I’ve noticed that many wage and hour lawyers have been talking and writing about the Fourth Circuit Court of Appeals‘ recent precedential opinion in Tom v. Restaurant Ventures LLC, 18-2509 (4th Cir. Nov. 24, 2020). A copy of the opinion is available HERE.
In case you are too busy to read the opinion, the following is a quick summary of the legal rules expressed by the Court: (1) the “automatic gratuities” (e.g., customer required to leave 20%) at issue were not “tips” because the customer was not authorized to deviate from the required gratuity amount; (2) the automatic gratuities could possibly qualify as “commissions” under the Section 7(i) “retail sales” exemption; (3) even if the automatic gratuities are deemed commissions, they still must be counted as total compensation in determining whether the employer satisfies Section 7(i)’s requirement that “more than half [of the employee’s] compensation for a representative period (not less than one month) represents commissions;” (4) an employer violates the tip credit rules by distributing tip pool proceeds to restaurant employees whose customer contact is de minimis (adopting the viewpoint expressed by the Fifth and Sixth Circuits); and (5) an FLSA retalition claim requires and “adverse employment action.” -PW