The Big Wheels Keep on Turning for Oregon Tip Pooling

The Oregon Restaurant & Lodging Association owes a debt of gratitude to our partners at the National Restaurant Association and our friends at Jackson Lewis law firm for working together to cover all costs for a petition of the United States Supreme Court in our case, Oregon Restaurant & Lodging Association v. Perez. If the Supreme Court takes the case, both parties have also agreed to cover all costs associated with necessary deliberation of our position. So, fingers crossed that the U.S. Supreme Court does in fact take the case and grant our petition for rehearing.

If you’re just now getting up to speed, we continue to fight for the rights of our restaurant members to implement mandatory tip pooling policies amongst staff working within the line of service as they see fit. We feel tip pooling amongst staff (not management) to be a right of employers when they are already meeting the full requirements of minimum wage law for all staff they employ.

There are seven states in our country (including Oregon) that do not have a tip credit, meaning all employers in these states are meeting all minimum wage obligations of all staff regardless of tip income being received by employees from customers. In a controversial decision on February 23, 2016 the Ninth Circuit, to the surprise of many, disregarded its own precedent in a previous case ORLA was involved with in Cumbie v. Woodie Woo to hold that the United States Department of Labor (DOL) had lawfully promulgated a rule under Section 203(m) of the Fair Labor Standards Act (FSLA) that restricts employers from implementing “tip pooling” arrangements that require employees that are customarily and regularly tipped (such as restaurant servers) to share such tips with their fellow employees who are not customarily or regularly tipped (such as kitchen staff).

On September 6, 2016 our case was denied a rehearing which upheld the February 23 decision. We were however granted a stay of the Ninth Circuit, meaning the government will not enforce the February 23 decision until either the Supreme Court denies our petition for certiorari or the Supreme Court reaches a final resolution on the merits of our case (if it takes the case).

Our lawsuit, Oregon Restaurant & Lodging Association v. Perez, is based on our belief that principles established in previous court cases that established the rights of our members to create tip pools between front of the house and back of the house staff were intentionally supplanted by a federal bureaucracy that didn’t like the decision judges made in our case.

If we look back at where we started on this issue and where we are to date, it has been quite the journey full of crucial questions that must be addressed about what separation of powers look like in the United States of America. Should the U.S. Department of Labor have the right to create a new rule that applies to employers operating in states that are already paying the full obligations of minimum wage outside of tip income and tell those employers how tips can and cannot be dispersed amongst employees within their private business? Should the U.S. Department of Labor be able to circumnavigate clear judicial direction given to us in our district court case allowing tip pooling in our state through a stroke of their rulemaking pen?

We certainly don’t think so. And we hope the U.S. Supreme Court agrees that a closer look at our case is deserving as they make tough decisions about what cases to accept with their limited time. Keep your fingers crossed – it is possible your statewide association in the northwest corner of the country will have its day in court amongst the most highly regarded court in the land.

In the meantime, please review your available tip pooling options here as we await more clarity on tip pooling through the judicial process. | Jason Brandt, President & CEO