Attempting to provide clarity to a subject that is a regular source of litigation, the Court of Appeals for the Fifth Circuit has issued an extended, detailed analysis addressing the circumstances under which an employee’s position is “customarily and regularly” tipped for purposes of participating in a valid tip pool under 29 U.S.C. § 203(m). Montano v. Montrose Rest. Assocs., 2015 U.S. App. LEXIS 15233 (5th Cir. 2015).

In Montano, the position at issue was a coffee man or barista who participated in the tip pool at a fine dining establishment. The parties disputed whether the barista truly was in a customarily and regularly tipped occupation, disputing his role in the service process and the frequency of his customer interaction. Finding that the “common thread of the cases and the DOL opinion letters is to require a tipped employee to have more than a de minimis interaction with the customers who leave . . . undesignated tips,” the panel reversed the District Court’s grant of summary judgment to the restaurant, finding a deeper inquiry into the factual issue of barista customer interaction was necessary. In a long, thoughtful concurrence, Judge James L. Dennis observed that the true determination of who was a customarily and regularly tipped employee involves an analysis of custom and the factual circumstances. For example, the contents of a tip jar labeled “for the chef” are clearly gratuities left for the chef, notwithstanding DOL regulatory guidance tending to indicate that a chef is not a customarily and regularly tipped employee. And tips left for a housekeeper in a hotel are clearly intended for them even though hotel guests rarely interact with the housekeeping staff.

Montano provides additional guidance for hospitality employers as they continue to wrestle with tip credit issues.