LAW OFFICES OF ANTHONY F. SANCHEZ, P.A. 

6701 SUNSET DRIVE, SUITE 101, MIAMI, FL, 33143 • TELEPHONE (305) 665-9211

PLAINTIFFS’ MEMORANDUM OF LAW RE: “ISSUE TO BE BRIEFED” NO. 12 

Issue No. 12: Did Plaintiffs timely seek a claim for tip confiscation and, if not, what 

impact does that have on their damages claim?

A. There is no statutory or regulatory reference to the phrase “tip confiscation”, 

nor is the phrase used in published or controlling caselaw. To the extent that 

the question asks whether the Plaintiffs have pleaded that the employer 

improperly kept tips belonging to them, the answer is clearly: “Yes”. 

The statutes and regulations do not mention the phrase “tip confiscation”, and neither does 

any controlling or published caselaw. Accordingly, to answer the question posed by the Court we 

must first intuit what the Court means by “tip confiscation”. We take the phrase to refer the seizing 

or taking of tips belonging to the Plaintiffs by their employers, or for the benefit of the employers.1

Plaintiffs have clearly alleged their employer unlawfully kept tips belonging to them. 

Complaint. The Plaintiffs’ Amended Complaint includes the following allegations: 

13. During periods of Plaintiff’s employment, the Employer unlawful took a “tip 

credit” against gratuities received by Plaintiffs, and/or took a “tip credit” 

which was greater than the “tip credit” allowed by law, if any. 

 

14. The Employer is not entitled to any so-called “tip credit” toward the applicable 

minimum wage rate of pay and has actually paid less than required by law as 

the result of among other factors, the following: (a) Plaintiff and others 

similarly situated are not “tipped employees” within the meaning of the FLSA 

§3(m); (b) Plaintiffs and others similarly situated were not properly advised of 

any intention by the employer to take a “tip credit” toward the obligation to pay 

at least applicable minimum wage rate of pay, nor were they advised of the 

amount of such credit; (c) Defendant took a “tip credit” in excess actual tips 

received and kept by Plaintiff; (d) Defendant took a tip credit greater than 

permitted by law and regulations, including 29 CFR §531.59; (e) 

Defendants took a “tip credit” from revenues which are not “tips”; (f) took a 

“tip credit” through an invalid tip pool which requires the sharing of tips 

with non-tipped employees, including “contractors” who are not employees 

at all; (g) taking possession of Plaintiff’s tips without also taking a “tip 

credit”; (h) taking retroactive “tip credits”; (i) the Employer failed to timely 

disburse minimum wage during the applicable pay day for the corresponding 

1

 / According to the Merriam-Webster dictionary “confiscate” means “to seize by or as if by 

authority”. https://www.merriam-webster.com/dictionary/confiscate. 

Case 1:20-cv-22603-JG Document 194-12 Entered on FLSD Docket 06/12/2023 Page 1 of 5
2 

pay period, and (j) requiring unlawful kick-backs to the Employer by 

requiring Plaintiff to use tips to pay operating costs of the employer. 

* * * 

21. At all times material to this action, the Employer failed to comply with 29 

U.S.C. §§201-219 and 29 C.F.R., §§516.2, 516.4, 516.28 et seq., and §§531.35 

and 531.50[

2

] et seq. and other applicable authority in that Plaintiff and those 

similarly situated performed services for the benefit of the Defendant for which 

they were paid well below the minimum wage rates required by both federal 

law, and under applicable Florida law and Florida Constitution (including 

§448.110(6), Florida Statutes, and § 24, Art. X of the Florida Constitution.), 

whose occasionally higher minimum wage rates are made applicable under the 

FLSA.

[ECF No. 7, pp. 3-4] (emphasis added). 

Pleading Requirements. Given that there is no provided definition of “tip confiscation”, 

there is no specific requirement pertaining to pleading “tip confiscation”. As such, regular rules of 

pleading apply. A pleading under Rule 8 “must simply give the defendant fair notice of what the 

2

 / 29 C.F.R. § 531.50 provides: 

(a) With respect to tipped employees, section 3(m)(2)(A) provides that, in 

determining the wage an employer is required to pay a tipped employee, the amount 

paid such employee by the employee’s employer shall be an amount equal to— 

(1) The cash wage paid such employee which for purposes of such 

determination shall not be less than the cash wage required to be paid such an 

employee on August 20, 1996 [i.e., $2.13]; and 

(2) An additional amount on account of the tips received by such employee 

which amount is equal to the difference between the wage specified in 

paragraph (a)(1) of this section and section 6(a)(1) of the Act. 

(b) Section 3(m)(2)(A) also provides that an employer that takes a tip credit against 

its minimum wage obligations to its tipped employees must inform those 

employees of the provisions of that subsection, and that the employees must retain 

all of their tips, although the employer may require those employees to participate 

in a tip pool with other tipped employees that customarily and regularly receive 

tips.

(c) Section 3(m)(2)(B) provides that an employer may not keep tips received by 

its employees for any purposes, including allowing managers and supervisors to 

keep any portion of employees’ tips, regardless of whether the employer takes a tip 

credit under section 3(m)(2)(A). 

(d) “Tipped employee” is defined in section 3(t) of the Act as any employee 

engaged in an occupation in which he or she customarily and regularly receives 

more than $30 a month in tips. 

Case 1:20-cv-22603-JG Document 194-12 Entered on FLSD Docket 06/12/2023 Page 2 of 5
3

plaintiff's claim is and the grounds upon which it rests.” Swierkiewicz v. Sorema N. A., 534 U.S. 

506, 512 (2002); “[A] complaint must contain sufficient factual matter, accepted as true, to state a 

claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim 

has facial plausibility when the plaintiff pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.” Id. 

B. Tips “confiscated” are recoverable as unpaid MW or as tips “kept”. 

1. Historical FLSA prohibition against “tip confiscation”.

In 1966 and 1974, the FLSA was amended to extended the protections of the Act to 

restaurant workers and tipped employees. This was accomplished in large measure by amending 

how the FLSA defined the statutory term “wage” (in §3(m) of the Act, i.e., 29 USC §203(m)) for 

purposes of determining compliance with the Act. In 1966 the FLSA’s “tip credit” was created, 

and in 1974 Congress again amended the Act to prohibit employers from taking a tip credit unless 

“all tips received by [an] 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.” 85 Fed. Reg. 86,756, 86,757 (Dec. 30, 2020). Then, in 2018, the Act was 

amended again to expand the prohibition against taking tips to all employers “regardless of 

whether they take a tip credit” or pay a direct cash minimum wage. Id. at 86,756. This resulted in 

a renumbering of the tip credit language in §3(m) so that the 1974 prohibition applicable to 

employers who take a tip credit became FLSA §203(m)(2)(A) and the 2018 expansion to all 

employers became §203(m)(2)(A). Id. Thus, both subsections in the definition of the word “wage” 

prohibit “confiscation” employer “keeping” of tips, and require that employees “retain” them. 

Prior to 2018, the tip theft was recoverable as unpaid minimum wage, and afterward it remained 

recoverable irrespective of whether there was a minimum wage violation alleged. 

Case 1:20-cv-22603-JG Document 194-12 Entered on FLSD Docket 06/12/2023 Page 3 of 5
4 

2. The prohibition against taking tips is in the definition of “wage”. 

The FLSA, requires employers pay employees a minimum wage. 29 U.S.C. § 206(a).

3

Accordingly, in determining compliance, what counts as a “wage” matters. The FLSA’s definition 

of “wage” recognizes that employers of “tipped employees” may conditionally use part (but not 

all) of such employees’ tips as wage payments. 29 U.S.C. § 203(m)(2). In defining what may be 

included as a “wage” the FLSA provides: 

(2)(A) In determining the wage an employer is required to pay a tipped employee, the 

amount paid such employee by the employee’s employer shall be an amount equal to — 

(i) the cash wage paid such employee which for purposes of such determination 

shall be not less than the cash wage required to be paid such an employee on 

August 20, 1996; and

(ii) an additional amount on account of the tips received by such employee 

which amount is equal to the difference between the wage specified in clause (i) 

and the wage in effect under section 206(a)(1) of this title. 

The additional amount on account of tips may not exceed the value of the tips 

actually received by an employee. The preceding 2 sentences shall not apply 

with respect to any tipped employee unless such employee has been informed 

by the employer of the provisions of this subsection, and all tips received by 

such 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.

(B) An employer may not keep tips received by its employees for any purposes, 

including allowing managers or supervisors to keep any portion of employees’ tips, 

regardless of whether or not the employer takes a tip credit. 

29 U.S.C. § 203(m)(2)(A) and (B) (emphasis added). 

Relatedly, what counts as “wages” is necessarily diminished by any amounts an employee 

has to pay to his employer, or for the employers’ benefit. This is illustrated in the regulations, 

including one proscribing “kickbacks”, as follows: 

Whether in cash or in facilities, “wages” cannot be considered to have been paid by 

the employer and received by the employee unless they are paid finally and 

unconditionally or “free and clear.” The wage requirements of the Act will not be 

3

 / The Florida Constitution in creating a right to Florida MW defines “wage” identically and 

by reference to FLSA (Fla. Const., Art X, §24 (c)). Moreover, the FMWA is expressly interpreted 

consistently with the FLSA. Llorca v. Sheriff, Collier Cnty., 893 F.3d 1319, 1328 (11th Cir. 2018).

Case 1:20-cv-22603-JG Document 194-12 Entered on FLSD Docket 06/12/2023 Page 4 of 5
5 

met where the employee “kicks-back” directly or indirectly to the employer or to 

another person for the employer's benefit the whole or part of the wage delivered 

to the employee. This is true whether the “kick-back” is made in cash or in other 

than cash . . . For example, if it is a requirement of the employer that the employee 

must provide tools of the trade which will be used in or are specifically required for 

the performance of the employer's particular work, there would be a violation of 

the Act in any workweek when the cost of such tools purchased by the 

employee cuts into the minimum or overtime wages required to be paid him 

under the Act. 

29 C.F.R. § 531.35.

3. The effect on damages when tips are taken by employer. 

 The evidence shows the Employer took a “tip credit” in all or most pay periods. Thus, using 

or “keeping” Plaintiffs’ tips both invalidates the “tip credit” and diminishes the amount Defendants 

paid as “wages”, if anything. Accordingly, in most if not all pay periods, the amounts Defendants 

took from Plaintiffs tip diminished the amounts that can be considered as having been paid as 

wages in satisfaction of the statutory requirements. The damages in MW cases are the difference 

between “wages paid and wages due”. Atlantic Co. v. Broughton, 146 F.2d 480, 482 (5th 

Cir.1944)4

; see also https://www.dol.gov/general/topic/wages/backpay (“A common remedy for 

wage violations is an order that the employer make up the difference between what the employee 

was paid and the amount he or she should have been paid.”); 29 U.S.C.§ 206(a) (“Every employer 

shall pay” MW); Fla. Const., Art X, § 24(a)-(c); Fla. Stat. § 448.110(6)(b) (“If the employer fails 

to pay the total amount of unpaid wages . . . the person aggrieved may bring a claim . . .”). 

The more the Employer takes from the Plaintiffs, the less they paid them. Moreover, since 

2018, an employer’s taking of tips is prohibited irrespective of “tip credit”, all tips taken are 

recoverable, even in pay periods when Defendants incidentally comply with MW requirements. 

Plaintiffs have alleged Defendants used Plaintiffs’ tips even when they did not take a “tip credit”. 

4

 / Decisions of the former Fifth Circuit rendered prior to October 1, 1981 are binding. Bonner 

v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc). 

Case 1:20-cv-22603-JG Document 194-12 Entered on FLSD Docket 06/12/2023 Page 5 of 5