The Court of Appeals for the 11th Circuit held earlier this week that a plaintiff who received at least the minimum wage and any overtime pay owed could not sue under the FLSA for withheld tips.

The federal minimum wage is $7.25 per hour.  Section 203(m) of the FLSA permits employers to pay tipped employees $2.13 per hour plus an additional amount in tips that brings the total hourly wage up to $7.25.  To take advantage of this “tip credit,” however, the FLSA requires that all tips received by the employee must be retained by the employee (subject to valid tip-pooling arrangements).

In May 2011, the U.S. Department of Labor issued a new regulation (29 C.F.R. § 531.52) that declared that “[t]ips are the property of the employee whether or not the employer has taken a tip credit under [§ 203(m)] of the FLSA.”

The plaintiffs in the 11th Circuit case—Malivuk v., Ameripark, LLC, No. 16-16310—received both wages and tips.  They sued, alleging that their employer had violated the FLSA by appropriating their tips.  The district court dismissed their claims, on the ground that § 216(b) of the FLSA provides a private cause of action only for failure to pay minimum wage or overtime pay—and the plaintiffs had not alleged any such failure.  The plaintiffs’ claims rested solely on § 531.52 of the FLSA regulations, and not on any statutory language within the FLSA itself.  (FLSA § 203(m) speaks only to whether an employer may take a tip credit; it does not itself contain a private right of action.)

So can a plaintiff sue for violation of an FLSA regulation when the statute itself provides no cause of action?  No.  As the DOL conceded in its amicus brief in Malivuk, an employee can bring a private lawsuit against an employer only when the FLSA itself authorizes such an action.  And the DOL agreed with the defendant that there is no statutory authority for a private suit by employees who claim only that their tips were withheld, but who do not also allege that they received less than the minimum wage (before tips) or that they were shortchanged on overtime pay.  The 11th Circuit affirmed the dismissal of the lawsuit.

Employers with tipped employees need to remain mindful of state laws that may provide a cause of action for withheld gratuities.

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Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York Times, Reuters, Bloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.