New Jersey District Court Moves Forward on Pool Tipping Case while National Restaurant Association Seeks SCOTUS Ruling on Tip Pooling
June 21, 2017
Francine Foner, Esq.
Jaqueline Larsen, Law Clerk
Ty Hyderally, Esq.
Working in the restaurant industry can be a large source of income for some workers. Servers can provide excellent service and receive large tips, which may result in their earning more than minimum wage. It is common knowledge that wait staff, bartenders, and bussers receive tips as part of their income. What is less commonly known is that some tipped employees may be compelled to share their tips with other workers who do not receive tips. In 2011, the Department of Labor amended the Fair Labor Standards Act (“FLSA”) to prohibit all restaurants from forcing tipped employees (also referred to as front-of-the-house employees, such as waiters and bartenders) to share their tips with non-tipped staff (also known as “back-of-the-house-workers,” such as chefs and other food preparers). In 2015, the Fourth Circuit issued an opinion contrary to the DOL rule, in Trejo v. Ryman Hospitality Props., Inc. 795 F.3d 442 (4th Cir. 2015). On the other hand, in 2016, the Ninth Circuit upheld the DOL rule in Oregon Restaurant and lodging Association v. Perez, (9th Cir. 2016). As a result of this split of authority, on January 19, 2017, the National Restaurant Association filed a petition for writ of certiorari to the United States Supreme Court seeking to overturn the Ninth Circuit’s decision and strike down the DOL’s 2011 regulation. As of this writing, that petition has not yet been decided.
As discussed in a blog we posted in July 2015, Erica Sargent, a server working in a Houlihan’s restaurant in New Jersey, challenged a tip pool policy requiring such tip sharing upon the ground that the same violated the FLSA. On June 12, 2017, the New Jersey District Court denied Defendant’s motion to dismiss that complaint. Acosta v. A.C.E. Rest. Gro. Inc., 2017 U.S. Dist. LEXIS 89640. In denying Defendant’s motion to dismiss, the Judge opined that there were sufficient allegations from which a jury could find that Defendants had violated the FLSA. Further, the Judge felt it premature to dismiss the complaint prior to completion of discovery bearing on whether food expediters should be considered front-of-the-house employees vs. back-of-the-house employees. Thus, if the Supreme Court grants certification to the National Restaurant Association, its ruling on “tip pooling” will likely have an impact – one way or the other – upon the plaintiff’s claims in Acosta.
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