Montano v. Montrose Restaurant Associates, Inc., 800 F.3d 186

Plaintiffs Montano and Nieves were waiters at Tony’s, a Houston fine-dining restaurant, paid $2.13/hour plus tips; Tony’s required mandatory tip pooling by station.
Tip pool allocations: percentages to captain, front waiter, back waiter, busboy, bartender; coffeeman received a fixed $10 per station per shift.
Plaintiffs sued under the FLSA, alleging Tony’s could not claim a tip credit because the coffeeman did not “customarily and regularly receive[] tips.”
District court granted summary judgment for Tony’s, finding the coffeeman performed important customer-service functions and thus could be included in the tip pool.
On appeal, the Fifth Circuit reversed, holding a genuine factual dispute exists about whether the coffeeman had sufficient customer interaction to be a tipped employee.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the coffeeman “customarily and regularly receives tips” under 29 U.S.C. § 203(m)	Coffeeman worked in the kitchen, did not serve or interact with customers, and thus would not receive tips absent a mandatory pool	Coffeeman’s duties (making coffee, aiding service) are important to diner service and justify inclusion in the tip pool	Reversed summary judgment; whether coffeeman is a tipped employee is fact-intensive and unresolved — customer interaction and duties are central to the inquiry
Whether employer may rely on mandatory tip pool to prove coffeeman was a tipped employee	Mandatory pooling cannot create tipped status; that would be circular	Tony’s argued longstanding practice shows customary receipt of tips	Court: employer cannot prove tipped status solely by designating employee in mandatory pool; must assess but-for world and customer intent
Proper legal test for tipped-employee status	N/A (plaintiffs emphasize duties/interactions)	Tony’s urged a broad test focusing on customer service functions regardless of direct contact	Court: adopt a case-by-case test emphasizing extent of customer interaction and whether duties are customer-service oriented
Burden to prove entitlement to tip credit	N/A	Tony’s bears burden to prove its tip pool and entitlement to tip credit	Court reiterates employer’s burden and reverses summary judgment due to factual disputes

Kilgore v. Outback Steakhouse of Fla., 160 F.3d 294 (6th Cir. 1998) (front‑of‑house employees with more than de minimis customer interaction may be tipped employees)
Myers v. Copper Cellar Corp., 192 F.3d 546 (6th Cir. 1999) (employees performing kitchen food‑preparation duties without direct customer contact are not tipped employees)
Roussell v. Brinker Int’l, Inc., [citation="441 F. App'x 222"] (5th Cir. 2011) (distinguishing front‑of‑house and back‑of‑house and treating direct customer interaction as highly relevant)
Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) (discussing DOL interpretation and standards for tipped‑employee status)
United States v. Conforte, 624 F.2d 869 (9th Cir. 1980) (defining a tip as a voluntary payment designated by the customer)