By Jeffrey Mokotoff and Christopher Butler, FordHarrison LLP
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!
Federal wage and hour regulations currently treat gratuities and tips as being an employee’s property, regardless of whether the employer pays the employee minimum wage or uses a tip credit to satisfy the minimum wage requirement.
Recently, the U.S. Department of Labor (DOL) proposed a rule that would allow employers to require tipped employees to share tips with employees who don’t customarily receive tips directly (e.g., restaurant cooks and dishwashers) if employees are paid the full federal minimum wage of $7.25 per hour. Under the prospective rule, employers that use the tip credit option to satisfy their obligation to pay minimum wage won’t be allowed to require tip sharing with workers who don’t customarily receive tips.
However, in Malivuk v. Ameripark, LLC, the U.S. 11th Circuit Court of Appeals—covers Alabama, Florida, and Georgia—has already concluded the very thing the DOL proposes. Deborah Malivuk worked for Ameripark as a valet driver. Ameripark paid her the minimum wage but kept a portion of the tips that she and her fellow valet drivers earned. Malivuk sued Ameripark, claiming her employer violated § 203(m) of the Fair Labor Standards Act (FLSA).
On appeal, the court rejected Malivuk’s claims, observing that in May 2011, the DOL implemented a regulation that declared, “Tips are the property of the employee whether or not the employer has taken a tip credit under [§203(m)] of the FLSA.” That particular regulation specified that only tipped employees and others who customarily and regularly receive tips (such as servers, bartenders, and greeters) could retain tips, regardless of whether the employer actually paid the tipped employee the minimum wage.
In making its ruling, the court declined to delve into the issue of whether the DOL regulation was entitled to any deference because only the DOL, not an employee or her attorney, has standing (i.e., the authority) to enforce the regulation. Moreover, the court observed that the FLSA only authorizes private lawsuits for unpaid minimum wages or unpaid overtime compensation. The court reasoned that because Malivuk’s tip-withholding claim implicated neither the minimum wage nor overtime, she had no viable claim on her tip-sharing claim.
As a result, in Georgia, an employer can require an employee to share tips with other employees, or even with the employer, without fear of legal liability as long as it pays the employee the minimum wage ($7.25) without using the tip credit ($2.13 per hour plus tips to reach the minimum wage).
If you have any questions about this article, please feel free to contact Jeff Mokotoff or Chris Butler, editor of Georgia Employment Law Letter.