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Oct 11 2017

Eleventh Circuit Denies Valet Right to Sue Over Unpaid Tips

Upholding the Atlanta-based federal District Court, the 11th Circuit Court of Appeals has affirmed a ruling that denied a valet employee her right to maintain a collective action against her employer. The allegations involved the employer improperly withholding the employee’s tips.

More specifically, the case sought to recover tips that valet employees allegedly received at a Georgia parking complex but were in part used by the employer to pay business expenses. The Plaintiff sought to maintain a collective action lawsuit against the parking garage employer, which alleged that the employer improperly withheld the valet drivers’ tips, and in doing so, violated the Fair Labor Standards Act. According to the valet, all tips were pooled and then distributed amongst the valets drivers; however, a portion of the tips were kept by the employer and used to cover other operating expenses.

Types of Tip Pools an Employer May Establish

The United States Department of Labor (DOL) is very specific about the types of tip pools that an employer may establish for tipped employees.  Generally, a tip that is received by an employee is the property of that employee.  However, in certain situations, an employer may require employees to pool tips. The DOL issued Fact Sheet #15, which provides for the following description of a valid tip pool:

Tip Pool: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

Plaintiff Failed to State a Theory of Liability under the FLSA

However, the Plaintiff in this case based her entire complaint on a 2011 U.S. Department of Labor regulation (29. C.F.R. § 531.52), which states that “[t]ips are the property of the employee whether or not the employee has taken a tip credit.”  In what turned out to be a fatal error in pleading, the Plaintiff failed to state a theory of liability under the FLSA for a minimum wage or overtime violation, she merely referenced the regulation.

The DOL (in an amicus brief) and the Court agreed that the Plaintiff could not hang her hat on solely on the regulation as her theory of liability, where she did not also state a violation of the minimum wage or overtime provisions of the Fair Labor Standards Act.  The 11th Circuit did acknowledge that even in the absence of a minimum wage or overtime violation, a case for wrongfully withheld tips could be maintained as a Rule 23 class action and under other state laws.  However, the Plaintiff’s case did not plead that, so the 11th Circuit determined that the case was properly dismissed.

Written by Wage Authority Group · Categorized: Tip-Sharing

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