Tip Pooling Arrangement OK’d by Ninth Circuit
Requiring wait staff to pool and share tips with kitchen or “back of the house” employees does not violate the Fair Labor Standards Act if the employer is not taking the tip credit to pay tipped employees less than the minimum wage, the Ninth Circuit declares.
The FLSA allows employers of tipped employees to pay them less than the minimum wage by counting received tips as part of their wages, e.g. a tip credit. In the case before the Court, a restaurant employer paid its wait staff more than the minimum wage, but required its servers to contribute their tips to a “tip pool” that was redistributed to all restaurant employees.
The Ninth Circuit ruling overturns a previous U.S. Dept. of Labor opinion that such arrangements were invalid. “The FLSA does not restrict tip pooling when no tip credit is taken. Therefore, only the tips redistributed to [the claimant] from the pool ever belonged to her, and her contributions to the pool did not, and could not, reduce her wages below the statutory minimum. We reject [the claimant’s] and the Secretary’s interpretation of the regulation as plainly erro¬neous and unworthy of any deference,” the Court holds. Cumbie v. Woody Woo Inc.