Melissa Compere v. Nusret Miami, LLC, 28f4th1180

Nusret Miami, an upscale Miami steakhouse, added a mandatory 18% "service charge" to customer bills from opening (Nov. 2017); customers could also give voluntary tips separately.
The restaurant routed the service charge through its POS, retained it (minus card fees), and redistributed it pro rata to staff; after April 30, 2018 Nusret satisfied employee wages exclusively from those collections.
Employees sued in a collective FLSA action, alleging Nusret underpaid minimum and overtime wages and unlawfully pooled tips with non-tipped staff; they argued the 18% fee was a tip and therefore could not be counted toward the employer’s wage obligations under 29 U.S.C. § 207(i).
Nusret moved for summary judgment, arguing the 18% fee was a compulsory service charge (not a tip) and that employees’ regular rate exceeded 1.5× the minimum wage, bringing the § 207(i) exemption into play.
The district court granted summary judgment for Nusret; on appeal, the Eleventh Circuit affirmed, holding the mandatory 18% fee was a service charge (not a "tip") because payment and amount were not "determined solely by the customer," and that tax reporting/gross-receipts treatment was irrelevant to the legal classification.
The court also rejected the Employees’ contention that additional discovery (an accountant deposition about tax treatment) would alter the result, because the charge is not a tip as a matter of law regardless of tax reporting.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the mandatory 18% charge is a "tip" under the FLSA	The 18% charge functions as a tip; absent proof it was included in employer gross receipts for tax purposes, it should be treated as a tip and cannot count toward employer wage obligations	The charge is a compulsory service charge (not a tip): customers cannot decline it and amount/payment not determined solely by the customer; thus it counts in the regular rate and may satisfy § 207(i)	Charge is a bona fide service charge, not a tip; employer may use it to meet FLSA wage obligations
Whether denial of Employees’ Rule 56(d)/extension requests (to depose accountant about tax reporting) was reversible error	Additional discovery was necessary to show service charges were not included in gross receipts, which would defeat summary judgment	Accountant testimony about tax returns is irrelevant because the statutory/regulatory definition of "tip" controls; tax reporting does not determine tip status here	Denial not reversible: testimony about tax treatment would not change the legal conclusion that the mandatory charge is not a tip

Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419 (U.S. 1945) (explains the "regular rate" must reflect payments regularly received and treats how tips factor into regular-rate analysis)
Wai Man Tom v. Hospitality Ventures LLC, 980 F.3d 1027 (4th Cir. 2020) (holds automatic gratuity for large parties is not a "tip")
McFeeley v. Jackson Street Ent., LLC, 825 F.3d 235 (4th Cir. 2016) (analyzes performance fees paid directly to performers and discusses gross-receipts considerations in that factual context)
Christensen v. Harris Cnty., 529 U.S. 576 (U.S. 2000) (agency opinion letters are entitled to respect to the extent they have persuasive power)
Skidmore v. Swift & Co., 323 U.S. 134 (U.S. 1944) (agency interpretations merit weight according to their persuasiveness)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standard)
Scott v. Harris, 550 U.S. 372 (U.S. 2007) (clarifies assessment of facts at summary judgment)