FLSA
Poker Dealers' FLSA Claims Go Forward
In Dispute Over Club's Right to 'Tip Credit'

Poker dealers in a Florida club's cardroom who were tipped by customers were entitled to proceed to trial on their claim that the club violated the Fair Labor Standards Act by failing to pay them the minimum wage, a federal court in Florida ruled March 20 (Wajcman v. Inv. Corp. of Palm Beach d/b/a Palm Beach Kennel Club, S.D. Fla., No. 07-80912-CIV-HURLEY/HOPKINS, 3/20/08).
Judge Daniel T. K. Hurley of the U.S. District Court for the Southern District of Florida said that Investment Corp. of Palm Beach d/b/a Palm Beach Kennel Club claimed that it was not required to pay the dealers the federal minimum because they received customer tips and the FLSA allowed the club a tip credit.

However, the employer's inclusion of poker room supervisors in the tip pooling arrangement raised genuine issues of material fact about the employer's entitlement to the FLSA tip credit and its duty to pay the minimum wage to the poker dealers , the court found.

Poker Dealers Got Tips, Not Minimum Wage

The club, located in West Palm Beach, Fla., includes a dog racing track and other facilities, as well as a public poker room. John Wajcman and the other 25 plaintiffs in the FLSA action were poker dealers at the club.
According to the court, the poker room staff included cashiers, host employees, a director, manager, and cardroom supervisors.

Cardroom supervisors were responsible for overseeing dealers in the poker room, including instructing dealers and making decisions in games, completing paperwork concerning the opening and closing of games, and intervening when necessary to resolve disputes between dealers and the club's customers.

The supervisors, who spent about 90 percent of their shifts on the cardroom floor, also were responsible for monitoring the grooming and dress of dealers and hosts, but had no authority to hire or fire employees or to make recommendations for such action, the court said.

Poker dealers received tips each day from customers, but all of the dealer tips were pooled. Each dealer was required to contribute 5 percent of the total to a pool, which was then distributed to the Kennel Club's cashiers, hosts and hostesses, and floor supervisors. Other club employees, including the director and manager, and a currency supervisor, card counter, card inspector, and administrative assistant, were excluded from the tip pool.

According to the decision, the club did not pay dealers the minimum wage required by the FLSA, but instead paid them half that amount as allowed by the FLSA "n determining the wages of a tipped employee."

In October 2007, Wacjman and another former employee filed a lawsuit in the U.S. District Court for the Southern District of Florida, alleging that the they were entitled under the FLSA to payment of the minimum wage. The plaintiffs, who were eventually joined by 24 other former dealers, also requested the liquidated damages authorized by the act, in an amount equal to the back pay owed, and attorneys' fees. The Kennel Club filed a motion for summary judgment on the FLSA claim, but the court denied the motion.

Including Supervisors in Tip Pool Leaves Issue for Trial

Hurley said that a tipped employee is defined under the act as an individual working in an occupation in which he customarily receives more than $30 per month in tips.
But the statute, 29 U.S.C. § 203(m), also requires that an employer's failure to pay the minimum wage will not be excused by the tip credit provision unless "all tips received by such employee have been retained by the employee." An employer cannot require that tips be shared with a company or with its managerial employees, Hurley said, but Section 203(m) specifically permits "the pooling of tips among employees who customarily and regularly receive tips."

The former poker dealers claimed that the Kennel Club was not entitled to the FLSA tip credit because the floor supervisors were not in an occupation that customarily receives customer tips.

Hurley said that court decisions under the FLSA have focused on whether the employees in question performed important customer service functions and whether they had more than minimal contact with the employer's customers.

The Kennel Club argued that customer relations was an "essential part" of the supervisors' jobs, but the court said that club offered no specific examples other than the supervisors' mediation of customer disputes with the poker dealers.

Hurley found, however, that "[t]he record is devoid of any evidence regarding the amount of time which they typically devote to this discrete task, and it is devoid of any competent evidence tending to suggest a quality of interchange between supervisors and customers that is designed or likely to enhance the customer's cardroom experience."

In fact, the court said, it appeared that the supervisors were placed on the cardroom floor not to "interact socially with customers (like a maitre d, waiter or host)," but to check or monitor the activities of the poker dealers.

Under the circumstances, the court found, "there is no evidence tending to show that the floor supervisors were engaged in services on the floor that were a likely subject of tipping."

Court Rejects Club's Reliance on Customer Contact

The Kennel Club argued that its supervisors had some contact with customers, and should be considered "tipped employees," but the court called the employer's position "extreme."
The court said that some employees, like security guards or bouncers, may have significant customer contact, but are not engaged in an occupation that customarily receives tips. "While the job might entail significant customer interface," Hurley noted, "it does not involve the exchange of pleasantries or provision of personal services that ordinarily evokes tipping generosity."

Noting that the Kennel Club offered no evidence of any industry practice or custom for the tipping of floor supervisors or "pit bosses," Hurley said that it was "difficult to conceive" that a customer would tip a cardroom supervisor who intervened in a dispute with a dealer.

Concluding that the dispute whether the floor supervisors were tipped employees under the FLSA, raised a "genuine issue of material fact on the contingent question whether the Kennel Club improperly took a tip credit under federal law," the court denied the employer's motion for summary judgment.

Chad E. Levy of Levy & Levy and Christopher J. Whitelock of Whitelock & Associates in Fort Lauderdale, Fla., represented the employees. Gregory D. Cook and Lynn G. Hawkins of FitzGerald Mayans & Cook in West Palm Beach, Fla., represented the Palm Beach Kennel Club.