Tip Pools Considered in Maryland FLSA Case

Tip Pools Considered in Maryland FLSA Case

RICHMOND, Va. — Two servers who worked for a group of hotels and restaurants at the National Harbor in Maryland filed a complaint against their employer, Marriott International, Inc., for violating the Fair Labor Standards Act (FLSA) and the Maryland Wage Payment and Collection Law. After they filed their complaint, the employers asked the court to dismiss the claims, and the court held a hearing and granted the motion. The case was appealed to a federal appeals court, which agreed with the dismissal of the complaint.

Tip Credit Claim

The servers argued that their claim fell under FLSA’s tip credit provision. Under this provision, an employer is allowed to take a credit against the minimum wage, in certain circumstances, by counting an employee’s tips as wages. Therefore, an employer must pay tipped employees a cash wage of $2.13 per hour and an additional amount in tips that brings the total wage to the federal minimum wage. Additionally, the the tip credit requires employers to inform employees that it is using tips to help it meet the minimum wage requirement and allow them to keep their tips unless they belong to a tip pool with other workers who regularly receive tips from customers. In this case, the plaintiffs argued that because they were never informed of the FLSA’s tip credit provision and the company’s tip pool includes employees who are not regularly paid, that tip-pooling arrangement violated FLSA. They alleged that they should retain all tips they received and the company must compensate them for lost tip wages.

FLSA’s Tip Requirements

The appeals court disagreed with the servers’ interpretation of FLSA. The court decided that FLSA’s tip provision did not create freestanding requirements regarding all tipped employees but only creates rights and obligations for employers who attempt to use tips as a credit against the minimum wage. Therefore, FLSA only requires payment when wages fall below the statutory minimum and hours rise above the overtime threshold. The plaintiffs in this case conceded that their wages did not fall below the statutory minimum wage. Therefore, the appeals court affirmed the dismissal of the case.

Tipped employees have particular rights under FLSA, but only if those rights are in line with the law’s minimum wage and overtime thresholds. Specific provisions of FLSA apply to tip pools. You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you feel that you have a valid wage claim for unpaid wages as a tipped employee. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.

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