Opinion ID: 759148
Heading Depth: 3
Heading Rank: 2

Heading: Whether Outback Hosts are Tipped Employees

Text: 37 Subsection 203(m) only allows employers to take tip credits toward the wage paid to tipped employees. Subsection 203(t) defines tipped 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) (1994). Using similar language, subsection 203(m) only permits tip pooling among employees who customarily and regularly receive tips. 29 U.S.C. § 203(m) (1994). 5 Plaintiffs argue that hosts are not tipped employees because an Outback host is neither engaged in an occupation in which he customarily and regularly receives ... tips ( § 203(t)) nor an employee[ ] who customarily and regularly receive[s] tips ( § 203(m)). Plaintiffs do not dispute that if the tips the hosts receives from the tip pool are included, hosts receive greater than $30 a month in tips as required by subsection 203(t). 38 As an initial matter, we note that the subsection 203(m) requirements make up part of the broader subsection 203(t) requirements. Subsection 203(m) requires that in order for a tip pool to be valid, participating employees must be employees who customarily and regularly receive tips. Subsection 203(t) requires that for an employee to be a tipped employee, the employee must both customarily and regularly receives tips, which is identical to the subsection 203(m) requirement, and be engaged in an occupation in which he customarily and regularly receives tips. Thus, if a tip-pool participating employee fulfills the subsection 203(t) requirements, she necessarily fulfills the subsection 203(m) requirements as well. Because we find that the subsection 203(t) requirements are satisfied here, it follows that the subsection 203(m) requirements are satisfied as well. 39 Plaintiffs' argument that hosts are not tipped employees fails because: (1) Department of Labor regulations indicate that tips received from a tip pool should be considered as tips for the purpose of subsections 203(m) and (t) and (2) hosts at Outback are part of an occupation that customarily and regularly receives tips and are employees who customarily and regularly receives tips. 40 Employees who receive tips from a tip pool are employees who receive tips according to Department of Labor regulations, case law, and Department of Labor practices. Where employees practice tip splitting, as where waiters give a portion of their tips to busboys, the amounts retained by the waiters and those given the busboys are considered tips of the individuals who retain them, in applying the provisions of section 3(m) and 3(t). 29 C.F.R. § 531.54 (1996); see also Marshall v. Krystal Co., 467 F.Supp. 9, 13 (E.D.Tenn.1978) (stating that waiters, bus persons, and bartenders who receive customarily and regularly as tips from customers or by apportionment of such pools amounts exceeding [the amount required by subsection 203(t) ] monthly, each are eligible to participate in a tip pool (emphasis added)); U.S. DEPT. OF LABOR FIELD OPERATIONS HANDBOOK § 30d04(a) (It is not required that all employees who share in tips must themselves receive tips from customers.). This approach is consistent with the statutory language, which does not require that an employee directly receive the requisite amount of tips from customers. 6 41 Plaintiffs correctly identify some circularity here: whichever employees Outback decides to allocate the tip pool to could receive the requisite $30 a month in tips. Plaintiffs argue that this definition would allow Outback and other employees to designate any of its employees as tipped employees, and then use a tip credit against the employer's minimum wage obligations if there are enough tips to go around. Plaintiffs argument fails because the circularity is limited by the subsection 203(t) requirement that an employee work in an occupation in which he customarily and regularly receives ... tips. 42 Hosts at Outback are engaged in an occupation in which [they] customarily and regularly receive[ ] ... tips because they sufficiently interact with customers in an industry (restaurant) where undesignated tips are common. Although the parties dispute exactly how hosts spend their time working at Outback, hosts do perform important customer service functions: they greet customers, supply them with menus, seat them at tables, and occasionally enhance the wait. Like bus persons, who are explicitly mentioned in 29 C.F.R. § 531.54 as an example of restaurant employees who may receive tips from tip outs by servers, hosts are not the primary customer contact but they do have more than de minimis interaction with the customers. One can distinguish hosts from restaurant employees like dishwashers, cooks, or off-hour employees like an overnight janitor who do not directly relate with customers at all. Additionally, the fact that Outback prohibits hosts from receiving tips directly from customers provides some evidence that Outback hosts work in an occupation that customarily and regularly receives tips. 43 Other courts have reached conclusions similar to ours here. Although no other courts have analyzed whether a host is a tipped employee, one court has held that a tip pool that benefits a maitre d' is permissible under the FLSA. In Dole v. Continental Cuisine, Inc., 751 F.Supp. 799 (E.D.Ark.1990), the district court upheld a mandatory tip pool where servers tipped out solely to a maitre d' who receives no tips directly from customers and whose responsibilities included setting up the dining room, greeting and seating customers, serving the first drink to customers, and assisting servers in serving customers as needed. See id. at 800-01; cf. Elkins v. Showcase, Inc., 237 Kan. 720, 704 P.2d 977, 989 (Kan.1985) (holding that non-service bartenders are not tipped employees because they were located behind a wall so they did not have any contact with customers and were not in a position to receive tips). 44 For the reasons stated in this section of the opinion, we reject plaintiffs' argument that Outback's tip credit and tip pool is invalid because Outback hosts are not employees in an occupation in which [they] customarily and regularly receive[ ] tips.