Pennsylvania Court Holds Employees Must Have Direct Customer Interaction to Participate in a Tip Pool under the Fair Labor Standards Act

In a case of first impression in the Third Circuit, a Middle District of Pennsylvania Court held that expediters at the Red Robin restaurant chain did not fall within the definition of “tipped employees” under the Fair Labor Standards Act (“FLSA”). Ford v. Lehigh Valley Restaurant Group, Inc., No. 14-cv-227. The case revolves around the interpretation of 29 U.S.C. § 203(m), which allows “the pooling of tips among employees who customarily and regularly receive tips.” Defendant Red Robin instituted a policy of requiring servers to contribute 3% of their gross sales to a tip pool. These proceeds were then distributed to restaurant bartenders, expediters and busboys. Plaintiffs claimed that the expediters should have been excluded from this pool as they were not “tipped employees” under the FLSA as they predominately worked in the kitchen and rarely interacted with customers.

Defendant asserted that the phrase “customarily and regularly receive tips” means that in order to be considered a “tipped employee”, one must receive tips at a “frequency which must be greater than occasional, but which may be less than constant.” Drawing on case law from other Circuits and the plain meaning of section 203(m), the Court rejected this argument holding that the statute’s plain meaning requires that employees who “customarily and regularly receive tips” have more than de minimis direct customer interaction.

The court held that the determination whether a worker falls within the definition of “tipped employee” is a fact intensive inquiry focusing on an employee’s level of direct customer interaction. Accordingly, the Court denied Defendant’s Motion to Dismiss. The NY Employment Lawyers at Fitapelli & Schaffer frequently represent workers in tip pooling cases. Please contact us at (212)300-0375 or www.fslawfirm.com for a free consultation.