Proposed Findings of Fact and Conclusions of Law

9 Sep 2016

Proposed Findings of Fact and Conclusions of Law

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Plaintiffs, Christopher Handyman and Jeffrey Goodman, file the following Proposed Findings of Fact and Conclusions of Law:

THIS CAUSE came before this Court on August 8th and 9th, 2016 for a bench trial. After having heard the evidence, observed witness credibility and demeanor, and reviewed the exhibits admitted, this Court makes the following findings of fact and conclusions of law:

Findings of Fact
Plaintiffs, Christopher Handyman and Jeffrey Goodman, are former employees of Defendant, Walle, LLC. (Pretrial Stipulation (“PTS”), Doc. 92, ¶ 9(1)). They filed this action on April 20, 2015 to recover compensation and other relief under the Fair Labor Standards Act, as amended (the “FLSA”), 29 U.S.C. Sec. 201 et. Seq. Id.
Jurisdiction is conferred on this Court by 29 U.S.C. Sec. 216(b). (“PTS” ¶ 9(2)).
At all times material hereto, Plaintiffs were citizens and residents of this judicial district, sui juris and were otherwise within the jurisdiction of this Court. (“PTS” ¶ 9(3)).
At all times material hereto, Defendant was the employer of the Plaintiffs, was conducting business in this judicial district and was an “employer” under the FLSA. (“PTS” ¶ 9(4)).
Defendant employed Mr. Handyman from May 20, 2008 to April 3, 2015 as a poker dealer. (Affidavit of Brian Postman, Plaintiffs’ Trial Exhibit 7, Paragraph 30). It employed Mr. Goodman from May 1, 2011 to April 8, 2015, also as a poker dealer. (Affidavit of Brian Postman Paragraph 31, Plaintiffs’ Trial Exhibit 7).
The Tip Pool

Some of Defendant’s employees, including the Plaintiffs, were required to participate in a tip pool as a condition of their employment. (Defendant’s response to Request for Admission 7 and 10, Plaintiffs’ Trial Exhibit 4). Plaintiffs were compensated as “tipped” employees under the FLSA. (Plaintiffs’ Trial Exhibit 7, Affidavit of Brian Postman Paragraph 32).
Defendant claimed a tip credit for the employees in the tip pool, including both Plaintiffs. (Defendant’s Response to Request for Admissions 1 and 2, Plaintiffs’ Trial Exhibit 4).
Defendant’s tip pool involves distributing tips taken from Plaintiffs and other poker dealers to what Defendant broadly calls “cage employees.” (Defendant’s response to Request for Admission 9, Plaintiffs’ Trial Exhibit 4); (Affidavit of Ms. Pernek, Paragraph 4, Plaintiffs’ Trial Exhibit 6). “Cage employees” includes employees such as vault personnel, tellers, podium persons and chip runners. Id.
Defendant’s tip pooling arrangement was different than at other poker room establishments owned by entities other than Defendant. (Tr., P 43, L 12-18).[1]
Notice of the Tip Pool

Defendant advised its employees of its tip pool in one of two ways. (Postman Affidavit, Plaintiffs’ Trial Exhibit 7, ¶ 27). First, by its posters and second by its Handbook. (Plaintiffs’ Trial Exhibit 7, Affidavit of Brian Postman ¶¶ 27 and 29).
The Poster(s)

Defendant displayed posters regarding the minimum wage. (Defendant’s Trial Exhibits 3-9). The posters contained the following language:
Employers of “tipped employees” must pay “a cash wage of at least $2.13 per hour if they claim a tip credit against their minimum wage obligation. If an employee’s tips combined with the employer’s cash wage of at least $2.13 per hour do not equal the minimum hourly wage, the employer must make up the difference. Certain other conditions must also be met.

Id. None of the posters address Defendant’s tip pool. Id.

The Handbook

Phil Faso, Defendant’s poker room manager, testified at trial that he prepared Defendant’s Handbook. (Tr. Vol. II, P. 42, L 7-8); See also (Plaintiffs’ Trial Exhibit 20). He estimates it was given out in around February or March of 2013. Id.
However, according to Defendant’s President, Mr. Postman, the copy introduced at trial was used by Defendant “from on or about August 2013 to the instant”. (Plaintiffs’ Trial Exhibit 7, Affidavit of Brian Postman ¶ 27, stating that “A copy of the handbook used by Ocala Poker from on or about August 2013 to the instant is attached as Attachment 3”).
At least one of the Plaintiffs could not verify that he ever actually received the employee Handbook, and if so whether the version in evidence was what he received. (Tr., P 120, L 11-15).
Paragraph 19 of the Handbook states:
All Dealers will place tips into a locked and numbered box which will be emptied at the end of each shift by either a Cage or Poker Room supervisor. A tip share of 10% will be deducted from all dealer tips to be distributed to the Cage personnel, not including full-time supervisors. This does not mean that Cage personnel work for you, they are to be treated with the same respect as any other co-worker.

(e.s.). The Handbook specifically addresses a “tip share” – not a tip pool. Id.

According to by the express terms of the Handbook, Defendant’s “supervisors” were not supposed to receive poker dealers’ tips. Id.
Information Regarding Tip Pool Limitations

Mr. Postman admitted that Defendant’s posters and its Handbook did not include information that the pool was supposed to be limited to employees that customarily and regularly receive tips. (Tr., P 226, L 13-21). Mr. Postman did not know how the Plaintiffs’ were supposed to have learned this information. (Tr., P 227, L 20-25). Thus, Mr. Postman testified that he did not know how Plaintiffs could have complained that the tip pool was illegal. (Tr., P 227-228, L 20-25, 1).
Mr. Goodman was never told that the tip pool was supposed to be limited to employees who customarily and regularly received tips; nor was that information in any posters or handbooks. (Tr., P 126, L 413).
Defendant never informed Mr. Goodman which employees were in the tip pool. (Tr., P 118, L 2-5). Mr. Goodman did not know Mr. Bendure was in the pool until this case began. (Tr., P 126, L 13-17).
Mr. Handyman was never told that the tip pool was supposed to be limited to employees who customarily and regularly received tips; nor was that information in any posters or handbooks. (Tr., P 132, L 15-23). Defendant never informed Mr. Handyman who was receiving his tips. (Tr., P 158, L 1-5).
The Tellers

A photo of the teller area is depicted in Defendant’s Trial exhibit 13. It shows the view the public would have of the teller area. Id. It also demonstrates that the public would have no view into “the Vault”. Id.
Defendant kept only a single tip box present for all of the tellers. Id.
Defendant’s Exhibit 14 shows both teller banks. (Defendants’ Trial Exhibit 14). It demonstrates the distinct separation between the teller area and “the Vault”. Id.
Tellers do not go into the vault. (Tr., P 67, L 1-6). There is a sign on the door indicating that only certain vault persons may enter. Id.
The Vault

The vault is where Ocala Poker’s employees maintain most of the money it collects from patrons in the Poker Room. (Affidavit of Brian Postman, Doc. 70, ¶ 4, Plaintiffs’ Trial Exhibit 7). Since the vault is where large amounts of money are kept, only experienced and trusted employees perform the vault counting function. Id. at ¶ 10.
Unlike the teller’s area, Defendant’s floor plan shows “the vault” is closed off from the public. (Plaintiffs’ Trial Exhibit 8). It is a secured area where the public is not allowed. (Tr., P 65, L 11-12); (Tr., P 65, L 9-10).
According to Defendant’s Interrogatory responses, Ms. Pernek is Defendant’s “Vault Manager.” (Defendant’s answers to Plaintiffs’ First Interrogatories, Number 3, Plaintiffs’ Trial Exhibit 5). However, at trial, she called herself “cage department manager.” (Tr., P 169, L 13-14).
Vault Persons

Ms. Pernek always has an employee scheduled in the Vault because someone always has to have access to the chips and cash. (Tr., P 197, L 16-20).
A vault person “handles money, oversees kind of independently the cash operations for the evening for the night.” (Tr., P 63, L 17-19). They are members of the tip pool. (Tr., P 67, L 22-23). It is a position of trust because it “is a lot of responsibility, compared to other positions, handling money”. (Tr., P 66, L 6-10).
Vault employees included, for example, Jason Bendure, Kathleen Danielson, Patricia Sharon, Dean Moore and Karen Drake. (Tr., P 197-198, L 23-24, 1-4); (Tr., P 63, L 15-16). All of those people were also receiving tips from the tip pool. (Tr., P 197-198, L 23-24, 1-4); (Tr., P 196, L 17-20).
During Plaintiffs’ employment, Mr. Bendure spent most of his time in the vault. (Tr., P 99, L 1-2). He worked in the vault less after Plaintiffs’ employment due to a downturn in Defendant’s business (Tr., P 65, L 19-22).[2] This downturn occurred in about the fall of 2015 (i.e. after Plaintiffs’ left Defendant’s employment) because a new competitor opened a poker room in nearby Ocala. (Tr., P 88, L 17-20).
Tip Wage Regulations

Brian Mathews is Defendant’s President with knowledge of its payroll practices. (Defendant’s answers to Plaintiffs’ first Interrogatories, Number 3, Plaintiffs’ Trial Exhibit 5). He testified that he became aware of 29 C.F.R. 531.59 (the “Tip Wage Credit” regulation) in May 2008. (Tr., P 47, L 7-17).[3]
After Defendant’s counsel prompted Mr. Postman via a speaking objection stating that “It didn’t exist in 2008,” Mr. Postman confessed that he in fact did not learn about the regulation in 2008. (Tr., P 48, L 3, 10).[4]
On questioning from Defendant’s counsel, Mr. Postman admitted that he had not heard of 29 C.F.R. § 531.59 prior to this litigation. (Tr., P 50, L 4-6). In fact, he testified he has never read 29 § C.F.R. 531.59. (Tr., P 49, L 19-21).
Defendant was not actively seeking information about the FLSA from the Department or other sources. (Tr., P 50, L 20-24). Mr. Postman did not even use Google to research the FLSA tip credit. (Tr., P 48 – 49, L 24 -1).
Employees Receiving Tips Were “Supervisors”

Jason Bendure was a vault employee who identified himself as a supervisor. (Tr., P 88, L 1-10; P 77, L 5-6). A “lot of [persons] that worked in the vault called each other supervisors.” (Tr., P 88, L 6). Other employees, such as the “floor people” called Mr. Bendure and the vault personnel supervisors. (Tr., P 88, L 7).
Ms. Pernek, Mr. Bendure’s supervisor, called the vault people supervisors. (Tr., P 189, L 20-22). She could not testify that the vault people were never supervisors, instead stating that they were not “typically a supervisor”. (Tr., P 189, L 25).
Mr. Goodman knew Mr. Bendure as a supervisor. (Tr., P 98, L 10-11). Mr. Handyman also knew him as the “vault supervisor” and he would go to Mr. Bendure to address problems with other employees. (Tr., P 132, L 3-9). Phillip Faso also admitted that the floor managers are “also sometimes called supervisors.” (Tr., Vol II, P 10, L 13-17).
Mr. Bendure and Ms. Danielson acted like supervisors by helping train employees. (Tr., P 68, L 17-18). Ms. Danielson signed some of Defendant’s tax documents. (Tr., P 68, L 19-24). Ms. Danielson also signed a “cage short agreement” for Defendant, which is an agreement obligating Mr. Bendure to pay Defendant money. (Tr., P 69, L 4-7).
Mr. Postman, Defendant’s president, took Ms. Pernek out of the tip pool because “she was called the manager.” (Tr., P 224, L 1-5). When asked about her job duties, he testified she recommends if someone should be fired and does the scheduling. (Tr., P 225, L 8-15). He stated that by recommending people for termination it made them management. (Tr., P 225, L 17-19). At the same time, however, Defendant’s “floor managers” did write ups but Defendant claims they were not true supervisors. (Tr. Vol. II, P 11, L 5-9). Likewise, “cage employees” – whom Defendant claims are not managers” – also did scheduling. (Tr., P 191, L 2-4).
Mr. Faso was a manager from November 2011 to April 2015. (Defendant’s Answers to Plaintiffs’ first Interrogatories, Number 3, Plaintiffs’ Trial Exhibit 5). He contributed to the tip pool in 2012. (Tr. Vol. II, P 39, L 18-22). He also would pay Mr. Goodman back for payments Mr. Goodman made for picking up food for customers by putting a chip into his tip box. (Tr. Vol. II, P 40, L 13-22). Those chips would then go into the tip pool. (Tr. Vol. II, P 40, L 23-24). 13.
Tip Accounting Was Incomplete

Marshal Kelso is Defendant’s Office Manager. (Defendant’s answers to Plaintiffs’ First Interrogatories, #3, Plaintiffs’ Trial Exhibit 5). She has knowledge of Defendant’s payroll and tip payments. Id.
There is only one tip box for both of the places where the tellers sit while doing their work (i.e. that depicted in Defendant’s exhibit 13). (Tr. Vol. II, P 63, L 17 – 22), (Tr. Page 84, Lines 9-13), See also (Floor Plan introduced as Plaintiffs’ Exhibit 8 (which depicts the two teller seats)). There is also only one for the chip runners’ carts. (Tr. Vol. II, P 63, L 17 – 22); (Tr. Page 84, Lines 1-3). Poker dealers each have a tip box of their own that sits on the tables they deal. (Tr. Page 53, Lines 1-3).
Defendant does not know how many tips are given to the vault persons because their tips were put in the same box with the tellers (Tr. Vol. II, P 64, L 3-5:). In other words, the tips for both teller positions were grouped together with those of the vault people, such as when the vault persons may fill in for tellers. Id.
Ms. Kelso testified that Defendant did not know “when people put a tip into that box that it’s meant for the vault persons and not for the tellers.” (Tr. Vol. II, P 64, L 3-5:).
Prior Litigation

Defendant became aware of legal problems with its tip pool in 2010 by hearing of another lawsuit involving a different poker room owned by an entity other than Defendant. (Affidavit of Brian Postman Paragraph 22, Plaintiffs’ Trial Exhibit 7).
This Court’s records also demonstrate that Defendant had been sued for its tip pooling procedures in the case of Cutungo v. Second Chance Jai Alai, LLC, Case No. 11-cv-113-OC-34TEM (M.D. Fla.) in 2011. In that case, Defendant’s tip pool was challenged similar to how it was in this case. See Doc. 36, the Complaint in that case, ¶ 6 (claiming Defendant had “illegal employment practices alleged herein, involving the tip pool and payroll practices.”) and ¶ 11 (“and all tips received by Plaintiffs, and others similarly situated, must be absolutely retained by Plaintiffs, or pooled with other tipped ‟employees.”).
Conclusions of Law
Under the FLSA, an employer must pay its employee a minimum wage. See 29 U.S.C. §206(a). That wage may include the employee’s tips. 29 U.S.C. §203(m). That is, an employer may pay an employee a cash wage below the minimum wage so long as the employer supplements the difference with the employee’s tips; this is known as an employer taking a “tip credit.” See id.

An employer may also impose upon its employees a tip pool, requiring those employees to forfeit tips customers intend for those employees – if certain requirements are met. It is important to note the distinction between “tip credit” and “tip pool.” While the two terms are interrelated, they have separate and distinct meanings and requirements. An employer takes a “tip credit” when the employer pays an employee a cash wage less than the minimum wage required, but supplements the difference with the employee’s tips. See, Kubiak v. S.W. Cowboy, Inc., 2016 WL 659305 at *6 (M.D. Fla. Feb. 18, 2016). In contrast, a “tip pool” is “[w]here employees practice tip splitting, as where waiters give a portion of their tips to the busboys.” 29 C.F.R. § 531.54.

The employer bears the burden of proving that they are eligible for a tip credit, including that sufficient notice was provided. Vancamper v. Rental World, Inc., No. 6:10- CV-209-ORL-19, 2011 WL 1230805, at *5–6 (M.D. Fla. Mar. 31, 2011). The requirements of a tip credit are strictly construed. Rubio v. Fuji Sushi & Teppani, Inc., No. 6:11-CV-1753-ORL-37, 2013 WL 230216, at *2 (M.D. Fla. Jan. 22, 2013) (citing Garcia v. La Revise Assocs. LLC, No. 08–cv–9356, 2011 WL 135009, at *5–6 (S.D.N.Y. Jan. 13, 2011)). In order to use a tip credit toward a tipped employee’s minimum wage, an employer must satisfy two conditions: (1) the employee must be informed by the employer of the FLSA’s tip provisions; and (2) the employee must be allowed to retain all tips which he/she receives, except in instances where pooling of tips is employed among other employees who “customarily and regularly receive tips.” 29 U.S.C. § 203(m). See also Kubiak, 2016 WL 659305, at *6 (citing Rubio, 2013 WL 230216, at *2). If an employer fails to meet the requirements of section 203(m), the employer may not claim the “tip credit” and is liable for full minimum wage, regardless of actual economic harm suffered by the employee. See Kubiak, 2016 WL 659305, at *6; Driver v. AppleIllinois, LLC, 917 F. Supp. 2d 793, 800 (N.D. Ill. 2013); Nat’l Rest. Ass’n v. Solis, 870 F. Supp. 2d 42, 45 (D.D.C. 2012).

A. Improper notice of the Tip Pool.
Defendant seeks to avoid paying Plaintiffs their minimum wages and deny Plaintiffs of their tips by establishing a “tip pool”.[5] However, Defendant’s tip pool was illegal because of A) improper notice and B) invalid participants. This Section A describes the four reasons why Defendant’s notice to Plaintiffs’ of the tip pool was improper. Section B, infra, explains why Defendant’s tip pool is invalid based on its participants, even assuming Defendant provided proper notice of the tip pool to Plaintiffs.

Plaintiffs were not informed that the tip pool is limited to employees who customarily and regularly receive tips and therefore the tip pool in invalid per 29 CFR § 531.59(b).
An employer must inform the tipped employee of the specific provisions of 29 U.S.C. § 203(m). 29 C.F.R. § 531.59(b). Effective May 5, 2011, the DOL amended rule 29 C.F.R. § 531.59(b), detailing an employer’s obligation to inform tipped employees of the tip credit provisions of § 203(m). The requirement “to inform” was enacted in 1974, when Congress amended the FLSA to include, inter alia, that a tip credit shall not apply “unless such employee has been informed by the employer of the provisions of this subsection.” 29 U.S.C. § 203(m).

29 CFR § 531.59(b) provides five disclosure requirements, and reads in part: Pursuant to section 3(m), an employer is not eligible to take the tip credit unless it has informed its tipped employees in advance of the employer’s use of the tip credit of the provisions of section 3(m) of the Act, i.e.:

[1] The amount of the cash wage that is to be paid to the tipped employee by the employer;

[2] the additional amount by which the wages of the tipped employee are increased on account of the tip credit claimed by the employer,

[3] which amount may not exceed the value of the tips actually received by the employee;

[4] that all tips received by the tipped employee must be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips;

[5] and that the tip credit shall not apply to any employee who has not been informed of these requirements in this section.

Id., (e.s.).

In this case, it is clear that Defendant did not comply with the notice requirements of § 531.59. According to Defendant’s president, Brian Postman, Defendant attempted to notify its employees of the tip pool by use of its Handbook and posters it displayed. (Plaintiffs’ Trial Exhibit 7, Affidavit of Brian Postman ¶¶ 27 and 29). The posters, however, did not contain any mention of the final disclosure requirement under 29 U.S.C. § 531.59(b): that “all tips received by the tipped employee must be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips.” (Defendant’s Trial Exhibits 3-9). Nor did the employee Handbook contain such a notice. (Plaintiffs’ Trial Exhibit 20). Moreover, both Plaintiffs were never told this information; a fact undisputed by Defendant. (Tr. P 126, L 413); (Tr. P 132, L 15-23). Defendant’s president Mr. Postman actually admitted this information was not conveyed. (Tr. P 226, L 13-21);

By not informing its employees of the legal limitations of the tip pool, Plaintiffs were kept in the dark by Defendant regarding who could legally participate in the tip pool. Thus, Defendant prevented its employees from challenging the tip pool and objecting to its participants. To that end, Mr. Postman testified that he did not know how Plaintiffs would have known to complain about the tip pool’s requirements since they were not informed of its obligations. (Tr., P 227-228, L 20-25, 1). Therefore, Defendant failed to comply with section 203(m) because it failed to properly notice its employees of the information required by § 531.59(b).

The Handbook’s description of the tip arrangement is false and therefore it did not convey proper notice of the tip pool.
Plaintiffs’ introduced a Handbook as their Trial Exhibit 20. Paragraph 19 of the Handbook addresses tips and states:

All Dealers will place tips into a locked and numbered box which will be emptied at the end of each shift by either a Cage or Poker Room supervisor. A tip share of 10% will be deducted from all dealer tips to be distributed to the Cage personnel, not including full-time supervisors. This does not mean that Cage personnel work for you, they are to be treated with the same respect as any other co-worker.
(e.s.). Defendant has argued that the decision in Ide v. Neighborhood Restaurant Partners, LLC, Case No. 1:13-cv-00509-SCJ (N.D. Ga.) supports the notion that a Handbook alone can be sufficient notice. However, Ide was not a tip pooling case. See (Paragraph 16 of the Amended Complaint in Ide) (“Plaintiff and other tipped employees, for example, were regularly required to perform duties such as food preparation, expediting, and general restaurant cleaning, but Defendants continued to pay them tip-credit wages while they were engaged in those non-tipped duties. See, also Ex. 1 to that Complaint (list of non-tipped work Defendants required tipped employees to perform).”). Thus, the handbook in Ide was sufficient because it addressed the tip credit and how it worked. The facts in Ide reveal that the employer provided comparatively accurate and complete information about its tip credit procedures to its employees in its Handbook.

Here, the Defendant provided misleading information about its tip pool in its Handbook regarding its participants. Specifically, according Defendant’s Handbook, “supervisors” were not supposed to be in the tip pool and were not supposed to receive Plaintiffs’ tips. (Plaintiffs’ Trial Exhibit 20). However, vault persons such as Jason Bendure were known as supervisors. (Tr., P 88, L 6). Moreover, these persons (such as Mr. Bendure) actually identified themselves as “supervisors”. (Tr., P 88, L 1-10; P 77, L 5-6). Ms. Pernek, a high ranking vault manager, called the vault employees supervisors. (Tr., P 189, L 20-22).

Whether they were truly supervisors is irrelevant for this particular analysis because the issue is whether Defendant’s employees had proper notice under the Handbook. Defendant’s employees were not properly noticed by the Handbook’s falsehood that supervisors would not be receiving tips from the tip pool. Plaintiff Goodman even testified that he had no idea Jason Bendure was receiving his tips until this litigation began. (Tr., P 126, L 13-17). Defendant also never informed Mr. Handyman who was receiving his tips. (Tr., P 158, L 1-5).

Defendant cannot rely on the Handbook as a vehicle for proper notice to Plaintiffs’ regarding the tip pool when the information in the Handbook is actually false. By not clearly defining who the “supervisors” are, the Handbook misled Plaintiffs into thinking that vault persons were not receiving their tips when, in fact, they were. Thus, Defendant cannot rely on the Handbook for proper notice to Plaintiffs of the tip pool.

The Handbook never address a tip pool, only a “tip share”, and therefore failed to properly notice Plaintiffs of a tip pool.

The main difference between “tip sharing” and “tip pooling” is that tip sharing is strictly voluntary. As per the Department of Labor’s Field Operations Handbook:

[I]t does not appear that the Congress, even in requiring as a general principle that tipped employees retain all their tips, intended to prevent tipped employees from deciding, free from any coercion whatever and outside of any formalized arrangement or as a condition of employment, what to do with their tips, including sharing them with whichever co-workers they please.

See Department of Labor Field Operations Handbook § 30d04(c) (Dec. 9, 1988), (e.s.).[6] For example, a waiter voluntarily splitting his tips with a busboy/girl and bartender constitutes tip sharing. Rousell v. Brinker International, Inc., 2008 U.S. Dist. LEXIS 52568, at *75 (S.D.Tex. July 9, 2008) (holding that employees may share tips with other workers who are not customarily and regularly tipped if they do so “free from any coercion whatever and outside any formalized arrangement or as a condition of employment”); WH Admin. Op. (Oct. 26, 1989); WH Admin. Op. (Mar. 26, 1976).

Defendant’s Handbook states that a “tip share of 10% will be deducted from all dealer tips to be distributed to the Cage personnel, not including full-time supervisors.” (e.s.). (Plaintiffs’ Trial Exhibit 20). However, Plaintiffs were compelled to give ten percent of their tips to the tip pool as a condition of their employment. Therefore, Defendant cannot rely upon its Handbook as proper notice of mandatory a tip pool because, at best, it describes only a “tip share.”

The Handbook was not provided until, at earliest, 2013 and therefore part of Plaintiffs’ claims include time before the Handbook was provided.

Even assuming the Handbook somehow provided proper notice, it was not provided to Plaintiffs until at earliest February or March of 2013 and latest August 2013, long after they started working. Mr. Matthew’s Affidavit, in evidence as Plaintiffs’ Trial Exhibit 7, states as follows:

Poker dealers, including the Christopher Handyman and Jeffrey Goodman, were made aware of this tip pool in two ways. First they received a copy of the Ocala Poker Dealer Handbook. A copy of that handbook used by Ocala Poker from on or about August 2013 to the instant is attached as Attachment 3.
(e.s.). Moreover, Defendant’ management was unclear as to when Plaintiffs actually received the Handbook.

In this case, assuming Plaintiffs received the Handbook, it was not received until long after Plaintiffs began working for Defendant. Plaintiffs’ Complaint was filed April 20, 2015. Because Defendant’s actions were willful (as discussed infra), the 3 year limitations period extends to April 2012. Thus, Plaintiffs would still be entitled to an award of damages beginning from April 20, 2012 (3 years prior to the filing of their complaint) through to the time the Handbook was received by Plaintiffs assuming the Handbook actually did provide proper notice of the tip pool.

Even if Defendant provided proper notice, The Tip Pool is invalid because of invalid participants.

Even assuming Defendant provided proper notice of its tip pool, Plaintiffs were illegally required to participate in a tip pool with employees who did not “customarily and regularly receive tips,” as set forth in 29 U.S.C. § 203(t). If tipped employees are required to participate in a tip pool with any employee who does not customarily receive tips, then the tip pool is invalid and the employer is not permitted to take a “tip credit.” Kilgore v. Outback Steakhouse of Fla., Inc., 160 F.3d 294, 300 (6th Cir. 1998); Reich v. Chez Robert, Inc., 28 F.3d 401, 403 (3rd Cir. 1994). As discussed below, even if Defendant provided proper notice of the tip pool, there are five independent reasons why the tip pool is invalid because of invalid participants.

Defendant did not prove that Vault Persons customarily and regularly receive tips in excess of $30 per week.
Under the FLSA an employer may not avail itself of the tip credit if it requires tipped employees to share their tips with employees who do not “customarily and regularly receive tips.” Shahriar v. Smith & Wollensky Rest. Group, 659 F.3d 234, 161 Lab.Cas. P 35953, 80 Fed.R.Serv.3d 1070, 18 Wage & Hour Cas.2d (BNA) 193 (2nd Cir., 2011), citing 29 U.S.C. § 203(m) (stating that the tip credit “shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips”). [7] Thus, an employer loses its entitlement to the tip credit where it requires tipped employees to share tips with (1) employees who do not provide direct customer service or (2) managers. Id., citing Myers v. Copper Cellar Corp., 192 F.3d 546, 550–51 (6th Cir.1999) (concluding that a “salad maker” was not a tipped employee because they had no “direct intercourse with diners, worked entirely outside the view of restaurant patrons, and solely performed duties traditionally classified as food preparation or kitchen support work”); Chung v. New Silver Palace Rest., 246 F.Supp.2d 220, 229 (S.D.N.Y.2002) (finding that it violates the FLSA for an employer to use a tip credit while requiring tipped employees to share tips with managers).

The FLSA defines a customarily and regularly tipped employee as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t).[8] Pursuant to 29 CFR § 531.52: “Only tips actually received by an employee as money belonging to the employee may be counted in determining whether the person is a ‘tipped employee’ within the meaning of the Act and in applying the provisions of section 3(m) which govern wage credits for tips.”

In Bingham v. Airport Limousine Serv., 314 F. Supp. 565 (W.D. Ark. 1970), the court determined that limousine drivers were not “tipped employees” where there was no “documentary evidence of individual tip receipts” and where the employer “made no attempt to keep the [required] records.” Id. at 571-72. The Bingham court stated as follows at page 572:

In any event, it seems quite clear that the court may not infer that plaintiffs are tipped employees merely because they are or were part of a group which has a record of receiving more than $20 a month in tips. 29 C.F.R. § 531.56(c). Most important, defendant made no attempt to keep the records required by Section 11(c) of the Act. It is perhaps true that defendant did not anticipate the need of accurate record-keeping, but the penalty for such an omission must fall upon the employer and not upon his employees.

(c.o.); (e.s.). See also Richard v. Marriott Corp., 549 F.2d 303, 305 (4th Cir.1977) (“[I]f the employer does not follow the command of the statute, he gets no [tip] credit.”).

In the instant case, Defendant called as a witness Marsha Kelso as the person knowledgeable about its tip accounting. She said she could not determine what tips were intended for tellers compared to those intended for the vault persons. Her testimony on this fact was very clear:

So how do you know when people put a tip into that box that it’s meant for the vault persons and not for the tellers?
I don’t.

(Tr. Vol. II, P. 64, L 3-5:). Thus, by Defendant’s own admission, it is unable to determine whether the vault persons themselves received the required amount of tips per month per 29 U.S.C. § 203(t) to qualify for inclusion in the tip pool.

Two cases cited by Defendant in its Trial Brief at page 9, paragraph 21, support the conclusion that an inability to prove the amount of tips provided directly to an employee is fatal to an employer’s claimed tip pool. In those cases, the employer prevailed because it proved the employee was directly given tips to satisfy the $30 per month limit. See Manning v. St. Petersburg Kennel Club, Inc.., No. 8: 13-cv-3060-T-36MAP (M.D. Fla. Feb. 5, 2015) (“Contrary to her suggestion, however, Derby Lane’s employee unequivocally states that she is able to distinguish which tips in the box are meant for her, and that those tips, in combination with the tips she receives in her hand, customarily and regularly exceed $30 a month.”); Palacios v. Hartman and Tyner, Inc., Case No. 13-cv-61541, 2014 WL 7152745, at *6-7 (S.D. Fla. Dec. 15, 2014) (“On the contrary, the record here is not so sparse. Defendant has submitted substantial evidence indicating that cashiers regularly received tips directly from customers, and, most critically, Plaintiffs do not dispute the fact that cashiers actually received tips directly from Defendant’s customers.”).

Defendant failed to prove the validity of its tip pool because it failed to prove the vault persons themselves received customarily and regularly exceed $30 a month in tips. They were improper participants in the tip pool and the pool is therefore invalid.

Defendant grouped its employees, in violation of 29 CFR § 531.56.

29 CFR § 531.56 discusses how to calculate whether an employee customarily and regularly exceeds $30 a month in tips and thus is properly included in a tip pool. § 531.56 states that an employer is not permitted to group its employees when determining whether they meet the required amount in monthly tips:

(c) Individual tip receipts are controlling. An employee must himself customarily and regularly receive more than $30 a month in tips in order to qualify as a tipped employee. The fact that he is part of a group which has a record of receiving more than $30 a month in tips will not qualify him. For example, a waitress who is newly hired will not be considered a tipped employee merely because the other waitresses in the establishment receive tips in the requisite amount. For the method of applying the test in initial and terminal months of employment, see § 531.58.

29 CFR § 531.56, (e.s.).

Here, Defendant grouped its vault personnel with its tellers in an attempt to attribute any tips the public intended for tellers to both groups. Instead of having a separate tip box for the vault persons (such as when they filled in for the tellers), Defendant comingled the tips regularly received by the tellers and attributed those tips to the vault persons. (Defendant’s Trial exhibit 13); (Tr. Vol. II, P 63, L 17 – 22), (Tr. Page 84, Lines 9-13), See also (Floor Plan introduced as Plaintiffs’ Exhibit 8 (which depicts the two teller seats)). This is improper under 29 CFR § 531.56 and invalidates the tip pool. Thus, Defendant failed to prove that the vault persons customarily and regularly received more than $30 a month in tips in order to qualify as a tipped employee. As such, the tip pool was invalid.

People working in the vault do not regularly and customarily interact with the public and thus the tip pool was invalid for including them in it.
Courts have held that employees who do not have sufficient customer interaction and perform work outside of the view of customers cannot be validly categorized as tipped employees under § 203(m). See Myers v. The Copper Cellar, Co., 192 F.3d 546, 550 (6th Cir. 1999). (“Because the salad preparers abstained from any direct intercourse with diners, worked entirely outside the view of restaurant patrons, and solely performed duties traditionally classified as food preparation or kitchen support work, they could not be validly categorized as ‘tipped employees’ under section 203(m).”). Here, “vault” employees did not have sufficient contact with the public to be validly categorized as tipped employees under § 203(m).

Defendant’s floor plan and the pictures introduced at trial plainly shows the vault is completely closed off from the public. (Floor Plan introduced as Plaintiffs’ Exhibit 8). Unlike the teller areas, which have a window for interacting with the public, the vault has no such public access. Id. Moreover, because the vault is a secure area full of money, its access is restricted. (Tr., P 65, L 11-12); (Tr., P 65, L 9-10). It is not an area the public accesses, needs to access, or is meant to access. Id.

Some of the vault persons might have had more contact with the public after Plaintiffs left Defendant’s employment because of a new competitor. (Tr., P 88, L 17-20). However, during Plaintiffs’ employment, their job duties were outside of the view of customers. (Tr., P 99, L 1-2); (Tr., P 65, L 19-22). Therefore, the vault persons cannot be validly categorized as tipped employees.

Vault Persons and Teller Persons are different occupations and therefore the vault persons are not tipped employees eligible for inclusion in the tip pool.

29 U.S.C. 203(t) defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” (e.s.). Here, the Court finds that vault persons and tellers are different occupations. Thus, the vault persons are not tipped employees and cannot participate in the tip pool.

Recognizing that there are situations in which employees have more than one occupation, some of which may meet the tip credit requirements and some of which may not, the regulations provide that in such “dual jobs,” the tip credit may only be applied with respect to the time spent in the tipped job. The regulations state as follows:

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $20 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man.

29 C.F.R. § 531.56(e) (e.s.). In Opinion Letter FLSA 2009-23, the DOL addresses this regulation in light of decisions such as Pellon v. Business Representation Int’l, Inc., 528 F.Supp.2d 1306 (S.D. Fla. 2007), aff’d, 291 Fed. Appx. 310 (11th Cir. 2008) (rejecting court’s reading of FOH § 30d00(e), holding, in part, that the 20 percent limitation does not apply to related duties). The Opinion Letter stated that the focus should be on whether the duties “are performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.” Id. The DOL stated that these “principles supersede our statements in FOH § 30d00(e),” and the Opinion Letter specifically addresses decisions such as Pellon.

Vault persons’ duties are not performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties. See e.g. (Tr., P 65, L 11-12); (Tr., P 65, L 9-10). This is demonstrated, in part, from the fact that tellers are not even permitted in the vault or to perform any of the work that vault persons perform. Id. Other duties the vault persons may perform (such as teller duties) when tellers are shorthanded are separate and apart and cannot be combined to establish one “cage person occupation”.

Upon review of the evidence presented at trial, the vault position is found to be a separate position that involves duties not connected with servicing customers. It is not “an occupation” which customarily and regularly receives tips and therefore not a tipped employee as defined by 29 U.S.C. 203(t). As such, the inclusion of vault persons in the tip pool was improper and invalidates the pool.

Management improperly participated in the tip pool.
The forced sharing of tips with management is an illegal practice that would invalidate the tip pool, regardless of whether the members of management are engaged in services that could be the subject of tipping. See Wacjman v. Investment Corp. of Palm Beach, No. 07-80912-CIV, 2008 WL 783741, at *3 & n.1 (S.D.Fla. March 20, 2008). Section 203(d) defines an “employer,” as “any person acting directly or indirectly in the interest of an employer in relations to an employee. . . .” 29 U.S.C §203(d).

In determining who is an “employer,” courts have looked at the following factors: the control of hiring and firing of employees; control of the manner in which work is performed; and the fixing of employee wages. See Dole v. Continental Cuisine, Inc., 751 F.Supp. 799, 802-03 (E.D.Ark. Sept. 28, 1990). Typically, employees who have been deemed to be “employers” under the FLSA are owners or managers. See, e.g., Gionfriddo v. Jason Link, LLC, 769 F. Supp. 2d 880, 893-894 (D. Md. 2011) (holding that the owner of a tavern was an “employer” under the FLSA and thus ineligible to participate in a tip pool). See also Ayres v. 127 Restaurant Corp., 12 F.Supp.2d 305, 308–09 (S.D.N.Y.1998) (holding that a restaurant employee serving as the manager was precluded from receiving tips).

Applying the above factors, a preponderance of the evidence demonstrates that some of tip pool participants had sufficient managerial authority to invalidate the tip pool by their inclusion therein. Mr. Bendure and Ms. Danielson participated in the tip pool and received tips the public meant for the Plaintiffs. (Tr., P 197-198, L 23-24, 1-4); (Tr., P 196, L 17-20). However, Mr. Bendure and other vault employees identified themselves as supervisors. Tr., P 88, L 1-10; P 77, L 5-6). Kathleen Danielson signed off on the cage short agreement for J. Bendure, trained chip runners, and signed tax form on behalf of Defendant. See e.g. (Tr., P 69, L 4-7). Danielson’s tasks included helping make employee schedules, balancing the vault value, and training employees, including chip runners, tellers, and podium people. See e.g. (Tr., P 68, L 17-18); (Tr., P 68, L 19-24). See Schear v. Food Scope America, Inc., 297 F.R.D. 114, 135 (S.D.N.Y. 2014) (where managing employees made decisions about scheduling other employees, including assigning work shifts, court found plaintiffs provided sufficient evidence to withstand summary judgment on the issue of whether employees were “employers” under the FLSA,). Moreover, Mr. Postman could not identify any meaningful difference between the duties of these persons and that of Ms. Pernek who was removed from the tip pool due to concerns that her supervisory duties would trigger an invalidity of the pool. (Tr., P 224, L 1-5); (Tr., P 225, L 8-15). Similarly, Mr. Faso was a supervisor and ineligible to participate in the pool. However, he admitted at trial that he was participating even as late as 2012 in some respect by contributing to it. (Tr. Vol. II, P 39, L 18-22).

Notably, Ms. Pernek admitted under question by Defendant’s counsel that some of the vault persons were sometimes supervisors. Her testimony in that regard was the following:

Have you ever designated a vault person as some sort of supervisor?
I have used that word.
But they don’t — do they supervise anybody?
No. They’re there to make sure that everybody gets what they need, but they’re not typically a supervisor.
(Tr., P 189, L 20-25), (e.s.). This testimony from Ms. Pernek, along with the other facts above, demonstrates by a preponderance of the evidence that (at least sometimes) the vault managers were actually supervisors and therefore their inclusion in the tip pool was improper.

III. Damages

Where a tipped employee is required to contribute to a tip pool that includes employees who do not customarily and regularly receive tips, the employee is owed all tips he or she contributed to the pool. See US DOL Fact Sheet #15, Tipped Employees Under the FLSA; [9] See also the DOL Field Operations Handbook Section 30d01(b)(1).[10] In addition, invalidity of the tip pool would entitle the employee to payment of minimum wage for all hours the employee had worked where the tip-pool was used. Id. Moreover, as discussed below, whether Defendant’s actions were “willful” or were done in good faith affects the damage calculations because those factors both extend the period recoverable to 3 years and double (i.e. liquidate) the damages.

Plaintiffs’ damages include both tips taken and minimum wages.
Plaintiffs admitted the payroll records for Plaintiffs as Exhibit 1. Analysis of that data for Plaintiff Goodman results in the attached Exhibit A, a composite of the tips taken by Defendant. For Mr. Goodman, after liquidation, it amounts to $29,000.00. For Mr. Handyman, it amounts to $10,234.00 as per the attached Exhibit B.

Plaintiffs also admitted the summary of hour records for Plaintiffs as Exhibits 10 and 11. Payroll Register printouts were also introduced as Plaintiffs’ Trial Exhibit 14. Analysis of that data for Plaintiff Goodman leads to the attached Exhibit C, a calculation of the differences in the minimum wages paid (the reduced tip pool wage) and the federal minimum wage at the time. For Mr. Goodman, it amounts to $23,717.42.[11] For Mr. Handyman, the attached Exhibit D is applicable and after liquidation, it amounts to $16,197.91.

Defendant’s conduct was “willful”.

Plaintiffs filed their cause of action on April 20, 2015. Pursuant to the FLSA, “every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.” Id. § 255(a) (emphasis added). Under the FLSA, a violation is “willful” if the employer either “`knew or showed reckless disregard for . . . whether its conduct was prohibited by the statute.’” Singer v. City of Waco, Tex., 324 F.3d 813, 821 (5th Cir. 2003) (quoting McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988)). “To establish that the violation of the [FLSA] was willful in order to extend the limitations period, the employee must prove by a preponderance of the evidence that [her] employer either knew that its conduct was prohibited by the statute or showed reckless disregard about whether it was.” Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515 F.3d 1150, 1162–63 (11th Cir. 2008).

Reckless disregard is the “failure to make adequate inquiry into whether conduct is in compliance with the Act.” 5 C.F.R. § 551.104. The burden of showing that an FLSA violation was “willful” falls on the plaintiffs. See id.; see also Samson v. Apollo Res., Inc., 242 F.3d 629, 636 (5th Cir. 2001) (“Generally, a plaintiff suing under the FLSA carries the burden of proving all elements of his or her claim.”).

Courts in this Circuit and others have found the following types of evidence support a finding of willfulness: an employer’s admission it knew it was violating the FLSA prior to suit, see Singer v. City of Waco, 324 F.3d 813, 821-22 (5th Cir.2003) (fire chief admitted he was aware firefighters were being paid incorrectly); an employer’s continuation of a pay practice after being put on notice the practice violated the FLSA, see Reich v. Bay, Inc., 23 F.3d 110, 117 (5th Cir.1994) (local Wage and Hour office director informed employer its overtime practices violated the FLSA); an employer’s prior violations of the FLSA, see Chao v. A-One Med. Servs., 346 F.3d 908, 919 (9th Cir.2003) (noting prior FLSA violations, even though not found willful, put employer on notice of FLSA requirements); Sealey v. EmCare, Inc., No. 2:11-CV-00120, 2013 WL 164040, at *4 (S.D.Tex. Jan. 14, 2013) (evidence employer previously litigated “a closely related overtime issue” sufficient to find willfulness); and an employer’s reliance on a blanket policy a certain type of employee was exempt, absent any review or study of whether any exemption applied, see Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1280-81 (11th Cir.2008) (employer never studied whether employees were exempt yet knew the employees in question spent most of their time performing manual labor). Here, Plaintiffs proved that Defendants’ knew that its conduct was prohibited by the statute or, at a minimum, showed reckless disregard about whether it was.

Defendant knew its conduct was illegal.
Prior litigation can support a finding a willfulness, see, e.g., Sealey v. EmCare, Inc., 2013 U.S. Dist. LEXIS 5536, 2013 WL 164040, at *4 (S.D. Tex. Jan. 14, 2013); see also Villegas v. Dependable Constr. Servs., Inc., 2008 U.S. Dist. LEXIS 98801, 2008 WL 5137321, at *27 (S.D. Tex. Dec. 8, 2008) (noting that, if the FLSA violations in the pending case resembled that of a prior lawsuit, `it is possible that Defendants had knowledge that they were violating FLSA’). Mr. Postman Affidavit admits in paragraph 22 that “Sometime in 2010 I became aware of a case in South Florida where a poker room was sued and lost over the inclusion of card room managers participating in a tip pool.” (Affidavit of Brian Postman Paragraph 22, Plaintiffs’ Trial Exhibit 7). Shortly thereafter, Defendant recognized problems exist with its tip pool. See Id.

This Court’s records also demonstrate that Defendant had been sued for its tip pooling procedures in the case of Cutungo v. Second Chance Jai Alai, LLC, Case No. 11-cv-113-OC-34TEM (M.D. Fla.) including in the year 2012. The Court takes judicial notice of these filings.[12] These facts prove that Defendant knew of the problems with Defendant’s tip pool but failed to properly address them.

Further evidence that Defendant’s actions were willful includes the fact that Defendant’s President provided false testimony at trial regarding claiming to have known about CFR § 531.59 three years before it came into existence. (Tr. Page 47, Lines 12-17). Only upon being prompted by Defendant’s attorney did Mr. Postman reverse his testimony, only to admit that he did not know about the applicable regulations until after receiving Plaintiffs’ summary judgment response in this litigation. (Tr. Page 50, Lines 1-6).

This is not the first time Mr. Postman has had difficulty testifying before this Court. In the matter of Stevenson v. Second Chance Jai Alai, LLC, Case No. 5:11-cv-496 at Doc. 72, Footnote 4 this Court stated the following in its Order on Plaintiff’s Motion for Liquidated Damages and Defendant’s Motion for Directed Verdict:

The Court also found Mr. Postman utterly incredible as a witness. (See Doc. 65, Tr. I, 17:13–18:24 (“Q. Is that statement true? A. No, it’s not. Q. But you signed this document under penalties of perjury, didn’t you? A. I signed it, yes.”).)

Mr. Postman was equally, if not more, incredible as a witness in this case.

Finally, it was no mere mistake that the Defendant structured its “cage department” in a manner to group tips that would normally go to the tellers in with the vault persons. For example, although Defendant’s interrogatory answers refer to Ms. Pernek as the “Vault Manager,” she attempted to couch her testimony at trial as the “cage department manager.” Compare (Defendant’s answers to Plaintiffs’ First Interrogatories, Number 3, Plaintiffs’ Trial Exhibit 5) with (Tr., P 169, L 13-14). This is found to be a willful attempt to subvert the laws requiring tip pool participants to have a minimum amount of tips and customer interaction with the public. Thus, by at least a preponderance of the evidence, Defendant’s actions were willful.

Defendant showed reckless disregard for its conduct; therefore it was “willful”.

Even if Defendant did not actually know its conduct was illegal, it was at a minimum reckless. An employer willfully violates the FLSA if the employer “knew or showed reckless disregard for … whether its conduct was prohibited by the [FLSA.]” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). The regulations implementing the FLSA define “reckless disregard” as “failure to make adequate inquiry into whether conduct is in compliance with the act.” 5 C.F.R. § 551.104.

Defendant failed to make adequate inquiry into whether its payment of Plaintiffs’ wages complied with the FLSA. In response to the litigation and notices mentioned in the previous section, Defendant did virtually nothing to address its conduct. Defendant did not even attempt to provide a Handbook to its employees until 2013 and even then drafting it was delegated to the poker room manager, Mr. Faso. (Tr. Vol. II, P. 42, L 7-8). A simple internet search would have revealed DOL Fact sheet #15, but Defendant did not even make that effort. (Tr., P 48 – 49, L 24 -1).

The evidence also demonstrates Defendant made little to no inquiry into the validity of its tip pool. Defendant admits that it knew of problems with its tip pool as far back as 2010, however it did not seek legal advice or call the DOL for guidance. It did not seek an opinion from either the DOL or a lawyer – nor did it even appraise itself of the applicable regulations. It did not bother to segregate its employees tips in an attempt to count their monthly tips; instead lumping them all in one group it called “cage employees.”

Finally, Defendant’s Handbook actually provided false information to Plaintiffs and its other employees. Defendant’s Vault Manager and the vault employees themselves called themselves “supervisors” but were taking money from the tip pool. (Tr., P 88, L 1-10; P 77, L 5-6). At about the same time as it was being drafted in 2012, Mr. Faso was participating in the tip pool himself despite being a supervisor. (Tr. Vol. II, P 39, L 18-22). Moreover, the Handbook falsely informed Defendant’s employees that “supervisors” would not be taking money from the tip pool. (Plaintiffs’ Trial Exhibit 20). This conduct and that described in the previous section, taken as a whole, demonstrates reckless behavior and thus warrants a finding of “willfulness” entitling the Plaintiffs’ to 3 years of damages preceding the filing of their Complaint.

Liquated damages are proper because Defendant did not prove a good faith defense.
To satisfy the good faith requirement, an employer must show that it acted with both subjective and objective good faith and “upon such reasonable grounds that it would be unfair to impose upon [it] more than a compensatory verdict.” Wajcman v. Inv. Corp. of Palm Beach, 2009 W.L. 465071 (2009), citing

Bozeman v. Port-O-Tech Corp., 2008 WL 4371313, *15 (S.D.Fla. Sept. 19, 2008)(quoting Joiner, 814 F.2d at 1538). To demonstrate the subjective component, an employer must show that it had “an honest intention to ascertain what the FLSA requires and to act in accordance with those requirements.” Feniger v. Cafe Aroma, 2007 WL 853735, *3 (M.D.Fla. March 16, 2007) (citing Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562, 1566 (11th Cir.1991)).

Proving the objective component of the good faith defense requires the employer to demonstrate that it had a reasonable belief that its conduct conformed with the FLSA. See Chao v. Tyson Foods, Inc., 568 F.Supp.2d 1300, 1322 (N.D.Ala.2008). If the employer can demonstrate that it had both a subjective belief that it was compliant with the FLSA and that it also had an objectively reasonable basis for its belief, then the Court may apply the safe harbor provision and limit or deny an award of liquidated damages. See Stevenson v. Orlando’s Auto Specialists, Inc., 2008 WL 4371830, *4 (M.D. Fla. Sept. 23, 2008). “Absent a showing of both the subjective and objective elements of the good faith defense, liquidated damages are mandatory.” Dybach v. State of Fla. Dept. of Corrections, 942 F.2d 1562, 1566-67 (11th Cir.1991) (c.o.).

Here, Defendant did not prove it satisfied the good faith requirement. It never proved it had an honest intention to ascertain what the FLSA requires and to act in accordance with those requirements, as described supra. Although Defendant seemed to claim at trial it was trying to copy the scheme employed by another poker room, an employer cannot rely primarily on the practices of others in its industry to demonstrate a reasonable belief that certain conduct conforms with the FLSA. Wajcman v. Inv. Corp. of Palm Beach, 2009 W.L. 465071 (2009), citing Barrentine v. Arkansas Best-Freight System, 450 U.S. 728, 741, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (the FLSA was “not designed to codify or perpetuate [industry] customs” that fall short of the statute’s purpose) (citing Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 602, 64 S.Ct. 698, 88 L.Ed. 949 (1944)). Regardless, Defendant never proved an “industry practice” and lacked any expert opinions or authority to prove the same. Moreover, as per Mr. Postman, Defendant’s tip pool was different than other poker rooms tip pools. (Tr., P 43, L 12-18). Therefore, the Court finds that the Defendant failed to prove its actions were in good faith and a finding of liquidated (i.e. doubled) damages is proper.

Attorney fees for Plaintiffs is mandatory.
An award of attorneys’ fees is mandatory when a plaintiff receives a judgment in a FLSA case. See 29 U.S.C. § 216(b). Because the FLSA seeks to protect employees from “inequalities in bargaining power between employers and employees,” Congress had made its provisions mandatory. Lynn’s Food Stores, Inc. v. U.S. Dep’t. of Labor, 679 F.2d 1350, 1352 (11th Cir.1982). “The FLSA plainly requires that the plaintiff receive a judgment in his favor to be entitled to attorney’s fees and costs.” Dionne v. Floormasters Enters., Inc., 667 F.3d 1199, 1205 (11th Cir. 2012). Here, Plaintiffs were represented by counsel and, because they will receive a judgment, are entitled to an award of attorneys’ fees and costs.

Judgment in favor of both Plaintiffs is proper.
Based on the foregoing, judgment is hereby entered in favor of Plaintiffs, Christopher Handyman and Jeffrey Goodman and against Defendant, Second Chance Jai-Alai, LLC (EIN: 16-1635521)[13] in the following amounts:

Handyman: $26,432.91 ($10,234.00, tips taken + $16,197.91, min. wage)
Goodman: $52,717.42 ($29,000.00, tips taken + $23,717.42, min. wage)
for a total judgment of $79,150.33, for which let execution issue. The Court also finds that Plaintiffs are entitled to an award of attorney’s fees and costs and reserves jurisdiction to make a ruling on the amount of award of attorney’s fees and costs to the Plaintiffs and their counsel on subsequent motion.

DONE AND ORDERED in chambers this ____ day of ____________, 2016.

[1] Volume I of the Trial Transcript (Doc. 103) is referred to simply as “Tr.”. Volume II of the Trial Transcript (Doc. 104) is referred to as “Tr. Vol. II.”

[2] Most or all of Defendant’s examination or Mr. Bendure was framed in the present tense and therefore irrelevant to this case. See e.g. Tr., P. 73-75. The relevant time frame was when Plaintiffs worked for Defendant. Mr. Bendure was clear that his job duties changed after the downturn in business (i.e. after Plaintiffs left Defendants employment). (Tr., P. 88, L 17-20).

[3] C.F.R. § 531.59 is dated April 5, 2011 (76 FR 18856).

[4] Defendant’s counsel made this speaking objection even after Plaintiffs’ counsel objected that he was making a speaking objection and this Court recognized that objection. (Tr., P. 47, L 21-25).

[5] An employee’s tips are the property of the employees that receive them. 29 CFR § 531.52 (“Tips are the property of the employee whether or not the employer has taken a tip credit under section 3(m) of the FLSA.”)

[6] Available at http://www.dol.gov/whd/FOH/FOH_Ch30.pdf.

[7] This legal principle was recognized in Defendant’s Trial Brief, at Doc. 97, Page 9.

[8] Under 29 CFR 531.54, an employee who receives tips from a tip-pool is permitted to count those received tips to establish whether they exceed $30 per month. However, courts have rejected the argument that an employee could become eligible for tip sharing simply by taking money from the tip pool. See Chan v. Triple 8 Palace, Inc., No. 03 Civ. 6048 (GEL), 2006 WL 851749, at *14 & n.22 (S.D.N.Y. March 30, 2006).

[9] Available online at http://www.dol.gov/whd/regs/compliance/whdfs15.pdf.

[10] Available online at http://www.dol.gov/whd/FOH/FOH_Ch30.pdf.

[11] The minimum wage calculations for Mr. Handyman were more complex than for Mr. Goodman as reflected in the attached Exhibit D because of Mr. Handyman’s dual rate status.

[12] Judicial notice of these filings is proper. In Eastbourne Arlington One, LP v. JPMorgan Chase Bank, N.A., the district court for the Northern District of Texas explained that it could take judicial notice of court records “to establish the fact of their having been filed.” 2011 U.S. Dist. LEXIS 81977, at *6-7 (N.D. Tex. July 27, 2011); see also In re James, 300 B.R. 890, 895 (Bankr. W.D.Tex. 2003) (same). See United States v. Cohen, 2012 U.S. Dist. LEXIS 18891, at *14-15 (C.D. Ill. Feb. 27, 2012) (noting that while a court may take judicial notice of documents filed in other lawsuits to establish “the indisputable facts that those documents exist, they say what they say, and they have had legal consequences”, such documents cannot be used “as proof of disputed facts in any other sense.”); In re FedEx Ground Package Sys., 2010 U.S. Dist. LEXIS 30303, at *10 (N.D. Ind. Mar. 29, 2010) (”Court documents from another case may be used to show that the document was filed, that party took a certain position, and that certain judicial findings, allegations or admissions were made …. Judicial notice generally doesn’t extend to the truth of the matters that were asserted in the other judicial proceeding.”) (citing General Elec. Capital v. Lease Resolution, 128 F.3d 1074, 1081 (7th Cir. 1997)).

[13] Employer Identification Numbers (EIN’s) are public information and available online at sunbiz.org.

About the Author:

Massey & Duffy has existed since October, 2003. We focus exclusively on civil litigation, including wrongful death, overtime cases, car and trucking accidents, insurance claims, breach of contract, general employment law, and serious personal injury lawsuits.