As a general rule, the Fair Labor Standards Act (FLSA) requires employers to pay a minimum wage of $7.25 per hour to employees, but that amount is reduced to $2.13 per hour for tipped employees, so long as the tips earned cover the differential. Furthermore, employers may not pay the $2.13 per hour unless “all tips received by [the] employee have been retained by the employee” with the exception of “pooling of tips among employees who customarily and regularly receive tips.” (29 U.S.C. § 203(m).)
On September 14, 2011, the Fifth Circuit addressed the issue of whether food “expediters” or “quality assurance” workers at Chili’s Restaurants fall within the category of employees who customarily and regularly receive tips so as to permit them to take advantage of the tip pooling practice. (Roussell v. Brinker Int’l Inc., No. 09-20561 (5th Cir. September 14, 2011).)
In Roussell, waiters and waitresses claimed that they were coerced into sharing tips with the “expediters” and “quality assurance” workers—employees who inspect completed food orders from the kitchen, garnish plates and delegate to servers and bussers the delivery of the food to the customers—in violation of the FLSA. Notably, the Department of Labor’s Field Operations Handbook provides:
[I]t does not appear that the Congress, even in requiring as a general principle that tipped employees retain all their tips, intended to prevent tipped employees from deciding, free from any coercion whatever and outside of any formalized arrangement or as a condition of employment, what to do with their tips, including sharing them with whichever co-workers they please.
(Department of Labor Field Operations Handbook § 30d04(c) (Dec. 9, 1988) (emphasis added).)
Thus, the relevant inquiry became whether Chili’s Restaurants operated a legal tip pool—the determination of which hinges upon: (1) whether the “expediters” and “quality assurance” workers were tip eligible; and (2) whether the managers coerced the servers to share their tips with the “expediters” and “quality assurance” workers. The Fifth Circuit held that Chili’s Restaurants violated the FLSA on both grounds because the workers at issue were not regularly or customarily tipped, and the “decision” to share tips with the “expediters” and “quality assurance” workers was not free from coercion.
It is highly recommended that employers review their tip pooling policies to ensure compliance with the relevant provisions of the FLSA.
Contact: Jaime A. Maurer