Eleventh Circuit: No Private Right of Action under FLSA for Withheld Tips
Earlier this week, the Eleventh Circuit Court of Appeals held that the Fair Labor Standards Act (“FLSA”) does not provide for a private right of action for withheld tips when minimum wage and overtime claims are not in play. The district court dismissed a proposed collective action brought by a valet driver who claimed that her employer took a portion of all valets’ tips to pay for business expenses in violation of the tip credit provisions of the FLSA. The valet driver’s collective claims relied exclusively on a 2011 U.S. Department of Labor regulation (29 C.F.R. § 531.52), which states that “[t]ips are the property of the employee whether or not the employee has taken a tip credit.” The claims were not supported by any specific statutory language in the FLSA authorizing a private right of action for withheld tips.
The U.S. Department of Labor (“DOL”) agreed, in amicus briefs, that there is no statutory authority for a private suit by employees who claim only that tips were withheld, but who do not also allege that they received less than the minimum wage or unpaid overtime. For these reasons, the Eleventh Circuit Court of Appeals affirmed the district court’s ruling and upheld the dismissal of the proposed collective action.
The Eleventh Circuit’s decision noted, however, that “nothing about our present holding undermines the DOL’s ability to investigate or enforce violations of the FLSA or a plaintiff’s ability to collect unpaid tips through an appropriate state law claim.” Thus, it appears that withheld tip class action claims must be brought under applicable state law, which means that they could be litigated under state equivalent Rule 23 procedures and not FLSA collective action “opt-in” procedures.