Florida - District Court Holds That Pit Bosses Should Not Be Digging Into the Tip Pool
May 14, 2008
Recently, Florida joined other states that have been evaluating challenges to the members of “tip pools.” In Wajcman, et al. v. Investment Corp. of Palm Beach d/b/a Palm Beach Kennel Club, the challenge was filed by several dealers employed by the Palm Beach Kennel Club between the years of 2004 and 2007. The dealers alleged that they should not have been required to pool their tips with floor supervisors (also known as “pit bosses”).
Participants in the Pool Must “Customarily and Regularly” Receive Tips
The Fair Labor Standards Act allows employers to reduce the wages of certain employees by applying a “tip credit.” Tip credits can only be applied toward the wages of employees who qualify as “tipped employees.” A tipped employee is any employee who “customarily and regularly receives more than $30 a month in tips.” Tipped employees must be allowed to retain all tips received, except in instances where pooling of tips is used among other tipped employees. 29 U.S.C. §203. There are stiff penalties for non-compliance with tip-pooling rules.
In Wajcman, during the relevant period, all of the dealer tips were pooled and the dealers were then required to contribute 5 percent of that total to a tip pool. The tip pool was distributed to cashiers, head cashiers, hostesses, hosts and floor supervisors. The plaintiff dealers challenged the inclusion of the floor supervisors in their tip pool, arguing that the floor supervisors do not “customarily and regularly” receive tips and therefore do not meet the definition of tipped employees.
The Kennel Club took the position that only those employees who have no interaction with customers should be excluded from the tip pool. The Court found that this argument would render the statutory requirement that employees “customarily and regularly” receive tips meaningless. The Court denied the Kennel Club’s motion for summary judgment, finding that the Kennel Club failed to establish that floor supervisors are engaged in an occupation that is traditionally the subject of tipping.
What Will the Courts Look for in Evaluating Members of a Tip Pool?
The Court noted that the record lacked evidence showing the amount of time floor supervisors spent mediating disputes between customers and dealers. This is an indication that going forward courts will look closely for evidence that members of tip pools actually interact with customers and meet the FLSA’s definition of tipped employees. This also highlights the importance of focusing on the duties actually performed by an employee, not on the employer’s job descriptions. In light of such decisions, hospitality employers would be wise to review their tip pooling practices.
For more information, email Ann M. Hensler at ann.hensler@hklaw.com or call toll free, 1.888.688.8500.
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