Restaurant industry trade associations have filed a lawsuit against the U.S. Department of Labor (DOL) on behalf of restaurants and restaurant employees who share in tips and participate in tip pools.

The lawsuit was brought by the Oregon Restaurant and Lodging Association, the Washington Restaurant Association, the Alaska CHARR and the National Restaurant Association, along with a Portland, Ore., restaurant and an employee of that restaurant.

The lawsuit, filed in the United States District Court in Portland, asks the court to declare recent DOL regulations prohibiting back-of-the-house (kitchen) workers from sharing in tips left by customers unlawful and not applicable to restaurants that pay employees who share the tips at least federal or the applicable (if higher) state minimum wage with no tip credit.

In 2010, the U.S. Court of Appeals for the Ninth Circuit ruled that federal law does not prohibit an employer from instituting a tip pool that includes back-of-the-house workers if that employer pays its employees who share in tips the full minimum wage and does not take a tip credit. Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010). DOL responded approximately a year later, publishing regulations in direct conflict with the Woody Woo decision.

Shortly after the DOL published these regulations on April 5, 2011, restaurant trade groups and at least one U.S. Senator contacted the DOL to raise concerns about these regulations and the confusion they create for employers, particularly in the Ninth Circuit, given their conflict with the Woody Woo decision. Enforcement of DOL's new regulations against employers in the Ninth Circuit was left unclear by DOL at that time.

However, on February 29, 2012, DOL issued a field assistance bulletin clarifying its position by rejecting the Ninth Circuit's Woody Woo decision and declaring: "The Wage and Hour Division will enforce nationwide the 2011 final rule (including against employers in the Ninth Circuit) explaining (DOL's position) that a tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit . . ."

In March 2012, restaurant trade associations again asked DOL to reconsider its position on this issue. They also asked DOL to withdraw its February 29 Bulletin and to clarify that employers in the Ninth Circuit -- who pay their employees the full minimum wage and do not take a tip credit -- may legally implement tip pools that adhere to the Ninth Circuit's Woody Woo ruling. DOL rejected this request.

As a result, the plaintiffs are seeking court intervention. It is their position that, not only are the DOL's 2011 Regulations unlawful, but they fail to take into consideration the intent of the customers who leave tips, as well as of the employees who share in the tips.

Jackson Lewis LLP, a nationwide labor and employment law firm, and Paul DeCamp, a partner in the firm's Washington, D.C., office and former administrator of DOL's Wage and Hour Division, represent the plaintiffs in this litigation.

"This issue is about fairness to restaurant workers, and it is extremely important to those who earn their livelihood preparing and serving our food," DeCamp said. "Simply put, federal law clearly allows a restaurant to give kitchen personnel such as cooks and dishwashers a share in a tip pool when the restaurant pays its employees the full federal minimum wage and does not take a tip credit. Plaintiffs are asking the court to compel DOL to respect that law."

Read more about operations management.

Related Content

User Comments – Give us your opinion!
Products & Services

Customized Menu Board Content

http://global.networldalliance.com/new/images/products/6689.png

6689/Customized-Menu-Board-Content

Get more from your restaurant POS with online videos and tutorials

http://global.networldalliance.com/new/images/products/1294.png

1294/Get-more-from-your-restaurant-POS-with-online-videos-and-tutorials

Restaurant technology news, trends & best practices

http://global.networldalliance.com/new/images/products/5079.png

5079/Restaurant-technology-news-trends-best-practices

Business Performance Management

http://global.networldalliance.com/new/images/products/6413.png

6413/Business-Performance-Management

Pepperoni

http://global.networldalliance.com/new/images/products/6787.png

6787/Pepperoni

Mexican-Style Meats

http://global.networldalliance.com/new/images/products/6795.png

6795/Mexican-Style-Meats

AquaCafe

http://global.networldalliance.com/new/images/products/6965.png

6965/AquaCafe

Nationwide Criminal Records

http://global.networldalliance.com/new/images/products/Criminal_Search_iix.gif

1427/Nationwide-Criminal-Records

Supply Chain Management

http://global.networldalliance.com/new/images/products/6405.png

6405/Supply-Chain-Management

Quote decoder: how to compare restaurant POS systems

http://global.networldalliance.com/new/images/products/1290.png

1290/Quote-decoder-how-to-compare-restaurant-POS-systems

Digital Menu Boards and ROI
Fast Casual Executive Summit
Request Information From Suppliers
Save time looking for suppliers. Complete this form to submit a Request for Information to our entire network of partners.