While many state laws regulate the distribution of gratuities (as well as service charges and other fees), the overwhelming judicial view, as originally set forth by the Ninth Circuit in Cumbie v. Woody Woo and joined by district courts in other jurisdictions, holds that an employee’s right to tips under the FLSA flows exclusively
tip pooling
Maximizing The Use Of The “Chain Of Service” Doctrine To Defend Claims
In cases challenging participation of food service workers other than the quintessential roles with which most diners are familiar (e.g., server/waiter, busboy, etc.) in tip sharing/pooling/splitting arrangements, some courts focus on whether the position lacked sufficient direct customer interaction to warrant receipt of tips. See generally Kilgore v. Outback Steakhouse, 160 F.3d…
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…
New York Court of Appeals Issues Starbucks Tip Ruling
In a significant victory for New York employers, the New York Court of Appeals has now held that Starbucks’ tip splitting practices did not violate New York law. In answering the certified questions in In Re Starbucks, the Court held “an employee whose personal service to patrons is a principal or regular part of…
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…
D.C. District Judge Rules Tip Pool Participation Of Maitre ‘d, Others Lawful Under FLSA
While the FLSA governs the payment of minimum wage and overtime, it does not by its statutory language regulate the receipt of gratuities. However, Section 3(m) of the FLSA (29 U.S.C. § 203(m)) requires that employees paid pursuant to the “tip credit” provision (i.e., paid less than the standard minimum wage of $7.25 due…
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…
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…
New York Hospitality Wage Order Goes Final: New Rules Effective 1/1/11
Yesterday, the New York State Department of Labor issued the final version of the new Hospitality Industry Wage Order, as previously discussed here and here. The final Wage Order, substantially revises various long-standing New York industry rules, including, the tip credit amount, permissibility of tip pooling, and spread of hours calculations. The Final Wage Order includes…