Lead Opinion
This case concerns coffee and tipping. Two waiters sued the Houston restaurant where they worked, claiming the restaurant violated federal law by requiring them to share tips with the restaurant’s “coffee-man.” The district court granted the restaurant’s motion for summary judgment, holding that, as a matter of law, the coffee-man was an employee who customarily and regularly received tips. Because there is a genuine issue of material fact as to whether the coffeeman customarily and regularly received tips, we REVERSE.
BACKGROUND
Plaintiffs-Appellants David Montano and Gaston Nieves worked as waiters for Tony’s, a fine-dining restaurant in Houston. Tony’s divided its dining room into various “stations,” each consisting of several tables. Each station’s tables were serviced by a “captain,” or lead waiter, and additional “waiters, busboys, and other service personnel.” At the end of each shift, the tips left on a station’s tables were divided, as directed by Tony’s, among the captain, front waiter, back waiter, busboy, bartender, and coffeeman. All participants in the tip pool received a percentage of the station’s tips except for the coffeeman, who received a fixed ten dollars from each station each shift. In addition to their tips, the plaintiffs were paid $2.13 per hour by Tony’s.
On January 17, 2012, Montano sued Tony’s, claiming that by requiring him to share his tips with the coffeeman, who they' claim worked in the kitchen and did not serve customers, the restaurant violated the Fair Labor Standards Act
For a worker to be eligible for tip sharing, his work must be important for direct diner service.... The barista directly supports the waiters [by making coffee and related concoctions]. He is an aide, not a remote coworker like a janitor or cook. Prompt, skillful preparation of these drinks produces diner satisfaction.... Tony’s may require its waiters to share their tips with [the barista].
Id. at *1-2. Plaintiffs timely appealed.
DISCUSSION
I.
We review a district court’s grant of summary judgment de novo, applying the same standard as the district court. Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo Bank, N.A.,
The FLSA sets the general national minimum wage at $7.25 per hour. 29 U.S.C. § 206(a)(1).
A restaurant may not claim a tip credit unless “all tips received by [a tipped] employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.” 29 U.S.C. § 203(m). Thus, the general rule is that an employer may not claim the tip credit unless a tipped employee is permitted to retain all of his tips. See id.
The primary issue in this case is whether Tony’s properly claimed the “tip credit” and paid Appellants less than the general minimum wage. There is no dispute that Appellants, as waiters, are “tipped employees.”
II.
It is not easy to determine whether the Tony’s coffeeman customarily and regularly received tips. The obvious starting point, of course, would be to inquire whether he actually received tips. Here, however, it is of no moment that the coffeeman actually received tips because he received tips exclusively through an employer-mandated tip pool. It would be circular to find that, because Tony’s required waiters to give the coffeeman tips, the coffeeman customarily and regularly received tips. This would allow a restaurant to designate any employee it wished as a tipped employee and claim a tip credit, as long as it made that employee part of a mandatory tip pool and the waiter’s retained tips plus the waiter’s $2.13 salary exceeded the general minimum wage. To give meaning to the statute, the question must be whether the coffeeman would cus
Determining whether the coffeeman would receive tips in the absence of Tony’s policy requiring them to share in the tip pool is particularly difficult because restaurant patrons typically do not specify a recipient for their tips. A “tip” within the meaning of the FLSA is defined as “a sum presented by a customer as a gift or gratuity in recognition of some service performed for him.... Whether a tip is to be given, and its amount, are matters determined solely by the customer, who has the right to determine who shall be the recipient of the gratuity.” 29 C.F.R. § 531.52; see also United States v. Conforte,
We first consider U.S. Department of Labor (“DOL”) rules and guidance. The DOL is authorized to promulgate rules interpreting and clarifying the FLSA. See Long Island Care at Home, Ltd. v. Coke,
The DOL has provided examples of occupations that “customarily and regularly receive tips” and those that do not. Its Field Operations Handbook (“Handbook”) lists “waiters/waitresses”; “bellhops”;
The DOL also has issued opinion letters responding to inquiries about whether certain employees qualify as tipped employees under the FLSA. The opinion letters make clear that one’s status as an employee who “customarily and regularly receives tips” is “determined on the basis of his or her activities,” not on the employee’s job title. U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter,
While the opinion letters, like the Handbook, do not address the coffeeman occupation, they provide some insight into the DOL’s view of when an employee customarily and regularly receives tips. The DOL has advised that itamae-sushi and teppanyaki chefs who prepare and serve meals directly to customers are tipped employees because they provide customer service similar to counter persons. See
III.
Courts faced with this question have analyzed the employee’s job duties to determine whether he was tipped or not. In one frequently cited case, the Sixth Circuit determined that restaurant hosts and hostesses were engaged in an occupation in which they customarily and regularly received tips because they had “more than de minimis interaction with the customers” in an industry in which “undesignated tips are common.” Kilgore v. Outback Steakhouse of Fl., Inc.,
Subsequently, the Sixth Circuit held that salad preparers, who “abstained from any direct intercourse with diners, worked entirely outside the view of restaurant patrons, and solely performed duties traditionally classified as food preparation or kitchen support work,” could not be categorized as “tipped employees.” Myers,
In an unpublished decision, this court reviewed a jury’s finding that “Quality Assurance” workers did not work in a position “that customarily and regularly receive^] tips.” Roussell,
The common thread of the cases and the DOL opinion letters is to require a tipped employee to have more than a de minimis interaction with the customers who leave the undesignated tips.
The district court erred in failing to consider the extent of the coffeeman’s customer interaction in determining whether he customarily and regularly received tips. The district court found that the coffeeman “directly aid[s] in serving diners” and that his work is “important for direct diner service.” Montano,
Applying this standard, there is a genuine issue of material fact as to whether the coffeeman was eligible to participate in a mandatory tip pool. Critically, there is a genuine issue of fact about whether the coffeeman had any interaction with the diners who left the tips. The evidence on summary judgment divides the relevant time period in half. Before June 2011, taking the facts in the light most favorable to Appellants, as we must, the coffeeman never went into the dining room, never brought trays to and from the dining room, did not wear a uniform, and only made coffee and tea. Starting sometime in the summer of 2011, the coffeeman’s job responsibilities expanded, though the extent of the expansion is disputed. Taking the facts in the light most favorable to Appellants, the coffeeman began wearing a uniform and carried large trays to the dining room about once per week. Even after this small change in job responsibilities, the coffeeman spent “most” of his time in the kitchen making coffee. At all relevant times, the coffeeman did not take customer orders, did not pour water or arrange water glasses, and did not help prepare the bread.
CONCLUSION
Determining whether an employee is one who “customarily and regularly receives tips” is a fact-intensive inquiry that requires a case-by-case analysis of the employee’s duties and activities. There is evidence from which a factfinder could conclude that the coffeeman’s level of customer interaction in a customer service role was non-existent or minor enough such that he is more similar to a cook or a
Notes
. On October 19, 2012, Nieves sued the restaurant, alleging the same FLSA violations. Both complaints are styled as "collective action” complaints on behalf of similarly situated Tony’s waiters. The district court consolidated the cases.
. Between July 24, 2008 and July 23, 2009, the minimum wage was $6.55 per hour. 29 U.S.C. § 206(a)(1). Although the change in the minimum wage could be relevant for damages, it does not affect our analysis.
.The FLSA also requires an employer taking a tip credit to inform its employees about any tip pooling arrangement. See 29 U.S.C.
. This complicated statutory structure is the result of this country’s unique and durable tradition of tipping. See Yoram Margalioth, The Case Against Tipping, 9 U. Pa. J. Lab. & Emp. L. 117, 121 (2006) (“[Tapping has become quintessentially American.”).
. The FLSA defines “[t]ipped employee” as "any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t).
.See U.S. Dep't of Labor, Wage and Hour Div., Fact Sheet # 15: Tipped Employees Under the Fair Labor Standards Act (FLSA) (rev. July 2013), available at http://www.dol.gov/ whd/regs/compliance/whdfs 15.pdf (last visited July 23, 2015) (“Where a tipped employee is required to contribute to a tip pool that includes employees who do not customarily and regularly receive tips, the employee is owed all tips he or she contributed to the pool and the full $7.25 minimum wage.”).
. The FLSA does not require that an employee who customarily and regularly receives tips receive them directly from customers. See Kilgore v. Outback Steakhouse of Fl., Inc.,
. For example, in interpreting an ambiguous regulatory phrase, the Eighth Circuit afforded Auer deference to the DOL's interpretation that an employee must spend 20 percent of his time engaged in tip-producing activities to be considered a "tipped employee.” Fast,
. These categories correlate directly with those contemplated by Congress when it first promulgated Section 203(m) in 1974. See S. Rep. 93-690, at 43 (categorizing "waiters, bellhops, waitresses, countermen, busboys, service bartenders, etc” as employees who customarily and regularly receive tips and "janitors, dishwashers, chefs, laundry room attendants, etc” as employees who do not).
. Indeed, in one opinion letter, the DOL opined on whether a restaurant’s dishwashers qualified as tipped employees. U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter,
. The court found it irrelevant that the "salad preparers” were waiters who were assigned to prepare salads for certain shifts. See Myers,
.Lower courts too have consistently focused on the extent of customer interaction when determining whether an employee is customarily and regularly tipped. See Rubio v. Fuji Sushi & Teppani, Inc., No. 6:141cv-1753,
. It is not clear that Tony's diners are even aware there is a designated employee to make coffee drinks, while they are likely aware that waiters, busboys, and bartenders are contributing directly to their enjoyment.
. The district court’s decision — and Tony’s argument — analogizes the coffeeman and a service bartender. See Montano,
. Tony's submitted evidence that the coffee-man helps bring food to the dining room 20-25 times per shift (more on weekends), assists with bringing bread to tables, and must wear a busboy uniform so he looks presentable to customers. The affidavit is dated May 7, 2012, and it is unclear if the description refers to the current job duties only or as they existed before the summer of 2011. In any event, because these facts are directly disputed, we ignore them for purposes of summary judgment. See Impossible Elec. Techniques, Inc. v. Wackenhut Protective Sys., Inc.,
. Because we reverse the grant of summary judgment, we need not reach Appellants’ alternative argument that the district court should have permitted additional pre-summary judgment discovery.
Concurrence Opinion
concurring in the judgment:
The question in this case is how to distinguish those employees who “customarily and regularly receive tips,” 29 U.S.C. § 203(m), from those who do not. Given the prevalence of undesignated tips — ie., those left without express instructions as to who are the intended recipients — the question has attendant difficulties. I agree with much of the majority’s analysis of the issue.
The majority sets the following rule: “[I]n determining whether an employee customarily and regularly receives tips, a court — or a factfinder — must consider the extent of an employee’s customer interaction.” Ante, at 193. In so considering, the majority instructs courts and factfinders to adopt the following (hopefully rebuttable) presumption: “A customer is more likely to tip someone with whom he has contact....” Id. This is probably a helpful rule of thumb for most cases but, respectfully, I think that it will lead the Court or factfinder astray in others. For example, hotel guests rarely interact with the housekeeping staff but nevertheless often leave tips for them.
Next, the majority sets this rule: “A court or factfinder should also consider whether the employee is engaging in customer service functions....” Id. The problem here is that it is unclear what exactly the majority has in mind when it refers to “customer service.” For example, I think most people would consider grocery store cashiers as providing “customer service,” and yet in my experience people only rarely, if ever, tip them.
Thus, in determining which employees “customarily and regularly receive tips,” the majority’s presumptions about “customer interaction” and “customer service” may be helpful in some circumstances, with respect to some jobs — indeed, I think they are helpful guideposts in this case involving a fine-dining restaurant and its “coffeeman” — but will inevitably prove counterproductive in others, such as those I have outlined. As I read the majority’s opinion, it does not disagree. Cf. ante, at 194 (“Determining whether an employee is one who ‘customarily and regularly receives tips’ is a fact-intensive inquiry that requires a case-by-case analysis of the employee’s duties and activities.”). In future cases in which “customer interaction” and “customer service” prove to be false indicators of the receipt of tips, courts should understand the limited nature of the majority’s guidance here, which was crafted with a particular fine-dining restaurant and one of its employees in mind, and not feel obliged by today’s decision to adopt presumptions that conflict with the factual reality in the case at hand. Cf. Eastman Kodak Co. v. Image Technical Servs., Inc.,
How, then, should future courts separate those employees who “customarily and regularly receive tips” from those who do not? What is needed is a neutral analysis, applicable in all circumstances, that is consonant with our country’s many peculiar norms and practices of tipping as they vary from one position or business to another. Put another way, courts need an analytical framework that can be applied in all cases to reach rational results. See Herbert Wechsler, Toward Neutral Principles of Constitutional Law, 73 Harv. L.Rev. 1, 15 (1959) (“[T]he judicial process ... must be genuinely principled, resting ... on analysis and reasons quite transcending The immediate result that is achieved. To be sure, the courts decide, or should decide, only the case they have before them. But must they not decide on grounds of adequate neutrality and generality ... ?”). The relevant regulations and persuasive case law provide the following:
Second, “customarily.” Customs are “habitual or usual practice^]; common way[s] of acting.” Oxford English Dictionary (online ed.), available at http://www. oed.com (last visited Aug. 27, 2015); see also Merriam-Webster Dictionary (online ed.), available at http://www.merriamwebster.com (last visited Aug. 27, 2015) (defining customs as, inter alia, “practice[s] common to many or to a particular place or class ... ”). Thus, the question becomes: Is there a habitual and usual practice among the business’s customers to tip — i.e., to present money with the intent that it be received by — the position of the employee at issue in the case?
Third, “regularly.” For an employee to “regularly” receive tips, the employee at issue must in fact receive tips with a frequency that is “greater than occasional, but ... may be less than constant.” See 29 C.F.R. § 531.57. Here, the focus is not on the customer but rather on the employee and whether that employee actually receives tips with sufficient frequency.
There is overlap between “customarily” and “regularly” receiving tips, but the concepts are distinct. See Ford v. Lehigh Valley Rest. Grp., Inc., No. 3:14-CV-227,
To summarize, when a court must determine whether a particular employee “customarily and regularly receives tips” under 29 U.S.C. § 203(m), the inquiry should be, essentially: At the specific business involved in the case, do the customers, as a habitual and usual practice (i.e., customarily), present money with the intent that the employee in question receive it as a gift or gratuity in recognition of a service the employee performed (i.e., as a tip for that employee), and does the employee in fact regularly receive such tips? If so, then
The issue of customer intent is necessarily a highly fact-bound inquiry that requires drawing reasonable inferences from the available concrete but circumstantial evidence. Cf., e.g., United States v. Trejo,
Applying the foregoing analysis to the facts of this case, I agree with the majority that there is a genuine dispute as to whether the coffeeman at Tony’s restaurant in Houston, who prepares coffee in the kitchen, outside the view of the customers, “customarily and regularly receives tips.” It is reasonable to infer that the restaurant’s customers, who are probably wholly unaware of the coffeeman’s existence, most likely intend to tip their waiter or the bartender, if anyone, for the preparation of their coffee, but not the coffeeman.
Accordingly, with these additional thoughts, I respectfully concur in the majority’s judgment that the restaurant is not entitled to summary judgment on the record presented for our review.
. I will note my agreement with two of the majority’s most important points. First, I agree that an employee cannot be deemed to “customarily and regularly receive tips” merely because of a mandatory policy requiring that other workers share their tips with him. Ante, at 189-90. To hold otherwise would indeed “be circular.” Id. at 189-90. Second, I agree that the employee's job title is not controlling. Id. at 191-92.
. The difficulties attendant in determining which employees "customarily and regularly receive tips” are manifest in the disarray of analytic approaches courts have taken to resolve the question. E.g., does an employee “receive tips” merely because the employer has a mandatory policy that requires other employees to share tips with him? Compare Kilgore v. Outback Steakhouse of Florida, Inc.,
.Marnie Hunter, Hotel Housekeeping: Do You Tip?, CNN (Aug. 24, 2011), http://www. cnn.com/2011/TRAVEL/06/24/hotel. housekeeping.tipping/ ("Survey data shows that about 30% of U.S. hotel guests leave tips for hotel housekeepers.... ”).
. I borrowed this clever example from Wajcman v. Investment Corporation of Palm Beach, No. 9:07-CV-80912,
. See, e.g., Amy Dickinson, No Taste for Rehash at Thanksgiving, Chicago Tribune (Nov. 14, 2009), http://articles.chicagotribune.com/ 2009-1 l-14/news/091113033 l_l_girlfriend brother-dinner ("It's as absurd as tipping the grocery cashier!”).
. Of course, the manner in which the court assesses the evidence and draws its inferences of customer intent will vary in different procedural postures. This case came before the court on the motion of Tony’s restaurant for summary judgment. On such a motion for summary judgment, "the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Tolan v. Cotton, — U.S.-,