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Decided July 29, 2015

The Fourth Circuit affirmed the district court’s dismissal of the complaint.

This was a case brought by Mohammad Sazzad and Anthony Gomes (“Plaintiffs”) against Ryman Hospitality Properties Inc., and Marriott International, Inc. (the “Defendants”) for violating the tip-credit provision of the Fair Labor Standards Act (FLSA), a collective bargaining agreement, and Maryland’s Wage Payment. The Plaintiffs, who work for the Defendants, alleged that the Defendants took a percentage of their tips in a tip-pooling arrangement and reapportioned it to other workers. When the Plaintiffs asked an official from the union they belonged to if such an arrangement was legal, the official informed them that it was not, and Plaintiffs filed suit in response. Specifically, they alleged that Defendants “violated the FLSA by ‘not paying Plaintiffs all their earned tips,’” and only requested damages in the form of the actual amount of tips taken from them by Defendants. The district court granted the Defendants’ motion to dismiss, and the Plaintiffs appealed.

After stating that they review a motion to dismiss under Rule 12(b)(6) de novo, the Fourth Circuit began their analysis by characterizing the Plaintiffs’ argument as one of statutory interpretation, and look first to the “plain meaning” of the FLSA and the context in which it was enacted. The Court characterized the FLSA as the “minimum wage/maximum hour law.” However, since Plaintiffs were not alleging that they were not paid the minimum wage, Plaintiffs did not have a private right of action under the § 216(b) of the statute, and instead claimed that § 203(m) created a right to “bring a claim for lost ‘tip’ wages.” Because that section of the statute provides that a tip-pool can only be used to increase the minimum wage of employees if employees are told about the tip-pool and are allowed to keep their tips, Plaintiffs argue that their rights were violated when they were not informed about the tip-pool. However, the Court, looking at the section in context with the entire FLSA statute, determined that the statutory requirements of § 203(m) does not apply to employees in the Plaintiffs’ situation who only seek the recovery of their tips not in relation to a minimum wage or overtime claim. Therefore, because the Plaintiffs conceded that their wages did not fall below the statutory minimum, their claim did not fall within the FLSA, and the Fourth Circuit affirmed the district court’s dismissal of their claim.

Full Opinion

Jennie Rischbieter