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President Obama Continues Push To Increase Federal Minimum Wage, Turns Attention to Tipped Wage

Despite encountering strong opposition to its proposals to raise the federal minimum wage and rewrite the Department of Labor regulations defining the exemptions from overtime under the FLSA, the White House is now requesting Congress raise the minimum wage for “tipped” employees.  Through a report released last week, the President argues that the minimum wage … Continue Reading

Citing To Precedent, Nevada Federal Court Rejects FLSA Tip Claim Asserted By Workers Receiving Minimum Wage

A Nevada federal court’s decision is consistent with  other recent federal court decisions holding that an employee has no claim for allegedly misappropriated gratuities under § 203(m) of the FLSA if no tip credit is taken and the employee receives the full minimum wage before tips, as the FLSA does not create  a property right … Continue Reading

Nevada Supreme Court Okays Tip Pooling

Providing guidance on some longstanding ambiguity regarding the meaning of Nevada’s statute on tip pooling, Nevada’s highest court ruled that an employer may impose mandatory tip pooling on employees and determine to which employees tips may be distributed. The Wynn casino’s tip pooling policy, which was reviewed by the Court and required pooled tips to be … Continue Reading

Following Woody Woo, Federal Court In Utah Rejects Employee Gratuity Claim Since No Tip Credit Taken

Joining several other recent federal court decisions, including a decision invalidating recently promulgated Department of Labor regulations purporting to address the issue, Judge Ted Stewart of the District of Utah has ruled that an employee has no claim for allegedly misappropriated gratuities under the FLSA unless the employer elected to take the tip credit set … Continue Reading

Minnesota High Court Rules: Tips Are Wages

As discussed in greater detail here, the Minnesota Supreme Court has ruled that gratuities received by night club employees were “wages” within the meaning of Minnesota’s law prohibiting deductions, and thus an employer violated that law when it required employees to pay for “register shortages . . . walkouts . . . [and] unsigned credit-card … Continue Reading

Restaurant Association Defeats Department of Labor, Invalidates 2011 Tip Regulations

In 2010, the Ninth Circuit held in Cumbie v. Woody Woo, Inc., that an employee’s property right to tips attaches under the FLSA only if the employer is taking a tip credit pursuant to 29 U.S.C. § 203(m). In response to this decision the Department of Labor passed widely discussed-regulations which, contrary to the decision, purport … Continue Reading

New York High Court To Hear Oral Argument In Closely Watched Starbucks Appeal

On May 28, 2013, New York’s highest state court, the New York Court of Appeals, will hear oral argument regarding the scope and application of New York Labor Law 196-d and its tip splitting provisions to Starbucks’ tip pooling practices. The court’s analysis of these issues, which came to the court as certified questions from the … Continue Reading

Federal Court in Indiana Dismisses Claims Alleging Work Outside Of “Tipped Occupation” As Contrary To Law And Inadequately Pleaded

In a case defended by Jackson Lewis Wage Hour Practice Group Chair and former Wage and Hour Administrator Paul DeCamp, Judge Theresa Springmann of the Northern District of Indiana on Tuesday dismissed claims brought by a former server employed by an Indiana-based Applebee’s operator alleging the restaurant was not entitled to avail itself of the … Continue Reading

New York Judge: Deduction of Full “Seamless Web” Fees from Gratuities Potentially Violates FLSA, New York Law

In a decision sure to attract attention within the New York hospitality industry, Judge Alison J. Nathan of the United States District Court for the Southern District of New York ruled in a case of first impression that deducting the full amount of service fees charged by internet food delivery sites (including popular web portal … Continue Reading

Florida Federal Court Holds Kitchen Chef Improper Tip Pool Participant

The FLSA regulates tip pool participation by limiting pool participants to employees who are “customarily and regularly tipped” as set forth in DOL guidance and interpreted by the courts. While the role of different positions in the service process (going to the question of whether they are “customarily and regularly” tipped) can be hotly contested, the … Continue Reading

Starbucks Tip Jar Wars Rage On: First Circuit Excludes Shift Supervisors From Massachusetts Tip Jars

The Court of Appeals for the First Circuit has ruled that under Massachusetts’ unique tip statute, shift supervisors cannot participate in the tip jar-based tip pool in Massachusetts locations. Matamoros v. Starbucks Corp., 2012 U.S. App. LEXIS 23185 (1st Cir. Nov. 9, 2012). Several years ago, a California Appeal Court ruled just the opposite under California … Continue Reading

Second Circuit Asks New York Highest Court for Clarity As To Who May Participate In a Tip Pool

Under New York law, a customarily tipped employee cannot be forced to share tips with an employer or its “agent”. In 2009, a New York federal judge ruled that Starbucks did not violate the New York Labor law (specifically Section 196-d) by permitting shift supervisors at New York Starbucks to receive tips from the coffee … Continue Reading

Colorado Federal Court Upholds Inclusion of Employee Performing Expediting Function In Tip Pool

Employers who maintain a tip pool are likely aware that, depending on the employer’s state of operation and prevailing law, such a tip pool typically can consist only employees who are both “customarily and regularly” tipped and who are not themselves “employers” or those with employer authority. Last year, we discussed a court’s recognition of the … Continue Reading

Maryland Judge Finds Question of Fact As To Whether Employer Provided Proper Notice of Tip Credit

The FLSA’s tip credit provision codified at 29 U.S.C. § 203(m) requires employers to notify employees of any tip credit taken by their employer against minimum wages owed. Prior to the DOL’s notice regulations issued on May 5, 2011 (codified at 29 C.F.R. § 531.59(b)), which were themselves the subject of legal challenge, the form such … Continue Reading

EDNY Judge Rules Suggested Gratuity Did Not Factor Into Overtime Calculation and Upholds Validity of Auto-Deduct For Meal Periods

As discussed repeatedly in these pages and elsewhere, employers have faced innumerable lawsuits regarding their alleged failure to distribute amounts purported to be gratuities to service staff in their entirety. However, even distributing tip money dollar-for-dollar to service providers is not a panacea against wage claims, as highlighted in a new opinion issuing from the Eastern … Continue Reading

District Judge Rejects Server’s Effort to Exclude Food Runners From Tip Pool

Tip pool participation under the FLSA, like classification of employees as exempt or non-exempt, turns on the duties of those participating in the tip pool, not their job titles. An example of this analysis is a recent Florida federal court decision rejecting a plaintiff server’s  challenge to the inclusion in the tip pool at a Ruth’s Chris Steak … Continue Reading

Texas Court Holds “Service Bartenders” May Be Eligible To Participate In A Mandatory Tip Pool Under FLSA

The FLSA and state law often both regulate the distribution of tips. See here. Under the FLSA, an employer can require all “customarily tipped employees” to pool tips generally or require a specific “customarily tipped employee” to share tips with another “customarily tipped employee.”  Disputes often arise as to whether an employee is a “customarily tipped employee” … Continue Reading

Appeals Court Finds Skycaps Claims For Misappropriated Tips Preempted by Federal Law

As we previously discussed, the airline industry, like the hospitality industry, has been assailed with lawsuits alleging that tips from customers intended for certain employees—in this case, baggage handlers, a/k/a skycaps—have been misappropriated by the employer, in violation of state statutes and common law. In the airline industry, conflicting authority has emerged even within the same … Continue Reading

Chicago Federal Court: Silverware Roller May Participate In Tip Pool

As discussed here, Section 3(m) of the FLSA (like many state laws) places restrictions on which employees within a workforce can receive and share in tips. While the FLSA permits tip pooling “among employees who customarily and regularly receive tips," litigation in the hospitality industry often centers around the legality of tip pool participation by restaurant … Continue Reading

Federal Court Holds Federal Aviation Law Does Not Preempt Skycaps’ Claims For Gratuities Under Pennsylvania Law

  While a significant percentage of employees’ claims for gratuities emanates from the food service and hospitality industries, other industries, including Aviation, are not immune. Baggage handlers in Massachusetts, New York and Pennsylvania all have asserted claims challenging industry tip practices, alternatively alleging that the amounts paid by customers for curbside check-in are gratuities (which allegedly … Continue Reading

Court Allows Counterclaim To Set Off Fees Paid To Independent Contractors Alleging Misclassification

When an independent contractor alleges s/he was misclassified and seeks alleged unpaid minimum wage and overtime, a significant issue is whether a prevailing plaintiff can receive a windfall.  Simply put, can an independent contractor alleging misclassification under the FLSA (or state law) keep fees for services already collected, and also collect a damages award for … Continue Reading
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