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Maryland Restaurant Owner Who also Worked as a Bartender is Ineligible to Receive Tips

By Aaron Olsen on March 16, 2011
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By:  Kara M. Maciel

A Maryland federal court recently ruled in Gionfriddo v. Jason Zink LLC that the owner and operator of two taverns could not qualify as a  “tipped employee” under the Fair Labor Standards Act (“FLSA”) and the Maryland Wage and Hour Law despite that he also worked as a bartender at his establishments.  Thus, while he contributed tips to the tip pool arrangement when he worked as a bartender, he could not also share in the distribution of the tips.  The court stated that allowing an owner to participate in a tip pool would broaden the FLSA’s tip credit provisions to a point where they would be meaningless.

 

Under the FLSA, an employer may take a “tip credit” and pay its tipped employees below the minimum wage, if the employees receive above the minimum wage when taking into account tips received from customers.  Only employees who customarily and regularly receive tips are allowed to participate in a tip pool, thereby excluding salaried management and employers.  The question the Court addressed was whether an employer may also be a tipped employee who can receive a share of the tip pool without invalidating it and the employer’s ability to take the tip credit.

 

As this was the first time a court in Maryland or the U.S. Court of Appeals for the Fourth Circuit had addressed the question, the court followed “the clear weight of authority” from other federal courts which had found that the FLSA expressly prevents employers from participating in employee tip pools.  

 

This is a reminder for all restaurateurs that every tip pooling arrangement and any use of the tip credit should be carefully monitored to ensure compliance with federal and sate law, and that no one who qualifies as an “employer” is receiving tips regardless of whether the individual was working in a function that routinely receives tips.

  • Posted in:
    Employment & Labor
  • Blog:
    Workforce Bulletin
  • Organization:
    Epstein Becker & Green, P.C.

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