Solis v. Lorraine Enterprises, Inc.
769 F.3d 23
1st Cir.2014Background
- FLSA requires minimum wage but provides a tip-credit exception for tipped employees if conditions are met.
- The restaurant Piccolo e Posto allegedly used a spillage fee and failed to maintain proper records, affecting wages and overtime.
- The Secretary sued Lorraine Enterprises, Lago, and Gonzalez for minimum wage, overtime, and recordkeeping violations.
- The district court granted summary judgment for the Secretary and awarded wages owed plus interest, $129,057.22.
- On appeal, the key issue is whether proper notice of tip credit was provided and whether individual liability attaches to Lago and Gonzalez.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tip-credit notice requirement validity | Solis: restaurant failed to provide proper advance notice | Gonzalez/Lago: evidence shows some notice or knowledge | Notice issues defeated summary judgment on tip credit |
| Due process challenge to notice ruling | Solis: district court ambushed defendants, violating due process | Lago/Gonzalez: due process rights were violated by late notice | No due process violation; appeal on Rule 59(e) denied |
| Minimum wage liability under tip credit | Solis: tip credit improper due to lack of notice and improper deductions | Gonzalez/Lago: defense of notice should negate liability | Tip credit invalid; wage liability stands |
| Individual liability for Lago and Gonzalez | Solis: individuals can be personally liable | Lago/Gonzalez: unclear personal liability under economic realities | individual liability affirmed based on admissions and control over corporation |
Key Cases Cited
- Martin v. Tango's Rest., Inc., 969 F.2d 1319 (1st Cir. 1992) (tip credit prerequisites and notice requirements arise from FLSA)
- Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464 (5th Cir. 1979) (employer bears burden to prove tip-credit eligibility)
- Kilgore v. Outback Steakhouse of Fla., Inc., 160 F.3d 294 (6th Cir. 1998) (strict notice requirement for tip credit)
- Reich v. Chez Robert, Inc., 28 F.3d 401 (3d Cir. 1994) (notice and tip-credit eligibility principles)