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WAGE AND HOUR

Tenth Circuit Aligns with Cumbie on Tip Credits

In Marlow v. New Food Guy, Inc., No. 16-1134, 861 F. 3d 1157 (10th Cir. June 30, 2017), the court affirmed the district court's ruling, consistent with Cumbie v. Woody Woo, Inc., 596 F. 3d 577, 581 (9th Cir. 2010), that if an employer pays more than the minimum wage without regard to tips, the Fair Labor Standards Act (FLSA) does not restrict the employer's use of tips. Restrictions on the use of tips apply only when the employer uses tips received by the employee as a credit against the employee's minimum wage. The court refused to extend Chevron deference to the U.S. Department of Labor (DOL) regulation to the contrary, which provides, "Tips are the property of the employee whether or not the employer has taken a tip credit...." 29 C.F.R. s. 531.52 (2011). The court disagreed with the agency and with Or. Rest. & Lodging Ass'n v. Perez, 816 F. 3d 1080, 1086-89 (9th Cir. 2016), that its rule fills an ambiguity or gap in the statute. The court ruled, "[S]ilence about employers who decline the tip credit is no 'gap' for an agency to fill. Instead, the text limits the tip restrictions in s. 203(m) to those employers who take the tip credit, leaving the DOL without authority to regulate to the contrary." Justice Neil Gorsuch, who joined the U.S. Supreme Court in April, participated in oral argument, but not in the decision.

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