Published on:

Eleventh Circuit Upholds Lower Court, Denies Valets the Right to Sue over Alleged Unpaid Tips

tip jarIn an important recent ruling, the 11th Circuit Court of Appeals has affirmed the decision of an Atlanta-based federal District Court, denying an employee the opportunity to pursue a class action against her employer for keeping some of the employees’ tips. The key to the employer’s victory in both courts was the limitations on private lawsuits contained in the Fair Labor Standards Act’s language. Since that law only allowed private lawsuits in cases of unpaid overtime or failure to meet the minimum wage, neither of which occurred in this case, the employee had no legal right to pursue a private class action.

The case focused upon the tips valets at a parking facility in north Georgia received. One valet launched a class action lawsuit that claimed that the employer was violating federal regulations by keeping for itself part of the tips customers gave to the valets. According to the valet, the tips were pooled, and then part of the tip pool was distributed among the employees according to a formula, but some of the tip money was kept by the employer and used to “offset other operating expenses.”

The crux of the valet’s lawsuit was a relatively new federal regulation. Federal law had long held that employers could pay tipped employees a base hourly pay rate below minimum wage as long as the employees’ total pay they received amounted to an hourly rate that met or exceeded the minimum wage set by the federal government. This also meant the employer could keep a portion of tip money for itself as long as it was paying the employees a total amount that was $7.25 or more.

The new regulation, adopted in 2011, said that all tips were the property of employees, regardless of whether or not the employer was meeting the $7.25-per-hour rate. This regulation was the centerpiece of the valet’s lawsuit.

The problem for the valet, however, was that the law didn’t give workers a “private right of action” (meaning a right to sue as an individual employee or class of employees) against employers that violated the regulation. The section of the FLSA that gives employees a right to sue, Section 216(b), only allows lawsuits over unpaid overtime or failure to pay the minimum wage. If the valet was getting $7.25 or more, she had no right to sue under the FLSA, according to the District Court.

The 11th Circuit agreed with that conclusion. The FLSA, the appeals court stated in its opinion, only allows individual employees or classes of individual employees to sue if the FLSA recognizes and authorizes that particular type of lawsuit. Section 216(b) only permits lawsuits in cases in which the employer violated either Section 206 or Section 207 of the FLSA. Section 206 covers the prohibition against paying less than the minimum wage, and Section 207 pertains to the maximum number of hours an employee can work without receiving overtime pay.

The valet never alleged in her complaint that the employer failed to remit overtime pay to her, nor that the employer paid her less than the prevailing minimum wage. As a result, her case couldn’t go forward.

Whether you are an employer or an employee, you need experienced counsel representing you when you are dealing with a FLSA issue. For knowledgeable and skillful advice and advocacy, consult the experienced Georgia employment attorneys at Mays & Kerr. Our attorneys have spent many years representing a wide array of clients, including both employers and employees, in FLSA and other employment matters, and we are ready to discuss how we can help you.

To speak with one of our lawyers about your case, call 1-877-986-5529.

More blog posts:

Georgia Employer Allowed to Keep Some of Employees’ Tips as Long as Employees Received Minimum Wage, Atlanta Employment Attorneys Blog, Sept. 14, 2016

Safeguarding Tipped Employees, Atlanta Employment Attorneys Blog, Dec. 17, 2012