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Employment & Labor Law Blog Legal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

Kansas and Missouri Federal Courts Raise the Stakes on Employers' Tip Pooling Practices

May 5, 2021 | Gregorio Silva

In separate cases, the U.S. District Courts for the Districts of Kansas and the Western District of Missouri recently certified classes under the Fair Labor Standards Act (“FLSA”) to pursue claims against Boyd Gaming and Pinnacle Entertainment, Inc. regarding tip-pooling arrangements and notice issues at local casinos, and other casino locations.

In James v. Boyd Gaming Corp. the District of Kansas certified classes relating to the tip pooling policies of Boyd Gaming at the Kansas Star Casino. And in Lockett v. Pinnacle Entm’t the Western District of Missouri certified similar classes related to tip pooling policies at Ameristar Council Bluffs, Ameristar Casino, Cactus Pete’s, Boomtown New Orleans, L’Auberge Baton Rouge, Boomtown Bossier City, L’Auberge Lake Charles, River City, Ameristar Vicksburg, and The Meadows casinos. In both cases the Court certified classes challenging both the tip splitting policies and the employers’ notice to employees.

The FLSA requires that employees receive a minimum wage of $7.25 an hour. Section 203(m) of the FLSA allows employers to pay tipped employees below the Federal minimum wage so long as the employees retain all tips, subject to permitted tip pooling arrangements, and the employer provides proper notice of the provisions of §203(m). 

If you walk into one of these casinos, you would likely find yourself, unwittingly, at the epicenter of the issue in both cases. Table games, such as blackjack and roulette, have dealers who play the games with customers and pit-bosses who supervise the casino floor. Table dealers receive pooled tips, where the casino collects the tips and equally redistributes them to all dealer, and wages below the Federal Minimum Wage. The pay for pit-bosses exceeds the minimum wage, but the supervisory positions do not get tips. Many casinos, including those above, have employees who work in dual roles covering both the pit-boss position and table dealer position on different day. All employees accrued Paid Time Off (PTO) based on their seniority and hours worked. When a tipped employee took PTO they received tips from the pool as if they had actually worked that shift.

Plaintiffs sought class certification of FLSA violation claims relating to the tip pooling practices applied to dual-role dealers. Plaintiffs allege that the casinos violated two FLSA provisions: first, a requirement to redistribute tips to employees “who customarily and regularly receive tips,” and second, a provision precluding the employers from keeping any portion of the tips collected. More specifically, Plaintiffs allege that when a dual-role employee took PTO, that pay necessarily occurred at the dealer’s rate, including tip shares, regardless of whether the employee earned the PTO working as a dealer or supervisor.

The FLSA allows an employee to bring wage/hour claims on behalf of himself and others, in a so-called “collective action”. Unlike class action suits, FLSA collective actions require claimants to opt-in rather than opt-out to participate in pursuing claims against the employer. Federal courts generally utilize a two-step approach to determining whether claims can be pursued on a class-wide basis. Under the two-stage approach, the court must first determine if the plaintiff has sufficiently alleged that all potential claimants are victims of a single policy. At the initial stage, the court can look to the allegations of the Complaint, supporting affidavits or declarations, but the court does not weigh evidence, resolve factual disputes, or rule on the merits until the second stage. If the court determines that a single policy has affected multiple “similarly situated” employees, it may issue a conditional class certification, which then enables plaintiffs to send out notice to all potential class members.

Both the Lockett and James courts conditionally certified the plaintiffs’ tip pooling class, as well as classes regarding the employers’ compliance with the FLSA’s notice requirements regarding tip withholdings. 

So what happens next?

Plaintiffs and defendants in both cases will get together to work out issues related to language and timing for the notice and opportunity to opt-in to the cases. After discovery, the courts will be called upon to make a final determination regarding whether the employees’ have similarly situated claims.  

We will keep our eyes on these cases to anticipate any impacts the decisions may have for all employers in tipping industries. 

OK, Boomer…Does Your Employee Have an Age Discrimination Claim?

April 27, 2021 | Jessica Holliday

We’ve all heard it (and in my case, I am publishing it – sorry, HR!): OK, Boomer. This phrase has risen in popularity over the years as a way of suggesting that Baby Boomers (i.e., those born between 1946 and 1964) have mindsets or attitudes that may be at-odds with those of younger generations. The “OK Boomer” phrase has shown up in viral Internet memes and GIFs, as a way of portraying Boomers as out-of-touch. The Supreme Court has even discussed the meme, when Chief Justice Roberts asked an attorney during oral argument if saying to an applicant “OK, boomer” is enough to qualify as age discrimination.

As discussed in my last post, the Age Discrimination in Employment Act (ADEA), Illinois Human Rights Act (IHRA), and Missouri Human Rights Act (MHRA) prohibit discrimination against employees who are 40 years old or older in any aspect of employment. Similarly, it is unlawful for an employer to harass an employee because of the worker’s age, if 40 or older. Such harassment can include derogatory or offensive remarks regarding an individual’s age, to the point where such comments are so frequent and severe that they create a hostile work environment. These laws clearly protect Boomers from age discrimination in the workforce.

As things stand, using the word “Boomer” in a derogatory fashion is likely not in and of itself enough to establish age discrimination. According to the Seventh Circuit, “isolated comments that are no more than ‘stray remarks’ in the workplace are insufficient to establish that a particular decision was motivated by discriminatory animus.” Merillat v. Metal Spinners, Inc., 470 F. 3d 685, 694 (7th Cir. 2006) (citing Cullen v. Olin Corp., 195 F. 3d 317, 323 (7th Cir. 1999)). With that being said, “this general rule may give way where particular remarks in fact support an inference that unlawful bias motivated the decision-maker, such as when those remarks are made by the decision-maker or one having input in a decision, and are made ‘(1) around the time of, and (2) in reference to, the adverse employment action complained of.’” Id. (quoting Hunt v. City of Markham, 219 F. 3d. 649, 652-53 (7th Cir. 2000)).

Let me sock it to you with what this means. If a 30 year-old employee refers to a 60 year old employee as a Boomer in a derogatory manner, without more, the 60 year old can hardly be said to have suffered age discrimination or a hostile work environment on account of the errant remark. However, if the 30 year-old employee is the 60 year-old’s supervisor and routinely refers to the 60 year-old as a Boomer and the employee suffers some adverse employment action at the hands of the supervisor, the Boomer may have a case under the ADEA or other state anti-discrimination law. Similarly, if the supervisor terminates the 60-year old employer, and near or at the time of the termination refers to the employee as a Boomer, the Boomer may also have a discrimination case. With all that being said, employers should caution their employees at all levels of employment on language that can be perceived as discriminatory. By allowing such language to infiltrate the workplace, employers are simply setting themselves up for a discrimination claim – regardless if the claim has merit.

And finally, Millennials and Gen Z: let’s remember that Boomers deserve respect, and even praise, for your culture today. Millennials – known for their usage of acronyms – should thank Boomers, as acronyms gained popularity in the 1960s during the Cold War and space race between the U.S. and Soviet Union, laying the groundwork for Millennial acronyms, such as OMG, LOL, BTW, FBF, and IMO.    While Millennials use many (some would say ridic) slang terms and phrases., such as “on fleek,” “slay,” and “turnt,” let’s also not forget that Boomers are responsible for such slang words and phrases as “groovy,” “gimme some skin (my FAVE!),” and “outta sight.” So maybe there is more in common between Millennials and Boomers than we think? So don’t flip your wig, you dig?

Order for Permanent Injunction Not Open for Interpretation

March 25, 2021 | Brandy Simpson and Jessica Cozart

On March 2, 2021, the Missouri Court of Appeals, Eastern District, in Chemline Inc. v. Mauzy, affirmed in part and reversed and remanded in part, a St. Louis County Circuit Court’s order finding a sales representative in contempt of the court’s permanent injunction order expressly prohibiting contact with his former employer’s customers. The trial court assessed a compensatory fine, despite plaintiff’s failure to demonstrate that it suffered actual damages as a result of the contemptuous conduct, and attorneys’ fees.

The case involved restrictive covenants, including a non-compete and non-solicitation agreement, between Chemline Inc. and its former sales representative Timothy Mauzy.  Mauzy left Chemline and began working for IXS Coatings in a sales capacity.  Seven months later, Chemline filed a petition for injunctive relief, claiming Mauzy violated the non-compete and non-solicitation provisions of his employment agreement in that he contacted customers with whom he had a relationship during his employment with Chemline.  Both Chemline and IXS coatings are in the business of custom coating for use in industrial and commercial application and, thus, are direct market competitors.

The trial court entered an order of permanent injunction prohibiting Mauzy from contacting five specific customers with whom he had a relationship during his employment at Chemline.  Four months after the injunction was entered, Chemline. file a motion for contempt and to show cause alleging Mauzy’s interactions with an employee from one of the five customers constituted a willful violation of the order.  The trial court found Mauzy engaged in “willful disobedience” of the order and entered a judgment of contempt, awarded Chemline $6,000 in attorney’s fees and $2,000 in compensatory damages for interfering with Chemline’s business relationships. 

Mauzy appealed claiming the trial court erred in: 1) finding him in contempt because the conduct was not clearly, unambiguously, and expressly prohibited by the order; 2) assessing a $2,000 compensatory fine where there was no evidence of actual damage; and 3) awarding Chemline Inc. $6,000 in attorney’s fees because he did not violate the injunction order, willfully or otherwise.

As to Point I regarding whether the order clearly, unambiguously and expressly prohibited Mauzy’s conduct, Mauzy claimed the order only precluded contact with the companies and not their individual employees. Mauzy did not deny being in contact with employees from former clients. He further claimed the order prohibited contacting former clients for “business-related solicitation” and not personal communication, though this distinction was not addressed in the order at issue, nor did Mauzy request clarification of the trial court’s order before directly violating it.  The Court of Appeals found no error in the trial court’s conclusion that the order’s prohibition on “contacting” former clients, encompassed all communications.

As to Point II regarding the court assessing a compensatory fine, the Court of Appeals held the trial court erred in assessing the $2,000 compensatory fine as there was no evidence that Chemline. suffered any actual damage as a result of Mauzy’s conduct.  Because compensatory fines are meant to be remedial in nature, these fines must be related to actual damage suffered.  Chemline could not demonstrate a quantified diminution in business sales for which compensatory damages would be appropriate.  Thus, the trial court erred in assessing and remanded for reconsideration of the compensatory fine. 

As to Point III regarding the award of attorney’s fees, the trial court’s order was affirmed, as the trial court has inherent authority to assess attorneys’ fees in a civil contempt proceeding.  The Court of Appeals will affirm an award of attorneys’ fees unless it constitutes an abuse of discretion, which was not found in this case. 

Moral of the story: don’t try to get cute with interpreting a court’s permanent injunction order.  “No communication” does in fact mean NO communication
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About Employment & Labor Law Blog

The BSCR Employment & Labor Law Blog examines topics and developments of interest to employers, Human Resources professionals, and others with an interest in recent legal developments concerning the workplace. This blog will focus on Missouri, Illinois and Kansas law, and on major developments under federal law, and at the EEOC and NLRB.  Learn more about the editor, David M. Eisenberg, and our Employment & Labor  practice.

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