Howard v. Second Chance Jai Alai LLC et al
Filing
81
ORDER denying 51 Motion for summary judgment. Signed by Magistrate Judge Philip R. Lammens on 6/16/2016. (JWM)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION
CHRISTOPHER HOWARD and
JEFFREY GREENSTONE, on behalf of
themselves and all others similarly
situated
Plaintiffs,
v.
Case No: 5:15-cv-200-Oc-PRL
SECOND CHANCE JAI ALAI LLC, a
Florida for profit limited liability
company d/b/a Ocala Poker & Jai-Alai,
Fictitiously,
Defendant.
ORDER
This FLSA consent case is before the Court on cross-motions for summary judgment, with
supporting exhibits. (Docs. 51 & 64). Defendant has also filed a reply. (Doc. 73). Thus, the
motions are fully briefed and ripe for review. Because there are issues of material fact that
preclude summary judgment, however, the parties’ motions (Docs. 51 & 64) are due to be
DENIED.
I. BACKGROUND
Plaintiffs, Christopher Howard and Jeffrey Greenstone, are former employees of
Defendant, Second Chance Jai-Alai, LLC (“Second Chance”), and were employed as poker dealers
at Defendant’s Ocala Poker and Jai-Alai establishment. As set forth in their Second Amended
Complaint (Doc. 29), Plaintiffs bring claims for alleged violations of the minimum wage
provisions of the Fair Labor Standards Act, 29 U.S.C. §201 et seq. (“FLSA”).
The instant dispute arises from Second Chance’s claiming of a tip credit on its poker
dealers, which permitted it to pay them less than the statutorily required minimum wage.
Plaintiffs allege that Defendant’s failure to comply with the FLSA ‘tip credit’ requirements results
in Defendant’s inability to claim a ‘tip credit’ for Plaintiffs. Plaintiffs also allege that, by
requiring its poker dealers to share their tip pool with non-tipped employees, Second Chance was
not permitted to claim the tip credit and was therefore obligated to pay its dealers the full minimum
wage. In a single count against Defendant Second Chance, Plaintiffs seek unpaid minimum
wages owed to them for the period in which they were paid pursuant to the tip credit, in addition
to liquidated damages, and attorneys’ fees and costs. Although the Second Amended Complaint
(Doc. 29) also contains a parallel Count II against corporate owner and officer Joseph James
Coffey, he was dropped as a party pursuant to Fed. R. Civ. P. 21. (Doc. 33).
Both parties have filed motions for summary judgment focused on the validity of the tip
credit and tip pool. Plaintiffs argue that Defendant was ineligible for the tip credit for three
different reasons: (1) because Defendant failed to provide proper notice of the tip credit to
Plaintiffs; (2) because Defendant improperly included so-called “Vault employees” who do not
customarily receive tips in the tip pool; and (3) because Defendant included an employee with
supervisory authority in the tip pool. In response, Defendant contends that Plaintiffs’ allegations
are without merit and fail to create any dispute of material fact. The parties both point to record
evidence, including depositions and affidavits, supporting their opposing positions. Upon a
review of the record, it is apparent that genuine disputes regarding material facts preclude the entry
of summary judgment in favor of either party.
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II. SUMMARY JUDGMENT STANDARD
Pursuant to Federal Rule of Civil Procedure 56(c), the entry of summary judgment is
appropriate only when the Court is satisfied that “there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.” In applying this standard,
the Court must examine the pleadings, depositions, answers to interrogatories, and admissions on
file, together with any affidavits and other evidence in the record “in the light most favorable to
the nonmoving party. See Samples on Behalf of Samples v. Atlanta, 846 F.2d 1328, 1330 (11th
Cir. 1988). As the Supreme Court held in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), the
moving party bears the initial burden of establishing the nonexistence of a triable issue of fact. If
the movant is successful on this score, the burden of production shifts to the non-moving party
who must then come forward with “sufficient evidence of every element that he or she must
prove.” Rollins v. Techsouth, 833 F.2d 1525, 1528 (11th Cir. 1987). The non-moving party may
not simply rest on the pleadings, but must use affidavits, depositions, answers to interrogatories,
or other admissible evidence to demonstrate that a material fact issue remains to be tried.
III. DISCUSSION
Under the FLSA, an employer must pay its employee a minimum wage. See 29 U.S.C.
§206(a). That wage may include the employee’s tips. 29 U.S.C. §203(m). That is, an employer
may pay an employee a cash wage below the minimum wage so long as the employer supplements
the difference with the employee’s tips; this is known as an employer taking a “tip credit.” See
id.
In order to use a tip credit toward a tipped employee’s minimum wage, an employer must
satisfy two conditions: (1) the employee must be informed by the employer of the FLSA’s tip
provisions; and (2) the employee must be allowed to retain all tips which he/she receives, except
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in instances where pooling of tips is employed among other employees who “customarily and
regularly receive tips.” 29 U.S.C. § 203(m). See also Kubiak v. S.W. Cowboy, Inc., 3:12-CV1306-J-34JRK, 2016 WL 659305, at *6 (M.D. Fla. Feb. 18, 2016) (citing Rubio v. Fuji Sushi &
Teppani, Inc., No. 6:11-CV-1753-ORL-37, 2013 WL 230216, at *2 (M.D. Fla. Jan. 22, 2013)).
Here, the parties do not dispute that Plaintiffs are tipped employees. The dispute focuses
on whether Plaintiffs were properly informed of the tip credit provisions, and whether Defendants
included in the tip pool employees who were not customarily and regularly tipped – i.e., vault
personnel and an alleged supervisory employee.
A. Notice Requirements of the Tip Credit
There are specific requirements for employers to be eligible for the tip credit. 1 An
employer must inform the tipped employee of the specific provisions of 29 U.S.C. § 203(m). 29
C.F.R. § 531.59(b). The employer bears the burden of proving that they are eligible for a tip
credit, including that sufficient notice was provided. Vancamper v. Rental World, Inc., No. 6:10CV-209-ORL-19, 2011 WL 1230805, at *5–6 (M.D. Fla. Mar. 31, 2011). The requirements of a
tip credit are strictly construed. Rubio, 2013 WL 230216, at *2 (citing Garcia v. La Revise
Assocs. LLC, No. 08–cv–9356, 2011 WL 135009, at *5–6 (S.D.N.Y. Jan.13, 2011)). If an
employer fails to meet the requirements of section 203(m), the employer may not claim the “tip
credit” and is liable for full minimum wage, regardless of actual economic harm suffered by the
employee. See Kubiak, 2016 WL 659305, at *6; Driver v. AppleIllinois, LLC, 917 F. Supp. 2d
1
As a preliminary matter, it is important to note the distinction between “tip credit” and “tip
pool.” While the two terms are interrelated, they have separate and distinct meaning and requirements.
An employer takes a “tip credit” when the employer pays an employee a cash wage less than the
minimum wage required, but supplements the difference with the employee’s tips. See, 2016 WL
659305 at *6. In contrast, a “tip pool” is “[w]here employees practice tip splitting, as where waiters give
a portion of their tips to the busboys.” 29 C.F.R. § 531.54.
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793, 800 (N.D. Ill. 2013); Nat’l Rest. Ass’n v. Solis, 870 F. Supp. 2d 42, 45 (D.D.C. 2012).
Here, the parties dispute whether sufficient notice was given to Plaintiffs regarding the
details of the tip credit, and the parties’ disagreement focuses upon the significance of an
amendment to the applicable regulation. Plaintiffs assert that Defendant failed to comply with
the notice requirements of amended rule 29 C.F.R. § 531.59(b). Meanwhile, Defendant concedes
that the new rule is in effect, but contends it complied with the requirement as defined by case law.
1. The Amendment to Rule 29 C.F.R. § 531.59(b)
Effective May 5, 2011, the Department of Labor (“DOL”) amended rule 29 C.F.R. §
531.59(b), detailing an employer’s obligation to inform tipped employees of the tip credit
provisions of § 203(m). The requirement “to inform” was enacted in 1974, when Congress
amended the FLSA to include, inter alia, that a tip credit shall not apply “unless such employee
has been informed by the employer of the provisions of this subsection.” 29 U.S.C. § 203(m).
However, as observed by the DOL in the introductory summary of the final rule, courts have been
inconsistent in determining what level of notice is sufficient to adequately inform the employee of
the provisions of § 203(m).2 See Updating Regulations Issued Under the Fair Labor Standards
2
Compare Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 298 (6th Cir. 1998)
(holding that an employer must “inform its employees of its intent to take a tip credit toward the employer's
minimum wage obligation,” but was not required to ‘explain’ the tip credit) with Martin v. Tango's
Restaurant, Inc., 969 F.2d 1319, 1322 (1st Cir. 1992) (interpreting section 203(m)'s notice provision to
require, “at the very least notice to employees of the employer's intention to treat tips as satisfying part of
the employer's minimum wage obligations,” but that the provision “could easily be read to require more”);
Also see Reich v. Chez Robert, Inc., 821 F. Supp. 967, 977 (D. N.J. 1993) (holding that an employer does
not meet its obligation to “inform” under section 3(m) when it tells its tipped employees that they will be
paid a specific wage but does not explain that that wage is below the minimum wage and that it is permitted
by law based on the employees' tips), rev'd on other grounds, 28 F.3d 401 (3d Cir. 1994)); Compare
Pellon v. Business Representation Int'l, Inc., 528 F. Supp. 2d 1306, 1310-11 (S.D. Fla. 2007), aff'd, 291
Fed. Appx. 310 (11th Cir. 2008) (holding that the employer fulfilled its duty to ‘inform its tipped employees
of the provisions of section 3(m) by posting the FLSA poster and verbally notifying the employees that
they would be paid $2.13 an hour plus tips, further noting that “a prominently displayed poster containing
all of the relevant tip credit information” would also constitute sufficient notice) with Bonham v. Copper
Cellar Corp., 476 F. Supp. 98 (E.D. Tenn. 1979) (holding that vague references to the minimum wage and
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Act, 76 Fed. Reg. 18832-01, 18843-44. This inconsistency prompted revisions. The DOL’s
purpose in promulgating the revisions was to update FLSA regulations that had “become out of
date because of subsequent legislation or court decisions,” and to “conform the regulations to the
FLSA Amendments.” See Updating Regulations Issued Under the Fair Labor Standards Act, 73
Fed. Reg. at 43654 (July 28, 2008). The DOL decided, after careful reexamination of the terms
of the statute, its legislative history, and a review of the public comments, to revise the rule as to
“the level of interpretation that employers must provide when informing tipped employees about
the tip credit pursuant to section [20]3(m).” Updating Regulations Issued Under the Fair Labor
Standards Act, 76 Fed. Reg. at 18844.
The amended final rule, codified as 29 C.F.R. § 531.59(b) provides five distinct disclosure
requirements, and reads in part:
Pursuant to section 3(m), an employer is not eligible to take the tip credit unless it
has informed its tipped employees in advance of the employer’s use of the tip
credit of the provisions of section 3(m) of the Act, i.e.: [1] The amount of the cash
wage that is to be paid to the tipped employee by the employer; [2] the additional
amount by which the wages of the tipped employee are increased on account of
the tip credit claimed by the employer, [3] which amount may not exceed the value
of the tips actually received by the employee; [4] that all tips received by the tipped
employee must be retained by the employee except for a valid tip pooling
arrangement limited to employees who customarily and regularly receive tips; [5]
and that the tip credit shall not apply to any employee who has not been informed
of these requirements in this section.
Id.
Courts have addressed whether the amended rule exceeds what the applicable statute
requires. See Nat’l Rest. Ass’n v. Solis, 870 F. Supp. 2d 42 (D.D.C. 2012). As the Solis court
noted, “the final [amended] rule is more specific than the proposed rule in the sense that it requires
employers to make five specific disclosures, which were not itemized in the proposed rule.” 870
a poster that was not prominently displayed did not meet the requirement to ‘inform’).
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F. Supp. at 53 (analyzing the final amended rule and its relation to the proposed rule and 29 U.S.C.
§ 203(m)). However, the specific disclosures required by the final amended rule come directly
from the text of the statutory provisions of section 203(m), which is apparent in a side-by-side
comparison of the text. See id.
In finalizing the amendment, the DOL expressly declined to follow certain case law, noting
that “those courts generally failed to consider the important legislative developments underlying
the FLSA’s tip credit provisions.” Updating Regulations Issued Under the Fair Labor Standards
Act, 76 Fed. Reg. at 18844. Specifically, the DOL pointed to a Senate Report that accompanied
the 1974 Amendments, which provided that:
[T]he amendment “modifies Section 3(m) of the [FLSA] by requiring employer
explanation to employees of the tip credit provisions, and by requiring that all tips
received be paid out to tipped employees. . . . The tip credit provision [] is designed
to insure employer responsibility for proper computation of the tip allowance and
to make clear that the employer is responsible for informing the tipped employee
of how such employee’s wage is calculated. Thus, the bill specifically requires that
the employer must explain the provision of the Act to the employee and that all
tips received by such employee must be retained by the employee.
Updating Regulations Issued Under the Fair Labor Standards Act, 76 Fed. Reg. at 18843 (quoting
S. Rep. No. 93-690 at 42-43 (1974)). And as one commentator pointed out, “the plain language
of the statute, [] requires not just that the employer ‘inform’ the employee that it is taking the tip
credit, but that ‘the employer [inform the employee] of the provisions of this subsection.’” Id.
Thus, expressly requiring the disclosure of five specific provisions, as in the final amended rule,
does not require employers to do any more than what they were already obligated to do under
section 203(m), albeit a more detailed requirement than some courts previously mandated. See
Nat’l Rest. Ass’n, 870 F. Supp. at 56; Dorsey v. TGT Consulting, LLC, 888 F. Supp. 2d 670, 681
(D. Md. 2012). It could be said that the final amended rule was intended to clarify the notice
requirements.
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2.
Evidence of Notice to Plaintiffs
In Defendant’s Motion for Summary Judgment, Defendant asserts that it fulfilled the
obligation to provide adequate notice by prominently displaying an employment poster approved
by the DOL. (Doc. 51, p. 14). However, as to what constitutes adequate notice, Defendant relies
on Pellon and Vancamper, which, as Plaintiffs correctly note, were both decided prior to the
effective date of the final amended rule 29 C.F.R. 531.59(b). In fact, in considering such a poster
after the final amended rule had taken effect, one court held that the poster itself was insufficient:
“The text of [FLSA] posters alone cannot comply with the requirement to inform
employees of the provisions of § 203(m). The federal poster discloses that an
employer may claim a tip credit when ‘certain other conditions [are] met’ without
describing those other conditions. . . . One of such conditions not described is the
requirement of § 203(m) that the employee retain all tips except for tip pooling.”
AppleIllinois, 917 F. Supp. 2d at 802-03.
In deciding the cross-motions for summary judgment, however, it is not necessary to
determine the precise contours of the post amendment notice requirement. There is ample
evidence in the record, including the Ocala Poker Dealer Handbook and deposition testimony,
which creates an issue of fact regarding the extent of notice provided to Plaintiffs.
First, it is indeed undisputed that an employment poster approved by the Department of
Labor was displayed in the Defendant’s facility. (Affidavit of Brian Matthews, Doc. 70, ¶ 29).
The poster displayed in this case stated the following:
Employers of “tipped employees” must pay “a cash wage of at least $2.13 per hour
if they claim a tip credit against their minimum wage obligation. If an employee’s
tips combined with the employer’s cash wage of at least $2.13 per hour do not equal
the minimum hourly wage, the employer must make up the difference. Certain
other conditions must also be met.
(Doc. 70-3, p. 4). The poster, however, did not contain any mention of the final disclosure
requirement under 29 U.S.C. § 531.59(b): that “all tips received by the tipped employee must be
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retained by the employee except for a valid tip pooling arrangement limited to employees who
customarily and regularly receive tips.” In light of the amended regulation, it is questionable
whether the poster the Defendant had posted, lacking any information about tip pooling, would –
without more – constitute sufficient notice, where Defendant claimed a tip credit and Plaintiffs
were part of a tip pool. See AppleIllinois, 917 F. Supp. 2d at 802-03.
Further, the evidence regarding what notice was given to Plaintiffs – in addition to the
poster – is vague and inconclusive. Defendant cites the deposition of Plaintiff Jeffrey Greenstone
admitting that at least certain aspects of the tip credit were explained to him. (Deposition of
Jeffrey Greenstone, Doc. 80, p. 24-25). Plaintiff Howard also testified that managers such as
Brian Matthews explained how the tip share would work. (Deposition of Christopher Howard,
Doc. 79, p. 58-59). While Pellon recognized that a poster and oral notification could be sufficient
notice (see Pellon, 528 F. Supp. 2d at 1310-11), here it is unclear what details were explained to
Plaintiffs, and whether those oral notices would have met the conditions of the regulation. And,
while the Ocala Poker Employee Handbook contains a general discussion regarding how tips are
shared under a formula determined by the Poker Room Manager, it lacks details. (See Handbook,
Doc. 80, Ex. 1).
All of this evidence creates an issue of fact regarding whether Defendant complied with
the notice requirements of section 203(m). As to Defendant’s motion for summary judgment on
this issue, Second Chance has not established the non-existence of a triable fact, particularly in
light of the revised regulation. Likewise, neither have Plaintiffs established the non-existence of
a triable fact as to the same issue, because their own deposition testimony could suggest they
received comprehensive explanations regarding the tip credit. Thus, summary judgment is not
appropriate in favor of either party on the issue of notice of the tip credit provisions.
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B. Validity of the Tip Pool Due to Alleged Ineligible Participants
Even if notice were proper, material issues of fact exist as to whether the tip pool was
proper. Specifically, Plaintiffs contend that they were required to participate in a tip pool with
employees who did not “customarily and regularly receive tips,” as set forth in 29 U.S.C. § 203(t).
If tipped employees are required to participate in a tip pool with any employee who does not
customarily receive tips, then the tip pool is invalid and the employer is not permitted to take a
“tip credit.” Kilgore v. Outback Steakhouse of Fla., Inc., 160 F.3d 294, 300 (6th Cir. 1998); Reich
v. Chez Robert, Inc., 28 F.3d 401, 403 (3rd Cir. 1994). Invalidity of the tip pool would entitle the
employee to payment of minimum wage for all hours the employee had worked where the tip-pool
was used. Id. “The requirements of the tip credit are strictly construed even if . . . [plaintiffs]
actually earned more than minimum wage for every shift they worked. . . .” Rubio v. Fuji Sushi
& Teppani, Inc., No. 6:11-cv-1753-Orl-37TBS, 2013 WL 230216, at *2 (M.D.Fla. January 22,
2013)(quoting Garcia v. La Revise Assocs. LLC, No. 08-cv-9356, 2011 WL 135009, at *5-6
(S.D.N.Y. Jan. 13, 2011)).
The FLSA defines a customarily and regularly 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).3 In determining whether an employee is a customarily tipped employee, courts
have focused on the extent of the employee’s customer interaction. See Rubio 2013 WL 230216,
at *2; Wacjman v. Investment Corp. of Palm Beach, No. 07-80912-CIV, 2008 WL 783741, at *3
(S.D.Fla. March 20, 2008)(courts focus on whether the employee “performs important customer
3
Under 29 CFR 531.54, an employee who receives tips from a tip-pool is permitted to count those
received tips to establish whether they exceed $30 per month. However, courts have rejected the argument
that an employee could become eligible for tip sharing simply by taking money from the tip pool. See
Chan v. Triple 8 Palace, Inc., No. 03 Civ. 6048 (GEL), 2006 WL 851749, at *14 & n.22 (S.D.N.Y. March
30, 2006).
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service functions, i.e., does the employee have more than de minimis service interaction with
customers”).
Here, Plaintiffs contend the tip pool is invalid due to the participation of vault employees
who lack customer interaction, and the participation of Kathleen Danielson who Plaintiff argues is
a supervisory employee not otherwise permitted to participate in the tip pool. Upon a review of
the record, the undersigned finds that there are genuine issues of material fact as to whether these
employees are customarily tipped employees.
1. General Overview of Second Chance’s Operations
As explained by Defendant’s President and manager of day-to-day operations, Brian
Mattthews, Defendant’s establishment includes a poker room, bar, deli, jai-alai exhibit court, intertrack wagering and other activities. (Affidavit of Brian Matthews, Doc. 70, ¶ 4). In addition to
the poker floor, there is a “Cage” separated by walls and glass windows. Id. at ¶ 8. Cage
department employees are stationed at the windows where patrons are able to exchange cash and
poker chips. Id. at ¶ 8. The Cage area is further separated into four additional areas, including
the “vault,” “Vicky’s Office,” “the Counting Room, and the “Man Trap.” Id. at ¶ 10. Matthews
explained, “[t]he Vault is where Ocala Poker’s employees maintain most of the money it collects
from patrons in the Poker Room. Since the Vault is where large amounts of money are kept, only
experienced and trusted Cage employees perform the Vault Counting function.” Id. at ¶ 10.
2. Cage & Vault Employees
According to Vicki Pernek, Cage department manager, some of the more experienced and
trusted Cage department employees also work in the Vault. (Affidavit of Vicki Pernek, Doc. 69,
¶ 7). Pernek explained that while Cage department employees are working in the Vault, they are
also performing teller duties while other Cage employees are on break, and they also continue to
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perform duties such as chip running and podium duty during every shift they work. Id. at ¶ 7.
Pernek contends that Cage employees “interact with and are all tipped by customers for their
work.” Id. at ¶ 6.
Defendant has argued vehemently in this litigation that the Cage department does not
include discrete and separate positions.
As Defendant’s argument follows, because Cage
department employees perform duties such as chip running, podium duty and teller duty, they are
properly tippable employees.
Plaintiffs contend, however, that numerous facts suggest that at least some Vault
employees lack the necessary amount of customer interaction to qualify as tipped employees under
29 U.S.C. § 203(t). Plaintiffs note that that the Vault is separate from both the Cage and public
areas, and is closed off by walls and doors. Further, Plaintiffs have identified at least one
employee, Jason Bendure, who primarily describes his position as a “Vault person.” (Deposition
of Jason Bendure, Doc. 74, p. 9). Bendure distinguished his position from tellers because he
worked in the Vault. Id. at p. 36. Similarly, Bendure described another employee, Kathleen
Danielson, as working primarily in the Vault. Id. at p. 23. Regarding Danielson, Bendure
testified, “[s]he was trained to work in the cage and on the poker room floor, but she was usually
in the vault.” Id. at 16.
The Court is mindful of Defendant’s position that Plaintiffs are merely attempting to create
a false personnel distinction that is contrary to the way it employees its Cage department staff.
Yet, although the record supports a finding that Cage employees interact with customers under
many circumstances (such as while performing teller duty and chip running duties), there is
conflicting evidence in the record on at least two points. First, there is conflicting evidence as to
whether certain Cage employees, such as Bendure and Danielson, are primarily Vault employees
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spending the majority of time in non-public areas with little or limited customer interaction – and
thus are not properly tipped employees. Indeed, courts have held that employees who do not have
customer interaction and perform work entirely outside of the view of customers cannot be validly
categorized as tipped employees under § 203(m). See Myers v. The Copper Cellar, Co., 192 F.3d
546, 550 (6th Cir. 1999). (“Because the salad preparers 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, they could not be validly
categorized as ‘tipped employees’ under section 203(m).”). To be sure, in this case, the parties
disagree regarding whether “Vault employee” is a distinct position or simply a duty performed by
Cage employees, and the record evidence illustrates that dispute as outlined above.
Likewise, there is also inconclusive evidence regarding the amount of time certain
employees, including specific “Vault’ employees such as Danielson and Bendure, spend
interacting with customers. Because a disputed issue of material fact exists regarding the quantity
and quality of the interactions between so-called “Vault” employees and customers, the
undersigned cannot resolve whether Vault employees (considered by Defendant to be Cage
employees and included in the tip pool) are indeed customarily and regularly tipped employees.
Put another way, regardless of the nomenclature of the positions, Plaintiffs have identified
evidence that creates material issues of fact regarding whether employees such as Danielson and
Bendure were improperly included in the tip pool.
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3. Kathleen Danielson
Plaintiffs also argue that the tip pool was invalid because it included a supervisory
employee, Kathleen Danielson. Meanwhile, Defendant contends that there is no evidence to
support that Danielson was an “employer” under the meaning of the FLSA.
The forced sharing of tips with management is an illegal practice that would invalidate the
tip pool, regardless of whether the members of management are engaged in services that could be
the subject of tipping. See Wacjman v. Investment Corp. of Palm Beach, No. 07-80912-CIV, 2008
WL 783741, at *3 & n.1 (S.D.Fla. March 20, 2008). The theory is that employees who exercise
substantial managerial authority over the day to day operations are functionally the “employers.”
Section 203(d) defines an “employer,” as “any person acting directly or indirectly in the interest
of an employer in relations to an employee. . . .” 29 U.S.C §203(d). In determining who is an
“employer,” courts have looked at the following factors: the control of hiring and firing of
employees; control of the manner in which work is performed; and the fixing of employee wages.
See Dole v. Continental Cuisine, Inc., 751 F.Supp. 799, 802-03 (E.D.Ark. Sept. 28, 1990).
Typically, employees who have been deemed to be “employers” under the FLSA are
owners or managers. See, e.g., Gionfriddo v. Jason Link, LLC, 769 F. Supp. 2d 880, 893-894 (D.
Md. 2011) (holding that the owner of a tavern was an “employer” under the FLSA and thus
ineligible to participate in a tip pool). See also Ayres v. 127 Restaurant Corp., 12 F.Supp.2d 305,
308–09 (S.D.N.Y.1998) (holding that a restaurant employee serving as the manager was precluded
from receiving tips).
Here, Plaintiffs argue that the tip pool is invalid due to the amount of supervisory authority
exercised by one if its participants, Kathleen Danielson. In Jason Bendure’s deposition, he
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described Danielson as “Vickie’s assistant,” apparently referencing Vicki Pernek, Cage
department manager. (Deposition of Jason Bendure, Doc. 74, p. 15). According to Bendure,
Danielson’s tasks included helping make employee schedules, balancing the vault value, and
training employees, including chip runners, tellers, and podium people. Id. at 42.
Defendant contends that there is no evidence to support that Danielson had the authority to
qualify as an “employer” under the FLSA.
Defendant argues that, although Danielson
occasionally assisted with scheduling, Pernek made the final decision for the week based on
Danielson’s suggestion, and that Danielson was not among the employees who had any managerial
or supervisory authority. (Supplemental Affidavit of Brian Matthews, Doc. 73-2., ¶ 2).
Upon review of the record, the Court notes that the evidence regarding Danielson’s duties
is sparse and not well developed. When viewed in the light most favorable to Plaintiffs, however,
and in context with the other record evidence, the fact that Danielson was known as the assistant
of the Cage department manager raises an issue regarding the extent of Danielson’s authority. At
least one fair interpretation of the evidence is that Danielson was the “Assistant” Cage department
manager. Indeed, in her affidavit, Pernek explains that she (Pernek) was removed from the tip
pool due to concerns that her supervisory duties would trigger an invalidity of the pool. (Affidavit
of Vicki Pernek, Doc. 69, ¶ 9). A reasonable fact finder could conclude that, because Pernek had
sufficient authority to raise concerns about effectively being an “employer,” her assistant
performed similar duties and possessed similar supervisory authority.
Where issues of fact exist regarding the extent of an employee’s control over hiring, firing,
training and scheduling, courts have declined to grant summary judgment in FLSA cases. See
Schear v. Food Scope America, Inc, 297 F.R.D. 114, 135 (S.D.N.Y. 2014) (where managing
employees made decisions about scheduling other employees, including assigning work shifts,
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court found plaintiffs provided sufficient evidence to withstand summary judgment on the issue of
whether employees were “employers” under the FLSA,).
Here, given the facts regarding
Danielson’s responsibility for scheduling and performing other supervisory duties, Defendant has
not met its burden of establishing the non-existence of a triable issue of fact as to Danielson’s
status.
IV. CONCLUSION
Because disputed issues of fact exist as to whether Plaintiffs received adequate notice of
the tip credit under 29 U.S.C. § 203(m), whether certain Cage or Vault employees are “tipped
employees” within the meaning of the FLSA, and whether Kathleen Danielson possessed sufficient
supervisory authority to be deemed an “employer,” the question of the validity of Defendant’s tip
pool cannot be resolved as a matter of law. Accordingly, the parties’ cross-motions for summary
judgment (Docs. 51 & 64) are DENIED.
DONE and ORDERED in Ocala, Florida on June 16, 2016.
Copies furnished to:
Counsel of Record
Unrepresented Parties
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