David MONTANO, Individually And On Behalf of Other Employees Similarly Situated v. MONTROSE RESTAURANT ASSOCIATES, INCORPORATED, doing business as Restaurant Associates Payroll, also known as Tony‘s, also known as Tony‘s Restaurant; Gaston Nieves v. Montrose Restaurant Associates, Incorporated, doing business as Restaurant Associates Payroll, also known as Tony‘s, also known as Tony‘s Restaurant
No. 14-20202
United States Court of Appeals, Fifth Circuit
Aug. 28, 2015
George R. Gibson, Nathan Sommers Jacobs, Houston, TX, Defendant-Appellee.
Before DENNIS, PRADO, and HIGGINSON, Circuit Judges.
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 coffeeman 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 violat-
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., 754 F.3d 272, 275 (5th Cir.2014). Summary judgment is ap-propriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
The FLSA sets the general national minimum wage at $7.25 per hour.
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.”
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.”5 There is also no dispute that Appellants did not retain all of their tips; Tony‘s required them to pool and share with other waiters, busboys, a bartender, and the coffeeman. Appellants do not challenge the requirement that they share tips with other waiters, busboys, or the bartender. Therefore, the narrow issue is whether the coffeeman was an employee who “customarily and regularly receive[d] tips.”
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.”
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, 551 U.S. 158, 165 (2007) (explaining that the Secretary of Labor is authorized “to prescribe necessary rules, regulations, and orders with regard to the amendments made by this Act“) (quoting Pub.L. No. 93-259, § 29(B), 88 Stat. 55 (1974)). The DOL‘s Wage and Hour Division has interpreted the FLSA and its tip credit provisions in administrative materials. See
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, 1997 WL 998047, at *2 (Nov. 4, 1997); see also
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 Fla., Inc., 160 F.3d 294, 301 (6th Cir.1998). The Sixth Circuit considered hosts’ interaction with restaurant patrons to be a good proxy for whether diners intended them to receive tips. Because tipping is a “gratuity in recognition of some service performed,”
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, 192 F.3d at 550.11 The court required the restaurant to pay waiters the general minimum wage for shifts in which salad preparers were improperly included in the tip pool. See id. at 550-51.
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[d] tips.” Roussell, 441 Fed.Appx. at 225, 231. The workers inspected completed food orders from the kitchen, garnished plates, and delegated to servers and bussers the delivery of food to customers. Id. at 225. Employing a standard deferential to the jury‘s verdict on review of the denial of a judgment as a matter of law, we found that the jury could have found that Quality Assurance workers did not customarily and regularly receive tips. See id. at 229-30. We drew a distinction between front-of-the-house staff (who customarily receive tips) and back-of-the-house staff (who do not) and held that direct customer interac-
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.12 We agree with these persuasive authorities and hold that, in determining whether an employee customarily and regularly receives tips, a court—or a factfinder—must consider the extent of an employee‘s customer interaction. This rule is faithful to the goal of the inquiry: determining the customer‘s intent. A customer is more likely to tip someone with whom he has contact, or at least sees assisting in the service.13 A court or factfinder should also consider whether the employee is engaging in customer service functions. Even an employee who works in the dining room will not be considered a tipped employee if his work is not customer service-oriented, for example, an electrician who is repairing a chandelier for the restaurant.
The district court erred in failing to consider the extent of the coffeeman‘s cus-
IV.
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.15 Viewing the evidence in the light most favorable to Appellants, the coffeeman had no customer interaction until the summer of 2011, and only de minimis interaction (one occasion per week) thereafter. From a station in the kitchen, the coffeeman received orders from waiters and provided waiters drinks to give to customers. From this evidence, a factfinder could find that the coffeeman did not customarily and regularly receive tips.
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
JAMES L. DENNIS, Circuit Judge, concurring in the judgment:
The question in this case is how to distinguish those employees who “customarily and regularly receive tips,”
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.3 Conversely, a restaurant‘s owner or manager might spend much of the evening asking customers how their meals were, but customers never tip him for his interaction. A nightclub‘s bouncer may have to “interact” (a clear understatement) with customers, and yet it‘s virtually unknown for anybody to tip him after picking themselves up off the pavement.4 In
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.5
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 Tech. Servs., Inc., 504 U.S. 451, 466 (1992) (“[P]resumptions that [do not] rest on... actual... realities are generally disfavored....“).
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[s]; 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.merriam-webster.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
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, 2014 WL 3385128, at *3 (M.D.Pa. July 9, 2014) (“[T]he adverbs ‘customarily’ and ‘regularly’ are stated in the conjunctive rather than the disjunctive. As such, the FLSA‘s plain meaning requires employees to customarily and regularly receive tips to be included in the tip pool.“). For example, there may be a “custom” of tipping a moving crew upon completion of a move, but if every move requires on average, say, a week on the road, and there is downtime between moves, then the crew members probably do not “regularly” receive tips.
To summarize, when a court must determine whether a particular employee “customarily and regularly receives tips” under
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, 610 F.3d 308, 315 (5th Cir.2010); United States v. Paul, 274 F.3d 155, 162 (5th Cir.2001). When intent is unclear—as it likely will often be, given our nation‘s peculiar tipping norms—courts can draw inferences from common experience; for example, the court may presume that it is unusual for restaurant patrons to tip the chef. But because the court‘s job is to assess reality, not dictate it, such assumptions must never override the concrete evidence; a tip jar with a “for the chef” label indicates tips for the chef no matter how uncommon a court may think such tips are. Cf. Parham v. J.R., 442 U.S. 584, 602 (1979) (“As with so many other legal presumptions, experience and reality may rebut what the law accepts as a starting point....“).6
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.
