NELA Files Amicus in Cumbie Tip Case

Attached is a "friend of the court" brief filed by the National Employment Lawyers Association in the Cumbie v. Woody Woo, Inc. case pending before the Ninth Circuit Court of Appeals. As discussed in earlier posts, the appeal concerns whether the FLSA allows employers to divert employee tips if they do not take a tip credit against the minimum wage. In other words, is the general rule that employee tips belong to employees nullified if an employer pays the full minimum wage rather than the server minimum? The brief is of particular interest in that it provides a succinct overview of the development of the FLSA tip rules and the policy concerns behind those rules.

Owner/Officer Liability for Wage Violations

Under the Fair Labor Standards Act, anyone who is an "employer" of an employee can be held liable for failing to pay proper wages to that employee. Employers should be aware, however, that the FLSA defines the term "employer" broadly to include not just the immediate corporate entity for which an employee works but also others in control including individual managers, officers and owners. In other words, individuals cannot count on limited liability protections for corporations to shield them from liability. For example, as discussed in the attached article, even after a corporate bankruptcy, individuals in the corporate chain of command can be held liable for unpaid wages.

California Ruling Doesn't Slow Starbucks Tips Suits

Recently, the California Supreme Court declined to review a Court of Appeals decision overturning a $105 million verdict against Starbucks relating to its tip policy. Starbucks has a policy of dividing tips between counter service "baristas" and supervisors. Based on the narrow facts of the case, the California Court of Appeals found the Starbucks system was not a violation of the California tips law. Since state tips laws vary greatly, however, the California ruling has had little impact on similar lawsuits filed around the country including in Massachusetts, New York and Minnesota.

Airline Skycaps Launch FLSA Suit Over Tips

Attached is a lawsuit recently filed on behalf of skycaps for United Airlines. The suit alleges that United's decision to start charging a $2 per bag fee for curbside check-in resulted in skycaps being deprived of tips they otherwise would have received. Since the skycaps apparently are paid on the "tip credit" system, federal law requires that they be allowed to keep all of their tips.