The FLSA’s tip credit provision codified at 29 U.S.C. § 203(m) requires employers to notify employees of any tip credit taken by their employer against minimum wages owed. Prior to the DOL’s notice regulations issued on May 5, 2011 (codified at 29 C.F.R. § 531.59(b)), which were themselves the subject of legal challenge, the form such notice was required to take was not clear. In a new decision addressing notice both before and after these new regulations, a federal judge in Maryland found questions of fact as to whether servers at restaurant chain Greene Turtle properly received such notice, rendering the claim inappropriate for summary judgment. Dorsey v. TGT Consulting, LLC, 2012 U.S. Dist. LEXIS 118005 (D. Md. Aug. 20, 2012).

­­­­­­­­In Dorsey, Plaintiffs employed at certain locations uniformly asserted that they did not receive notice of the tip credit. While documentation regarding orientation and training at the defendant restaurants was produced, the documentation did not expressly refer to or explain the tip credit or the calculation of wages. In opposition to the claims the restaurant provided managerial affidavits in which interviewing and hiring managers stated that they routinely advised servers (some of whom were industry veterans) of the tip credit practice.  Accepting these affidavits as not inconsistent with the prior deposition testimony from corporate representatives, the court found a factual dispute as to whether notice was provided to the collective action plaintiffs.

In regard to the notification requirements contained in the new DOL regulations, the Court rejected plaintiffs’ argument that those requirements (with which Defendant clearly did not comply prior to their enactment) should have retroactive application, based on “DOL's final rule [acknowledging] that the new regulation represents a change in the law, at least at it has been applied by the courts.”

As noted above, challenges have been mounted to the DOL’s tip credit notice requirement, however employers should assume applicability and comply with such regulations to avoid legal issues.  Of course, since state laws may impose further notice requirements, employers also must ensure compliance with applicable state law.