Mould v. NJG Food Service Inc.
37 F. Supp. 3d 762
D. Maryland2014Background
- Plaintiff Jeffrey Mould worked as a server at the Crab Bag (Feb 2011–June 2013); paid $3.63/hour (overtime $7.26). Tip pool distributed to servers and certain kitchen staff under Levy’s apportionment.
- Starting Dec 9, 2011, management adopted a policy estimating tips as 10% of cash sales and 100% of card tips for tax reporting; did not account for tip-pool contributions, producing an overstated 2012 W-2.
- Plaintiff filed suit (May 1, 2012 amended complaint including FLSA retaliation) alleging FLSA, MWHL, MWPCL, IRC §7434, conversion, and unjust enrichment claims; later suspended and terminated in June 2013 after complaints about his conduct.
- Defendants produced revenue reports with “recommended contributions” to the tip pool and argued employees knew they were paid as tipped employees; payroll statements did not explicitly notify employees of the §203(m) tip-credit mechanics.
- The employer included cooks/crab steamers/prep cooks in the tip pool; some kitchen staff occasionally had limited customer contact but many worked entirely in the kitchen out of patrons’ view.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of tip credit under FLSA (Counts I & IV) | Mould: employer failed to give required §203(m) notice and pooled tips with non–customarily tipped employees, invalidating tip credit. | Defendants: payroll/paystubs and pay rates put Mould on notice; tip pool participants were eligible or contributions were customary. | Court: Notice requirement not satisfied; tip pool included employees who do not customarily receive tips -> tip credit invalid. Partial summary judgment for Plaintiff on liability. |
| Willfulness of FLSA violations (statute of limitations) | Mould: conduct willful, entitling him to 3-year limitations. | Defendants: believed wage practice lawful and relied on payroll processor; not reckless. | Court: Notice violation was unreasonable but not reckless (not willful) -> 2-year statute; tip-pooling willfulness remains disputed (denied summary judgment). |
| State-law tip-credit (MWHL, Count II) | Mould: state law mirrors FLSA; employer failed to notify under state statute. | Defendants: same defenses as federal. | Court: MWHL notice not given; summary judgment for Plaintiff on liability. |
| MWPCL unlawful deductions (Count III) | Mould: paying $3.63/hr was unlawful deduction because tip credit invalid. | Defendants: bona fide dispute over wages meant no liability under MWPCL. | Court: No bona fide dispute exists re: tip-credit notice; Defendants’ summary judgment denied; matter to be tried. |
| IRC §7434 W-2 fraud (Count VII) | Mould: Defendants willfully filed a fraudulent W-2 overstating tips (intent to deceive). | Defendants: used a good-faith estimation policy to report tips (aggregate estimation); no intent to defraud. | Court: No evidence of intentional wrongdoing; summary judgment for Defendants (Count VII dismissed). |
| FLSA retaliation (Count X) | Mould: filing suit was protected activity; suspension/termination were retaliatory (temporal proximity, alleged unequal treatment). | Defendants: terminated for legitimate, non-retaliatory reason—sexual harassment complaints and investigation. | Court: Plaintiff established prima facie case by timing, but Defendants articulated nondiscriminatory reason; Mould failed to show pretext with admissible evidence -> summary judgment for Defendants on retaliation. |
| Personal liability of owner Graves for wage claims | Mould: Graves exercised operational control and is an employer under FLSA/MWHL. | Graves: not involved in day-to-day employment decisions; not an employer. | Court: Material fact issue exists (emails and involvement permit inference Graves participated in termination) -> summary judgment denied as to Graves’ personal liability. |
Key Cases Cited
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (Sup. Ct.) (definition of willfulness for FLSA statute of limitations)
- Myers v. Copper Cellar Corp., 192 F.3d 546 (6th Cir.) (employees who work entirely out of view of patrons are not "tipped employees")
- Gionfriddo v. Jason Zink, LLC, 769 F. Supp. 2d 880 (D. Md.) (discussion of tipped-employee minimum-wage framework)
- Dorsey v. TGT Consulting, LLC, 888 F. Supp. 2d 670 (D. Md.) (paystub/earnings statement insufficient to satisfy §203(m) notice requirement)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (Sup. Ct.) (burden-shifting framework for retaliation claims)
- Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351 (4th Cir.) (willfulness standard reproducing McLaughlin)
- Fior D'Italia, Inc. v. United States, 536 U.S. 238 (Sup. Ct.) (reference to IRS aggregate estimation method for tips)