HB Ad Slot
HB Mobile Ad Slot
Federal Court In Florida Is Latest To Reject DOL Regulation, Finds FLSA Does Not Require Employees Receiving Full Minimum Wage Retain All Tips
Tuesday, 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.  A federal court in Florida is the latest to highlight this at-times confusing reality, joining a growing line of authority 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). See Aguila v. Corporate Caterers II, Inc., 2016 U.S. Dist. LEXIS 104962 (S.D. Fla. Aug. 9, 2016).  In Aguila, the plaintiff delivery drivers sued defendant catering company under the FLSA, claiming that the company “retained some or all of these tips.”  The court granted the defendant’s motion to dismiss the plaintiffs’ claims, holding that the provisions of Section 3(m) of the FLSA (which require, among other things, that tipped employees paid a tip credit rate retain all of their tips) did not apply to plaintiffs because the plaintiffs did not allege that the defendant paid them below the full minimum wage (i.e., that the employer used some or all of their tips to satisfy the minimum wage).

Citing, among other authority, the recent decision of another judge within the Eleventh Circuit, the Court in Aguila noted that “under a consistent body of case law, courts have interpreted § 203(m) to prohibit an employer from retaining an employee’s tips only if the employer pays the tipped employee less than the federal minimum wage.”  The Aguila court joined a number of federal courts in rejecting the recent position taken by the United Stated Department of Labor (“DOL”) on this issue – a position set forth in recently-implemented regulations – and the Ninth Circuit’s decision in Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080 (9th Cir. 2016) which adopted the DOL’s position.  Specifically, the Aguila court noted that it “disagrees with the flawed reasoning in Perez and finds that the DOL was without authority to address this issue” because the FLSA’s “plain and unambiguous language” expressly ties the requirement that employees retain all tips to the taking of a tip credit.

The law governing tip practices under the FLSA (as well as numerous state laws regulating gratuities) continues to develop, and employers of tipped workers in any industry permitting tipping must inform their business and employment practices by reference to current law in their jurisdictions.

HTML Embed Code
HB Ad Slot
HB Ad Slot
HB Mobile Ad Slot
HB Ad Slot
HB Mobile Ad Slot
 
NLR Logo
We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins