By Kate McGovern Tornone, Editor
The U.S. Department of Labor’s (DOL’s) limits on tip pools are valid, the 9th U.S. Circuit Court of Appeals—which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington—reaffirmed September 6, denying a request for it to reconsider its opinion on the issue.
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An accompanying dissent, however, laid out a road map for the employer to seek U.S. Supreme Court review, according to one expert who says we haven’t seen the last of this case.
Background
The regulation in dispute prohibits employers from forcing tipped employees to share gratuities with untipped employees. DOL issued the rule in 2011 to close a loophole that allowed employers to arrange such a pool as long as it also paid the employees involved minimum wage. (The Fair Labor Standards Act (FLSA), under certain circumstances, permits employers to use workers’ tips as a credit against the minimum wage.)
In 2012, stakeholders challenged the regulation and two district courts found that it was invalid. DOL’s ability to issue the 2011 rule was foreclosed by the 9th Circuit’s prior ruling in Cumbie v. Woody Woo, Inc. (596 F.3d 577) that the FLSA’s limits on tip pools clearly only applied to employers taking a tip credit, the district courts explained.