Summary
The Fourth Circuit affirmed dismissal of employees’ claims alleging that their employers’ tip-pooling arrangement violated the Fair Labor Standards Act’s tip-credit provision. Because the plaintiffs were paid at least the minimum wage independently of tips and sought only recovery of allegedly withheld tips, the court held that the FLSA did not provide a private cause of action for their claims. Judge Harris concurred in the judgment, emphasizing the distinction between substantive protections under the FLSA and the availability of a private remedy.
Topics
Practice areas
Questions Presented
- Whether the FLSA's tip-credit provision, 29 U.S.C. § 203(m), creates a private cause of action allowing employees who receive at least the minimum wage and seek only allegedly withheld tips to recover those tips.
- Whether the FLSA's requirements concerning notice of the tip-credit provision and retention or pooling of tips apply when the employer does not use tips to satisfy its minimum-wage obligations.
Holdings
- The FLSA does not provide a private cause of action for employees seeking recovery of tips unrelated to a minimum-wage or overtime violation when their wages do not fall below the statutory minimum and the employer does not claim a tip credit.
- The statutory requirements that an employer inform employees about § 203(m) and permit them to retain tips, subject to qualifying tip pooling, do not apply to employees seeking only tips unrelated to a minimum-wage or overtime claim where the employer is not using tips to satisfy minimum-wage obligations.
Key quotations
“We thus find that the statutory requirements that an employer inform an employee of § 203(m) and permit the employee to retain all his tips unless the employee is in a tip pool with other regularly tipped employees does not apply to employees, like the Plaintiffs, who are seeking only the recovery of the tips unrelated to a minimum wage or overtime claim.” (795 F.3d at 448)
“Accordingly, the judgment of the district court is affirmed.” (795 F.3d at 448)
Factual background
The plaintiffs worked as servers at hotels and restaurants in Maryland's National Harbor complex and belonged to UNITE HERE, Local 25. They alleged that the defendants took approximately 4% of daily food and drink sales from servers' tips and redistributed those amounts to bartenders, server assistants, busboys, and food runners, even though the servers had not voluntarily agreed to the arrangement. The plaintiffs were paid a base wage at or above the statutory minimum wage and did not allege unpaid overtime or that the defendants used a tip credit to satisfy minimum-wage obligations.
Procedural history
The plaintiffs sued their employers, alleging that the employers' tip-pooling arrangement violated the FLSA, a collective bargaining agreement, and Maryland's Wage Payment and Collection Law. The United States District Court for the District of Maryland dismissed the complaint under Rule 12(b)(6). The Fourth Circuit affirmed the dismissal. A third plaintiff, Patricio David Trejo, did not appear on appeal and was dismissed for failure to prosecute.