Wednesday Federal Employment Law Update

Hello all, and welcome back to the blog.  On Wednesdays, we analyze a recent federal opinion on a key employment issue. 

Today, we tackle the District Court opinion of Turner v. Millenium Park Joint Venture, LLC, 2011 WL 772878 (N.D. Ill. March 7, 2011), for several reasons.  One, it is a case brought under the federal Fail Labor Standards Act (“FLSA”), the law that gives rise to the most federal cases in the United States.  Two, the case deals with a humorous fact pattern on an issue many of us have been familiar with at some point in their lives.  And three, I found another court with a sense of humor, always a plus!

Turner is an attempted class action brought by restaurant servers from an establishment called Park Grill.  At Park Grill, servers were paid 60% of the federal minimum wage plus tips, a portion of which was contributed to a “tip pool” shared by all eligible employees.  Prior to 2006, Park Grill servers, in addition to waiting tables, were required to roll silverware.  During a 2006 meeting, however, at the suggestion of the restaurant’s servers, the restaurant hired separate employees to roll silverware.  The restaurant’s announcement to hire silverware rollers drew a “standing applause” from the wait staff.   As part of their compensation, however, the rollers receive $3 per day per server from the tip pool.

The FLSA permits employers to credit up to 50% of the tips received by a “tipped employee” toward the required minimum wage.  The Plaintiffs sued under the FLSA, essentially arguing that the restaurant improperly characterized the silverware rollers as “tipped employees,” consequently costing the servers $3 per day per roller. 

The case boiled down to an interpretation of the statutory provision “customarily and regularly receives tips.”  Plaintiffs argued that the provision should be read to require some customer contact by the employee.  The restaurant offered the more circular argument that since the rollers did in fact receive tips, they qualify as tipped employees under the statute.  In other words, “tipped employees are who we say are tipped employees!” 

Unsurprisingly, the Court found a middle approach, but one which in this case favored the restaurant.  The Court set the standard that an “employee customarily and regularly receives tips under the FLSA if that employee receives tips, either directly from customers or from other employees who themselves receive direct customer tips, on a regular basis.”  The only question in this case is whether the servers in this case agreed to the sharing arrangement.

The Court found that the servers did so agree, stating that agreements could be express or implied.  Given that the silverware rollers were performing a task that would have otherwise been required of the servers, their work freed up more time for the servers to provide good customer service, and therefore presumably earn more tips.  In this regard the Court analogized the rollers to busboys who, like the rollers, do not receive tips from the customers but who freely share in tip pools with servers.  Moreover, not only did the servers ask for these hires to be made, they gave a standing ovation when their request was granted.   

The Court therefore granted summary judgment to the restaurant.  In closing, the Court gratuitously opines that the servers had “chutzpah” to attempt to invoke the FLSA under these facts. 

While the Northern District of Illinois certainly does not state the “law of the land,”  I think this is an interesting example of how a complicated statute is applied to a common real-life scenario.

Explore posts in the same categories: Federal Employment Law Updates

One Comment on “Wednesday Federal Employment Law Update”

  1. K O'Malley Says:

    Nice Read, Good post!


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