Labor Code Section 351 provides that tips belong to the servers who generate them. Tip pooling - employer-mandated sharing of tips among service staff, has been held lawful under that section. But certain tip pooling arrangements, particularly those in which management shares tips, have been held illegal.
In Lu v. Hawaiian Gardens Casino, Inc., a card dealer sued over a tip pooling arrangement, claiming that the employer's policy violated section 351. The lower courts held that Section 351 does not authorize private lawsuits. The Supreme Court stepped in to resolve a split in the courts of appeal. Applying general principles regarding when the Legislature intends to create private causes of action, the Court held there was none authorized under Section 351.
Of course, the plaintiffs can pursue their unfair competition claims, etc. The main disadvantage I can see off the cuff is the absence of a claim for attorney's fees under the Labor Code.
This case does not address whether tip pooling itself is lawful. So, employers should continue to draft tip pooling arrangements in accordance with lower court decisions on the subject, such as Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 1067; Etheridge v. Reins Internat. California, Inc. (2009) 172 Cal.App.4th 908, 921-922; Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 878-884; and Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.
The case is Lu v. Hawaiian Gardens Casino, Inc. and the opinion is here.
Showing posts with label tip pooling. Show all posts
Showing posts with label tip pooling. Show all posts
Ninth Circuit Upholds Tip Pooling Under FLSA
The Fair Labor Standards Act does not prohibit employers from allocating tips under a tip pool, if the employer does not apply a "tip credit" to satisfy the minimum wage obligation.
The Fair Labor Standards Act permits payment of a sub-minimum wage to tipped workers, so long as the base subminimum wage plus tips exceeds the normal minimum wage.
The plaintiffs claimed that the employer's allocation of pooled tips violated the Fair Labor Standards Act. They raised a number of arguments regarding the validity of the tip pooling arrangement, under which 55-70% of tips were distributed to kitchen and dishwashing staff. But the court said the FLSA does not prohibit tip allocations where the employee earns full minimum wage before tips. When an employer does pay subminimum wage and relies on tips to fill the gap, however, there are restrictions on tip pooling under FLSA (29 U.S.C. s. 203(m)). But those did not apply in this instance.
California law, however, does not permit the subminimum wage. Neither does Oregon law, which is where this case arose. Therefore, employers complying with state law minimum wages will not have to worry about the FLSA when constructing tip pools.
The case is Cumbie v. Woody Woo, Inc. and the opinion is here.
The Fair Labor Standards Act permits payment of a sub-minimum wage to tipped workers, so long as the base subminimum wage plus tips exceeds the normal minimum wage.
The plaintiffs claimed that the employer's allocation of pooled tips violated the Fair Labor Standards Act. They raised a number of arguments regarding the validity of the tip pooling arrangement, under which 55-70% of tips were distributed to kitchen and dishwashing staff. But the court said the FLSA does not prohibit tip allocations where the employee earns full minimum wage before tips. When an employer does pay subminimum wage and relies on tips to fill the gap, however, there are restrictions on tip pooling under FLSA (29 U.S.C. s. 203(m)). But those did not apply in this instance.
California law, however, does not permit the subminimum wage. Neither does Oregon law, which is where this case arose. Therefore, employers complying with state law minimum wages will not have to worry about the FLSA when constructing tip pools.
The case is Cumbie v. Woody Woo, Inc. and the opinion is here.
Court of Appeal Stiffs Baristas
Remember that time when the Starbucks Baristas won $86,000,000 because the shift supervisors took their tips? That was awesome.
[Sorry, I like Chris Farley. Sue me. I'll SLAPP you.]
Anyway, some time ago, we wrote about that huge Starbucks verdict over this tip pooling issue here. Then came the flood of tip pooling cases this winter and spring, discussed here and here. The Supreme Court is working on at least one of the cases here.
And now, the court of appeal just made real the Starbucks plaintiffs' worst nightmare: they reversed the monster $86,000,000.00-ish judgment quicker than as you can say tall no-whip-mocha with foam. As if I would ever say that.
The court held that the tips were placed in a community box for all service-related employees to share. Therefore, the court reasoned, the tip pooling statute did not even apply and the company was free to share tips with the service leads. The managers and assistant managers did not share in the tips.
So, easy come, easy go. We will see if the Supreme Court agrees to take up this case as well.
The case is Chau v. Starbucks and the opinion is here.
DGV
[Sorry, I like Chris Farley. Sue me. I'll SLAPP you.]
Anyway, some time ago, we wrote about that huge Starbucks verdict over this tip pooling issue here. Then came the flood of tip pooling cases this winter and spring, discussed here and here. The Supreme Court is working on at least one of the cases here.
And now, the court of appeal just made real the Starbucks plaintiffs' worst nightmare: they reversed the monster $86,000,000.00-ish judgment quicker than as you can say tall no-whip-mocha with foam. As if I would ever say that.
The court held that the tips were placed in a community box for all service-related employees to share. Therefore, the court reasoned, the tip pooling statute did not even apply and the company was free to share tips with the service leads. The managers and assistant managers did not share in the tips.
So, easy come, easy go. We will see if the Supreme Court agrees to take up this case as well.
The case is Chau v. Starbucks and the opinion is here.
DGV
California Supreme Court Takes Tips
(Or at least they accept tip pooling cases for review. ) What's tip pooling? We blogged about it here and wrote an article here. Yeah, we're on it.
Who knew tip pooling was the new meal break? There have been about four recent appellate decisions on tip pools in recent months. The Supreme Court decided to have its say, accepting review in Lu v. Hawaiian Gardens. We'll see if they grant and hold the rest of them or leave one on the books for guidance to the bar while the Lu review is pending.
DGV
Who knew tip pooling was the new meal break? There have been about four recent appellate decisions on tip pools in recent months. The Supreme Court decided to have its say, accepting review in Lu v. Hawaiian Gardens. We'll see if they grant and hold the rest of them or leave one on the books for guidance to the bar while the Lu review is pending.
DGV
Another Court of Appeal Decision on Tip Pooling
Did lawyers file a whole bunch of class actions on tip pooling at about the same time a year or two ago? Apparently so. Several judicial opinions have now emerged. They're not good for the plaintiffs.
We recently posted about Budrow v. Dave & Buster's here. There, the court decided that a restaurant's requirement that cocktail waitrons tip out a bartender was lawful.
Now, in Etheridge v. Reins International California, Inc. opinion here, the court of appeal reached the same conclusion, albeit with a slightly different formulation. Tip pooling, the court held, is fine when the tips are doled out to employees in the "chain of service." It is still forbidden to involve managers / supervisors in tip pools. But the bussers, bar backs, and hosts can breathe again.
We recently posted about Budrow v. Dave & Buster's here. There, the court decided that a restaurant's requirement that cocktail waitrons tip out a bartender was lawful.
Now, in Etheridge v. Reins International California, Inc. opinion here, the court of appeal reached the same conclusion, albeit with a slightly different formulation. Tip pooling, the court held, is fine when the tips are doled out to employees in the "chain of service." It is still forbidden to involve managers / supervisors in tip pools. But the bussers, bar backs, and hosts can breathe again.
Court of Appeal Clarifies California's Tip Pooling Law
If you have worked in a restaurant, then you know. Most restaurants require waitrons (servers) to "tip out" busboys, bartenders, runners, hosts, and/or others involved in the chain of service. If you gain the reputation for stiffing the busboy, bartender, etc. (under-tipping), you will be punished by no water, wrong drink orders, forgotten bread for your table, etc. So, smart wait staff tips out correctly.
In California, though, there is a statute addressing the practice of "tip pooling." The primary purpose of the law is to prevent management from taking a dip into the tip pool, as it were.
Some folks believe that tips by law are retained only by the server who collects it, or who engages in "direct table service."
The Court of Appeal put that interpretation to rest in Budrow v. Dave and Buster's. There, a cocktail waiter objected to tipping out the bartender. No wonder he lasted a month, or three months as he argued.
Anyway, the opinion is here. I'll bet you some side work that the Justices themselves or the court staff pulled a few doubles in their day.
In California, though, there is a statute addressing the practice of "tip pooling." The primary purpose of the law is to prevent management from taking a dip into the tip pool, as it were.
Some folks believe that tips by law are retained only by the server who collects it, or who engages in "direct table service."
The Court of Appeal put that interpretation to rest in Budrow v. Dave and Buster's. There, a cocktail waiter objected to tipping out the bartender. No wonder he lasted a month, or three months as he argued.
Anyway, the opinion is here. I'll bet you some side work that the Justices themselves or the court staff pulled a few doubles in their day.
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