By Kayleigh Butterfield

On July 29, 2015, the Fourth Circuit issued its published opinion in the civil case, Jahir v. Ryman Hospitality Properties, Inc. In Jahir, the Fourth Circuit affirmed the district court’s dismissal of plaintiffs’ FLSA claim seeking lost tips from Ryman Hospitality Properties, Inc. and Marriott International, Inc. (collectively, Defendants).

Alleged Facts and District Court’s Dismissal

Plaintiffs Mohammad Sazzad Jahir and Anthony Gomes worked as servers for hotels and restaurants owned by Defendants. Plaintiffs were also members of the UNITE HERE, Local 25 union.

According to the facts alleged in Plaintiffs’ complaint, Defendants took a portion of Plaintiffs’ tips every day and redistributed them to bartenders, server assistants, busboys, and food runners, all of whom would not normally receive tips. Plaintiffs did not voluntarily agree to such a tip-pooling arrangement, and eventually asked a union official if the arrangement was legal. The official told Plaintiffs that it was not.

Plaintiffs then filed a complaint alleging that Defendants’ tip-pooling arrangement violated the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m), the 2009 Collective Bargaining Agreement between UNITE HERE and Defendants, and the Maryland Wage Payment and Collection Law. The district court granted the Defendants’ Rule 12(b)(6) motion to dismiss each claim. Plaintiffs appealed only the dismissal of the FLSA claim, which the Fourth Circuit reviews de novo.

Background of the FLSA

The FLSA is known as the “minimum wage/maximum hour law.” It is intended to protect covered employees from low wages and oppressive working hours. Section 203(m) addresses “tip credits,” and allows employers to credit against the minimum wage they must pay employees by classifying tips as “wages.”

Section 203(m) Does Not Apply to Plaintiffs’ Claim

The Fourth Circuit examined the plain language of § 203 and determined that it does not apply to the Plaintiffs’ situation. Plaintiffs conceded that they were paid a full minimum wage without including tips. However, they argued that § 203(m) required Defendants to inform them of FLSA’s tip-credit provision and the tip-pooling arrangement before redistributing the tips. The Fourth Circuit rejected Plaintiffs’ argument by reading the plain language of § 203(m) in the broader context of the FLSA as a whole, which clearly aims to establish fair minimum and overtime wage laws. The Fourth Circuit concluded that § 203(m) did not apply where employees are paid a full minimum wage without tip.

Dismissal Affirmed

For the foregoing reasons, the Fourth Circuit affirmed the district court’s dismissal of Plaintiffs’ claims. Judge Harris concurred, stating that plaintiffs have no cause of private action under any FLSA section except § 216(b), which is not what Plaintiffs’ brought this action under.