774 F. Supp. 2d 856

Melissa Ann GUSTAYUS, et al., Plaintiffs, v. CAZOS, INC., d/b/a The Hop, and Constantine Dekazos, Defendant.

Cause No. 4:09-CV-02932.

United States District Court, S.D. Texas, Houston Division.

April 1, 2011.

*857David I. Moulton, Bruckner Burch PLLC, Houston, TX, for Plaintiffs.

John H. Trueheart, Jr., Law Offices of John Trueheart, Houston, TX, for Defendants.

MEMORANDUM AND ORDER

STEPHEN W.M. SMITH, United States Magistrate Judge.

This Fair Labor Standards Act (FLSA) case is before the court on plaintiffs Melissa Ann Gustavus, Tiffany Gay, Felice Reyes, and Jennifer Renee Goins’s motion for partial summary judgment.1 The motion is granted.

Background

Plaintiffs were servers and bartenders at defendant Cazos, Inc. d/b/a The Hop, a nightclub in Webster, Texas.2 Plaintiffs allege that the wages they received (measured by the amount The Hop paid them, plus any tips received) did not meet the minimum hourly wage required by the FLSA.3 Moreover, plaintiffs allege they did not receive overtime pay for hours worked in excess of forty per workweek.4

On September 9, 2009, plaintiff Melissa Ann Gustavus filed her complaint, asserting both a minimum wage claim and an overtime claim under the FLSA.5 The case was conditionally certified as a collective action,6 and Tiffany Gay, Felice Reyes, and Jennifer Renee Goins consented to join as plaintiffs.7 On February 17, 2011, plaintiffs filed their motion for partial summary judgment.8 Plaintiffs argue they should be granted summary judgment on defendants’ “tip credit” defense to their minimum wage obligations under the FLSA.

Analysis

The FLSA provides that employers must pay employees a statutory minimum wage. 29 U.S.C. § 206(a). *858However, an employer may pay a “tipped employee”9 as little as $2.13 per hour if the tips the employee receives, added to that hourly wage, amounts to the statutory minimum wage. See id. § 203(m). An employer is eligible to use this “tip credit” provision only if (1) the employer informs the employee of the “tip credit” provisions, and (2) all tips received by the employee are actually retained by the employee, although “employees who customarily and regularly receive tips” may engage in tip pooling. Id. If the employer does not meet these requirements, it “must pay each employee the full minimum wage ... required under section 206.” Pedigo v. Austin Rumba, Inc., 722 F.Supp.2d 714, 721 (W.D.Tex.2010); see Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 467-68 (5th Cir.1979). Since the use of a tip credit is an affirmative defense, the defendants bear the burden of proof on this issue. Barcellona, 597 F.2d at 467.

The first requirement of § 203(m) is that the employer must inform the employee of the tip credit provisions. To meet this requirement, an employer need not explain the tip credit in detail to its employees. Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 298 (6th Cir.1998); Pedigo, 722 F.Supp.2d at 725; Bernal v. Vankar Enterprises, Inc., 579 F.Supp.2d 804, 809 (W.D.Tex.2008); Lentz v. Spanky’s Restaurant II, Inc., 491 F.Supp.2d 663, 672 (N.D.Tex.2007). However it must at a minimum inform the employees that “it intends to treat tips as satisfying part of the employer’s minimum wage obligation.” Kilgore, 160 F.3d at 298 (citing Martin v. Tango’s Restaurant, Inc., 969 F.2d 1319, 1322 (1st Cir.1992)); Pedigo, 722 F.Supp.2d at 725; Bernal, 579 F.Supp.2d at 809; Lentz, 491 F.Supp.2d at 672. An employee’s awareness of an industry-wide practice that employers generally use a tip credit does not satisfy this requirement. Bernal, 579 F.Supp.2d at 809.

In response to an interrogatory asking how The Hop informed plaintiffs of the tip credit provisions, The Hop responded, “Verbal and break down on checks and notices published.” 10 This one response is the only summary judgment evidence in the record that The Hop informed plaintiffs of these provisions, and does not create a genuine issue of material fact on this issue. Regarding the “verbal” communication, the summary judgment evidence indicates that Kevin Melton — The Hop’s president and general manager11— only instructed the head waitress (who in turn, instructed other employees) about the hourly wage paid biweekly and the percentage of tips shared with other employees.12 As for the “break down on *859checks,” summary judgment evidence provides that check stubs contained the employees’ hourly wage and the amount “reported in tips.”13 However the employees never saw these check stubs.14 Finally, regarding “notices published,” there is no summary judgment evidence in the record indicating the content of the notices with regard to minimum wage laws.15 To the extent “notices” could be interpreted to mean the employee manual, the manual merely reminded employees of the percentage of tips shared with other employees.16 In sum, no reasonable juror could find from the summary judgment evidence that The Hop informed the plaintiffs of its intent to utilize the tip credit provisions of 29 U.S.C. § 203(m). Plaintiffs are entitled to summary judgment on defendants’ tip credit defense.17

Conclusion

For the foregoing reasons, plaintiffs’ motion for partial summary judgment is granted. Plaintiffs are entitled to summary judgment on defendants’ tip credit defense to plaintiffs’ minimum wage claims under the FLSA.

Gustayus v. Cazos, Inc.
774 F. Supp. 2d 856

Case Details

Name
Gustayus v. Cazos, Inc.
Decision Date
Apr 1, 2011
Citations

774 F. Supp. 2d 856

Jurisdiction
United States

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