Total Articles: 62
Nexsen Pruet • September 20, 2017
When a customer leaves a tip for a server, who receives the full amount of the tip at the end of the day? According to a 2011 Department of Labor (DOL) regulation, the tip always belongs to the server, even if the employer pays the server minimum wage. However, a recent DOL announcement in late July has put this issue back on the table and may resolve a conflict between courts across the country as to tip practices within the hospitality industry. The 2011 regulation states that tips are the property of the employee regardless of whether the employer pays the employee minimum wage and claims a tip credit. Now, DOL is rescinding this regulation, which will allow employers more flexibility in their tip pooling practices.
Littler Mendelson, P.C. • September 13, 2017
On September 6, 2017, the Ninth Circuit Court of Appeals declined to accord deference to the U.S. Department of Labor's (DOL) interpretation of its "dual jobs" regulation. The court reasoned that the interpretation, as articulated in the DOL's Field Operations Handbook (FOH), was inconsistent with the dual jobs regulation and attempted to create a de facto new regulation. The appellate court rejected the FOH's requirement that employers evaluate employee work on a duty-by-duty and minute-by-minute basis to determine whether an employer may take a tip credit for specific time worked. The court favored the DOL's earlier guidance on the regulation, which instructed employers to look for a "clear dividing line" to distinguish between when an employee is engaged in a customarily tipped occupation versus a second and separate non-tipped occupation.
Jackson Lewis P.C. • September 11, 2017
Finding it wholly inconsistent with the statute and the regulation it purports to interpret, the Ninth Circuit has held invalid the United States Department of Labor’s “80/20” tip credit rule, or “20% Rule,” which limits the availability of the tip credit when tipped employees spend more than 20% of their time performing allegedly non-tip generating duties.
FordHarrison LLP • September 08, 2017
Executive Summary: On September 6, in Marsh v. J. Alexander’s LLC, the Ninth Circuit Court of Appeals refused to give deference to the U.S. Department of Labor’s (“DOL”) tip-credit guidance under the Fair Labor Standards Act (“FLSA”). The guidance—commonly known as the “80/20 rule”—provides that employers may not take a “tip credit” for time spent performing duties “related” to tip-producing activities (e.g., cleaning tables or rolling silverware) if these duties constitute more than 20 percent of the tipped employee’s time in a given week. In holding that the 80/20 rule is inconsistent with the FLSA because it improperly analyzes an employee’s duties rather than the performance of distinct jobs, the Ninth Circuit created a circuit split on this issue, and potentially paved the way for a U.S. Supreme Court decision with national impact.
Phelps Dunbar LLP • September 08, 2017
In a decision rendered on September 6, 2017, the 9th U.S. Circuit Court of Appeals found that the Department of Labor’s (“DOL”) interpretative guidance on an employer’s obligation to pay tipped workers the federal minimum wage for non-tipped work under the Fair Labor Standards Act (“FLSA”) is not entitled to deference.
FordHarrison LLP • July 25, 2017
Quite a bit of effort goes into making an enjoyable restaurant experience, such as good food, prompt service and, of course, cleanliness. Want to reward the dishwashers for providing you with spotless silverware, expediters for bringing out your food while it is still hot or the chef for cooking the perfect meal by leaving a generous tip? Not so fast. Cooks, expediters and other back-of-the house employees historically have not been able to legally share in the tips that are pooled and distributed among the servers, hosts and others in the front of the house.
Fisher Phillips • July 25, 2017
The U.S. Department of Labor plans to propose, sometime in August, a full rescission of the controversial tip-pooling restrictions that impact employers who pay tipped employees the full minimum wage directly, according to a regulatory agenda published July 20. This news should come as a welcome relief to employers in the hospitality industry, especially those operating in the Ninth Circuit — which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska — where a divisive 2016 appellate court decision has operated the last several years to handcuff a substantial number of businesses.
Ogletree Deakins • July 25, 2017
In a welcome sea change for the hospitality industry, the U.S. Department of Labor (DOL) announced on July 20, 2017 that it would repeal the Obama administration’s 2011 regulations that severely curtailed tip pooling. The DOL further announced that, as it works to finalize the repeal, its investigators are barred from enforcing the Obama-era rule.
The US Department of Labor (DOL) has announced that it plans to rescind the current Fair Labor Standards Act (FLSA) restrictions on "tip pooling by employers that pay tipped employees the full minimum wage directly."
Fisher Phillips • July 21, 2017
The U.S. Department of Labor plans to propose a full rescission of the controversial tip-pooling restrictions impacting employers who pay tipped employees the full minimum wage directly sometime in August, according to a regulatory agenda published this morning.
Fisher Phillips • July 21, 2017
We recently wrote about two federal appellate decisions holding that tipped employees for whom no federal Fair Labor Standards Act Section 3(m) "tip credit" has been taken, and to whom all FLSA minimum wages and overtime compensation due have been paid, may not sue under that law to recover tips that their employers allegedly unlawfully retained.
Jackson Lewis P.C. • July 21, 2017
Today the Trump Administration, through the Office of Management and Budget’s Office of Information and Regulatory Affairs, released the federal government’s semi-annual Unified Agenda of Regulatory and Deregulatory Actions.
FordHarrison LLP • July 05, 2017
Executive Summary: On June 30, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled in Marlow v. The New Food Guy, Inc. d/b/a Relish Catering (Relish) that neither the Fair Labor Standards Act (FLSA) nor a Department of Labor (DOL) regulation requires an employer to share customers’ tips with employees so long as the employees are paid more than minimum wage.
Fisher Phillips • June 14, 2017
In a welcome decision for employers, the Eleventh Circuit U.S. Court of Appeals (having jurisdiction over Alabama, Florida, and Georgia) recently ruled that a tipped employee for whom no federal Fair Labor Standards Act "tip credit" had been taken, and to whom all FLSA wages due had been paid, could not sue her employer under that law for allegedly converting some of her tips to the employer's own uses.
Franczek Radelet P.C • May 16, 2017
In 2011, the U.S. DOL published a regulation mandating that restaurants who count tips toward the minimum wage as permitted under the Fair Labor Standards Act have to notify employees that they are taking the credit. (See U.S. DOL Fact Sheet #15 for more information on the current requirement.) Last week, a federal district court in Pennsylvania ruled that a former bartender at Cadillac Ranch All American Bar & Grill could move forward with a hybrid state law / FLSA class/collective action, alleging that the restaurant chain violated the DOL’s notice regulation by failing to tell tipped workers that their wages would be calculated using the tip credit.
Fisher Phillips • February 20, 2017
We've all struggled with what to do when we're given conflicting orders. Grandma says "have some pudding," and Pink Floyd's Roger Waters responds, "how can you have any pudding if you don't eat your meat?!" Employers are increasingly facing similar (though perhaps less-existential) wage-related conflicts.
Fisher Phillips • September 12, 2016
The U.S. Court of Appeals for the Ninth Circuit has denied petitions for rehearing, as a panel or en banc, its opinion earlier this year holding that the U.S. Department of Labor could extend the Fair Labor Standards Act’s tip-pooling restrictions to instances where the tipped employees received the minimum wage without reliance on the Section 203(m) tip credit. Circuit Judge Diarmuid O’Scannlian’s highly critical dissent, in which he was joined by nine others, could serve as a tempting invitation for the U.S. Supreme Court to accept review of the matter.
Fisher Phillips • September 07, 2016
Restaurants and other hospitality businesses in the Western U.S. received bad news late yesterday as a federal appeals court refused to strike down a controversial tip-pooling regulation. The U.S. Department of Labor’s (USDOL’s) rule prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage, and although a group of hospitality employers hoped that a court would reject the rule as running contrary to well-established law, the 9th Circuit Court of Appeals once again upheld the rule.
Phelps Dunbar LLP • August 23, 2016
A federal district court in the Southern District of Florida joined a growing number of district courts in holding that the Department of Labor’s interpretation of the “tip credit” provision of the Fair Labor Standards Act, 29 U.S.C. § 203(m), is invalid. See Aguila v. Corporate Caterers II, Inc., No. 1:15-cv-24350-KMM, 2016 WL 4196656, *1 (S.D. Fla. Aug. 9, 2016).
Jackson Lewis P.C. • August 16, 2016
While Department of Labor regulations interpreting the FLSA remain the primary source of employer guidance regarding the Act’s requirements, they are not necessarily the final word on what federal wage law requires. This is so even where they have been subject to “notice and comment,” triggering a higher level of judicial deference.
Jackson Lewis P.C. • July 31, 2016
The Fair Labor Standards Act has long provided that an employer may satisfy its federal minimum wage obligations for a tipped employee by applying the employee’s tips as a credit toward the minimum wage and, in doing so, directly pay such employee less than the general minimum wage. If the employer’s wages plus the employee’s tips do not equal or exceed the minimum wage, the employer must make up the difference. Moreover, in order to take advantage of the tip credit, the employer is required to notify its tipped employees that it is taking the tip credit and to provide certain information pertaining to the credit.
Jackson Lewis P.C. • July 28, 2016
On July 26, 2016, Judge William S. Duffey of the United States District Court for the Northern District of Georgia issued a decision holding that an employer does not have to ensure tipped employees retain all of their tips if the company is not using the employee’s tips to satisfy part of the minimum wage pursuant to the FLSA’s “tip credit” provision, 29 U.S.C. § 203(m). In Malivuk v. AmeriPark, LLC, the plaintiff sued defendant AmeriPark, LLC (a provider of valet parking services) under the FLSA claiming that Ameripark illegally withheld tips paid to her and other valets. Malivuk v. AmeriPark, LLC, 2016 U.S. Dist. LEXIS 97093 (N.D. Ga. July 26, 2016).
Restaurants and other employers that require wait staff, bartenders and other tipped employees to clean tables, make coffee or perform other similar duties can draw comfort from a new appeals court ruling.
Littler Mendelson, P.C. • July 04, 2016
The U.S. Court of Appeals for the Fifth Circuit concluded on June 14, 2016 that an employer may not deduct more than the actual credit card fees associated with liquidated credit card tips for employees without compromising the tip credit taken by the employer against the employee’s wages. Steele v. Leasing Enterprises, Ltd., No. 15, 20139 is an important decision for employers with operations in the Fifth Circuit because it endorses for the first time other courts’ conclusions that certain deductions may be made against an employee’s tips by an employer without disturbing the tip credit, but illustrates the danger in overreaching in those deductions.
Fisher Phillips • July 04, 2016
A recent U.S. Labor Department blog post re-casts the agency's long-running campaign against an alleged "subminimum wage for tipped workers" under the federal Fair Labor Standards Act. Although this latest pitch introduces a different phrase, USDOL also recycles last year's canard that "[t]he current federal tipped minimum wage . . . still stands at just $2.13 per hour."
Franczek Radelet P.C • June 23, 2016
Hospitality industry employers take note: If you claim a “tip credit” toward the minimum wage for any of your employees, you need to make sure that all tips are properly distributed to employees. A recent case from the Fifth Circuit Court of Appeals involving a Texas restaurant chain illustrates the hazards of making a mistake with the tip credit rules. Steele v. Leasing Enterprises, Ltd. (.pdf)
Ogletree Deakins • March 04, 2016
In a split 2-1 decision, the Ninth Circuit Court of Appeals ruled in Oregon Restaurant and Lodging Association v. Perez (February 2016) that its 2010 decision in Cumbie v. Woody Woo, Inc. did not prevent the U. S. Department of Labor (DOL) from implementing regulations prohibiting all employers—even those that do not take advantage of a “tip credit”—from requiring tipped employees to participate in a tip pool that includes employees who are not “customarily and regularly” tipped.
FordHarrison LLP • March 03, 2016
Section 203(m) of the Fair Labor Standards Act (FLSA) allows employers of tipped employees to take a tip credit against the employer's minimum wage obligation if: (a) notice of the tip credit is provided, and (b) tipped employees are allowed to retain all of their tips, except in the case of tipped employees participating in a valid tip pool that only includes other tipped employees. The DOL's 2011 Regulations provided that employers who do not take a tip credit pursuant to § 3(m) must pay their employees the full cash minimum wage, may not retain employees' tips, and may not require employees to participate in a tip pool that includes non-tipped employees. The 2011 Regulations were a direct response to, and rejection of, the Ninth Circuit Court of Appeals' decision in Cumbie v. Woody Woo, 596 F.3d 577 (9th Cir. 2010), which held that § 3(m) does not preclude employers who do not take a tip credit from maintaining a tip pool that includes non-tipped employees (e.g. cooks, dishwashers and other back-of-the-house employees).
Fisher Phillips • March 02, 2016
In a surprising decision that may require many restaurants and other hospitality businesses in the Western U.S. to alter their labor practices, the 9th Circuit Court of Appeals upheld a 2011 U.S. Department of Labor (USDOL) rule that prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage. The February 23, 2016 decision applies to all businesses operating in the 9th Circuit, which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska (Oregon Rest. & Lodging Association v. Perez).
FordHarrison LLP • December 10, 2015
In this country, there are thousands of employees who earn their living off tips or gratuities they receive from customers. Over the last several years, there has been a movement afoot, particularly in the restaurant industry, to eliminate tipping from the workplace. Most recently, Joe's Crab Shack became the first major restaurant chain to test a "no-tipping" policy at more than a dozen of its locations. Servers, hosts, and bartenders at test locations of Joe's Crab Shack are now being paid a higher, fixed, hourly wage well above the current federal minimum wage of $7.25 per hour. Joe's Crab Shack is not the only restaurant experimenting with no-tipping policies. Union Square Hospitality Group announced earlier this year that 13 of its New York City restaurants will go to a no-tipping policy. "No-tipping" restaurants are still far from the norm in the United States but it is definitely a trend to watch.
Ogletree Deakins • November 10, 2015
In Montano v. Montrose Restaurant Associates., Inc., 800 F.3d 186 (5th Cir. Aug. 28, 2015), the Fifth Circuit Court of Appeals reversed and remanded a decision of the Southern District of Texas in which the trial court had granted summary judgment in favor of a restaurant. The issue was whether it was permissible under the Fair Labor Standards Act (FLSA) for the restaurant to include a “coffeeman” (also known as a “barista”) in a mandatory tip pooling arrangement with lead waiters, front waiters, back waiters, busboys, and bartenders.
Jackson Lewis P.C. • October 15, 2015
As New York’s hospitality industry prepares for a reduced tip credit and a fast food minimum wage, one New York restaurateur has announced its intention to eliminate tipping and thus, by extension, use of the tip credit: New York City’s Danny Meyer. This lengthy Eater feature discusses Meyer’s audacious new Hospitality Included program, noting the pitfalls encountered by other fine dining establishments which have moved away from American dining’s deep-rooted tipping conventions. Watch this space for further developments regarding NYS Department of Labor regulation of the hospitality industry and industry responses thereto.
Littler Mendelson, P.C. • September 04, 2015
In Montano v. Montrose Restaurant Associates, Inc., the U.S. Court of Appeals for the Fifth Circuit was presented with what may seem like an easy issue: does including a “coffeeman” in a tip pool invalidate the tip credit? The Fifth Circuit’s answer? It depends. While the court attempted to articulate a test that would provide some clarity, it may be such a fact-intensive inquiry that it does not provide employers much guidance.
XpertHR • September 04, 2015
A new appeals court ruling offers guidance for employers in Louisiana, Mississippi and Texas about how to determine which employees are eligible for the minimum wage tip credit.
Jackson Lewis P.C. • August 04, 2015
In accordance with the Ninth Circuit and several other federal court rulings, the Court of Appeals for the Fourth Circuit yesterday held that an employee cannot bring a claim for wages based on allegedly misappropriated gratuities under the FLSA. Trejo v. Ryman Hospitality Props., 2015 U.S. App. LEXIS 13204 (4th Cir. July 29, 2015).
Fisher Phillips • June 03, 2015
A recent post appearing on the U.S. Labor Department’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”
Fisher Phillips • February 19, 2015
A recent post appearing on the U.S. Department of Labor’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”
Fisher Phillips • February 17, 2015
A recent post appearing on U.S. Labor Department's blog begins, "The federal tipped minimum wage has been $2.13/hour since 1991. That's right - it's been the same for nearly a quarter century."
Ogletree Deakins • November 04, 2014
Many employers in the hospitality industry employ individuals who receive customer tips or gratuities in the ordinary course of their work day. These tips may serve as an offset against an employer’s minimum wage obligations under the federal Fair Labor Standards Act (FLSA)—but only if certain criteria are met.
Franczek Radelet P.C • May 08, 2014
Recently, I explained that revising the FLSA regulations will not be easy, and highlighted tip credits as one such area in particular. In my last post, I discussed yet another case involving the miscalculation of wages for tipped employees.
Fisher Phillips • May 06, 2014
We’ve covered tips and tip credits at length in the past here, here, here, and here, and I could probably blog all day, every day just to keep up with the volume of tip-related cases and actions that are filed nationwide, some high profile and others not. I want to highlight one of them here.
Fisher Phillips • April 08, 2014
A White House report promoting a substantial jump in the federal Fair Labor Standards Act's minimum wage perpetuates now-widely-disseminated propaganda about an alleged "tipped employee minimum wage" of $2.13 per hour.
Ogletree Deakins • February 11, 2014
Automatic gratuities for large parties are commonplace in many restaurants, bars, and hotels throughout the country. However, as of January 2014, the Internal Revenue Service (IRS) now classifies these automatic gratuities as “service charges.” As a result, the automatic tips will be treated as regular wages and subject to payroll tax withholding.
Ogletree Deakins • August 27, 2013
A federal judge in the Middle District of Tennessee recently held that bouncers (sometimes referred to as “security guards”) at Coyote Ugly Saloons were properly permitted to participate in tip pools with bartenders, barbacks, and waitresses. The holding in Stewart v. CUS Nashville, LLC turns on the Coyote Ugly bouncers’ unique job duties, which require them to have significant customer interactions that differ from the duties of most bouncers in restaurant and retail settings.
Franczek Radelet P.C • September 20, 2012
Shortly after my co-author, Bill Pokorny, wrote about celebrity and Iron Chef Mario Batali’s multi-million dollar settlement of a class action tip pooling lawsuit, another celebrity chef here in Chicago was sued for violating tip pooling laws. In March 2012, a lawsuit was filed against Master Chef Graham Elliot by 14 former employees over tip pooling requirements at his self-titled restaurant.
FordHarrison LLP • July 05, 2012
The Revenue Ruling discusses the assessment of employer FICA taxes on tips, including the application of section 3121(q) of the Internal Revenue Code (the "Code") and the application of the credit allowed under section 45B of the Code, but warns that it is first necessary to determine whether a payment is actually a "tip" for these purposes, noting that it makes no difference what the payment might be called. Even though described as a "tip," a payment that constitutes a "service charge" is wages, and is subject to withholding and reporting as such.
Franczek Radelet P.C • March 12, 2012
The latest news in celebrity chef wage and hour litigation is that eight New York restaurants owned by Mario Batali have agreed to settle $5.25 million to settle a class action lawsuit alleging that they illegally withheld tips from hourly service workers.
Franczek Radelet P.C • January 25, 2012
In May, my partner Staci reported on a ruling against Applebee's by the 8th Circuit Court of Appeals, holding that tipped employees who spent more than 20 percent of their working time on nontipped activities like cleaning restrooms were entitled to the federal minimum wage of $7.25 per hour. Applebee's asked the U.S. Supreme Court to review the ruling, arguing that the Eighth Circuit incorrectly deferred to the U.S. Department of Labor's "informal interpretation" of its FLSA regulations in its 1988 Field Operations Handbook, and that as a result it applied an "utterly unworkable standard that has no basis in the text or purpose of the FLSA and that will impose crushing administrative and financial burdens on restaurants and other employers of tipped employees." Last week, the Supreme Court turned down Applebee's petition, leaving the Court of Appeals' ruling intact.
ManpowerGroup • January 19, 2012
In a move that could have a significant impact on employers with tipped employees, the Supreme Court rejected an appeal over "tip credit" practices.
Fisher Phillips • December 06, 2011
The U.S. Supreme Court is being asked to decide what amounts to the future of tip credit for many businesses â€“ particularly in the hospitality industry. In short, the issue is whether an employer can continue to pay tip credit employees on a tip credit basis if they spend more than 20% of their work time on duties that did not produce tips.
Fisher Phillips • November 01, 2011
Section 3(m) of the federal Fair Labor Standards Act allows a portion of the employee's FLSA-required minimum wages to consist of tips. Unfortunately, it is all-too-common for employers to make expensive mistakes where tips are concerned.
Ogletree Deakins • July 19, 2011
New regulations issued by the Wage and Hour Division of the Department of Labor (DOL) interpreting the Fair Labor Standards Act (FLSA) recently went into effect; but the National Restaurant Association (NRA) and other industry groups are challenging the regulations.
Franczek Radelet P.C • June 20, 2011
On April 5, 2011, the U.S. Department of Labor published new final regulations that among other things require employers to give new detailed notices to tipped employees in order to credit tips toward the minimum wage. The new regulations took effect on June 5, 2011. Yesterday, June 16, 2011, the National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Businesses filed a lawsuit against the DOLseeking to block enforcement of the new rules. National Restaurant Association v Solis (PDF).
Fisher Phillips • June 02, 2011
The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent final rule. DOL's tip-related pronouncements are a mixed-bag for employers.
Fisher Phillips • May 03, 2011
The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent Final Rule. DOL's tip-related pronouncements are a mixed-bag for employers.
Fisher Phillips • February 22, 2011
A bill introduced recently by U.S. Representative Donna Edwards (D. Md.) would amend the federal Fair Labor Standards Act to require many employers to boost their direct cash payments to tipped employees by 76% within 90 days after passage, even though these employees are already receiving (by law) at least the FLSA minimum wage in combined tips and cash wages. A year later, the cash-wage requirement would be $5.00 (135% higher than the current level). In two years, the figure would increase to $5.50 (158% higher than today) or 70% of the FLSA minimum wage, whichever is more. H.R. 631 would be known as the WAGES Act ("Working for Adequate Gains for Employment in Services").
Ogletree Deakins • November 03, 2009
The wage and hour laws are outdated and compliance is exceedingly difficult in light of the way in which most hotels and restaurants are required to operate. But, you already knew these facts. Recent tip credit and tip pooling cases continue to highlight the problems and we will be addressing tipped employee issues in this and future editions of the Hospitality eAuthority.
Fisher Phillips • June 05, 2008
Cutting into potential profits, New York's highest court rules that restaurants may not pocket mandatory service charges that are represented to customers as gratuities for the wait staff.
Fisher Phillips • March 12, 2008
In our October/November issue, we reported on a troubling interim decision by a federal district court judge in Missouri. The case involved pay for bartender Gerald Fast, and focused on two issues: whether the restaurant's automated timekeeping resulted in off-the-clock work (referred to as "Appletime"); and whether the restaurant unlawfully applied the federal tip credit to non-tipped work the bartender was required to do, in addition to his other duties.
Fisher Phillips • April 23, 2007
With employers making adjustments in their payroll systems, some of those in the hospitality industry are wondering how a state’s higher minimum wage rate impacts the tip credit.
Fisher Phillips • March 30, 2007
Many employers are nervously awaiting the possibility of a new federal minimum wage under the FLSA, while others must deal with increases already passed at the state level.
Fisher Phillips • March 13, 2007
Tip pooling is a way of life in certain establishments. Tip-oriented businesses from restaurants to golf courses can, under the law, require tipped employees to share that money with other employees.