In my post, Manager's Drunk Facebook Post Leads to Retaliation Claim, I wrote about a wage-and-hour lawsuit brought by bartenders at the famous Coyote Ugly Saloons. In that post, my focus was on retaliation claims that the employees had added by way of an amended complaint. I promised, though, to follow up with a post dedicated to the wage claim. And here it is.
The case began its life as an FLSA collective action based on an allegedly illegal tip pool. The class included current and former employees who worked as bartenders, barbacks, and waitresses. Bartenders were required to put all of the tips they earned during a shift into a pool. The pool was then distributed among bartenders, barbacks, and security guards who worked that shift. An employee's share of the pool depended on the job performed but was always percentage based. Bartenders never retained more than 85% of the total pool.
Tip pooling is a common practice and not as draconian as it may sound when it's done properly. But when it's done improperly, it can be a major source of hostility. In this case, the employees claimed that the tip pool was unlawful because security guards, who were not "tipped employees," participated in it.
The FLSA defines "tipped employees," as those who "customarily and regularly receive tips." The employer argued that security guards sufficiently interacted with customers so as to constitute employees who "customarily and regularly receive tips." This claim was based on the undisputed fact that the security guards checked the I.D.s of patrons, interacted with them, and encouraged people passing by to come inside.
But to prove that the security guards were "tipped employees" as defined by the FLSA, the employer submitted evidence of an alleged industry standard. It purported to show this standard by introducing the testimony of a couple of people who had patronized the saloons and who claimed to have tipped the security guards.
The court rejected this argument, finding that a so-called industry is never a consideration in determining the proper classification of an employee under the FLSA. In fact, if anything, the court noted, the argument was more of an admission of improper misclassification. The fact that an entire industry is getting it wrong does not mean the FLSA does not apply.
And I heartily agree. Really, since when has the claim that "everyone's doing it" been sufficient to excuse liability? In my house, that argument never worked--even when I was just a lass. So I'm hard pressed to understand why the employer thought it would work here.