United States District Court, S.D. Alabama, Southern Division
APRIL R. NAIL, et al., Plaintiffs,
ROBERT M. SHIPP, et al., Defendants.
K. DUBOSE, CHIEF UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiffs' motion for
partial summary judgment (Doc. 155), Defendants' Response
(Doc. 158), and Plaintiffs' Reply (Doc. 159).
Findings of Fact
a collective action under the Fair Labor Standards
Act, 29 U.S.C. § 201 et seq.
(FLSA) based on activities at an Orange Beach,
Alabama restaurant. (Doc. 1). Named Plaintiffs Jordin
Ballard, Richard Boyett, Mark L. Hopper, and April R. Nail
(collectively with the opt-in plaintiffs) allege that
Defendants Robert "Matt" Shipp, Regina Shipp, and
Sportsman Fish House, LLC (d/b/a Shipp's Harbour Grill)
violated their FLSA rights while they were employed at the
restaurant. (Id.) In part, Plaintiffs assert
the Defendants claimed an improper tip credit and failed to
reimburse them for uniforms, violating FLSA minimum wage
compensation obligations. (Id.)
federally mandated minimum wage is $7.25/hour. 29 U.S.C.
§ 206(a)(1)(C). At the restaurant, the Defendants paid
plaintiffs (employed as servers) a direct cash wage of
$2.13/hour and claimed a tip credit of $5.12/hour. (Doc.
156-1 (Dep. M.Shipp at 70)). The restaurant also employed a
tip-out system, i.e., at the end of each shift, servers ran a
paper report showing their gross sales and 3% of the gross
sales was deducted from their tips . (Doc. 156-1 (Dep.
M.Shipp at 48)). Defendants required -- as a condition of
employment -- that servers place 3% of their gross sales in a
tip pool for distribution to other employees; 1% to bussers,
1% to food runners, and 1% to bartenders. (Doc. 156-1 (Dep.
M.Shipp at 33, 70-71, 196); Doc. 156-4 (Defs' Interrog.
Resp #1)). During training, employees were told about the
tip-out process (Doc. 156-1 (Dep. M.Shipp at 173-174); Doc.
156-2 (Dep. R.Shipp at 223-225)), and employees "learned
the tip sharing system nightly by doing." (Doc. 156-4
(Defs' Interrog. Resp. #1, 7)). General Manager Richard
Thomas (Thomas) administered the tip-out system. (Doc. 156-1
(Dep. M.Shipp at 77)).
the Defendants required employees to wear uniforms consisting
of a logo t-shirt and an apron. (Doc. 156-1 (Dep. M.Shipp at
262)). Servers were required to buy the aprons as part of the
uniform. (Doc. 156-1 (Dep. M.Shipp at 245, 262); Doc. 156-4
(Defs' Interrog. Resp. #5, 7, 12)). Regarding shirts,
until 2017 Defendants only provided one (1) shirt to tipped
employees free of charge. (Doc. 156-4 (Defs' Interrog.
Resp. ##5, 10); Doc. 156-2 (Dep. R.Shipp at 228)). Defendants
charged the tipped employees $10/shirt to purchase additional
shirts. (Id.) Following a second Department of Labor
(DOL) investigation of the restaurant in 2017 -- during which
the DOL investigator told Matt Shipp the restaurant was
required to provide two (2) free shirts to tipped employees
as most worked two (2) double shifts/week and one (1) shirt
was insufficient -- Defendants began providing two (2) free
shirts. (Doc. 156-1 (Dep. M.Shipp 59); Doc. 156-5 (DOL
Report); Doc. 156-4 (Defs' Interrog. Resp. ##5)).
Standard of Review
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Rule 56(c) provides as follows:
(1) Supporting Factual Positions. A party asserting
that a fact cannot be or is genuinely disputed must support
the assertion by:
(A) citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the
absence or presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support the fact.
(2) Objection That a Fact Is Not Supported by Admissible
Evidence. A party may object that the material cited to
support or dispute a fact cannot be presented in a form that
would be admissible in evidence.
(3) Materials Not Cited. The court need consider
only the cited materials, but it may consider other materials
in the record.
(4) Affidavits or Declarations. An affidavit or
declaration used to support or oppose a motion must be made
on personal knowledge, set out facts that would be admissible
in evidence, and show that the affiant or declarant is
competent to testify on the matters stated.
Fed.R.Civ.P. Rule 56(c).
party seeking summary judgment bears the “initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of ‘the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if
any,' which it believes demonstrate the absence of a
genuine issue of material fact.” Clark v. Coats
& Clark, Inc., 929 F.2d 604, 608
(11th Cir. 1991) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986)). If the nonmoving
party fails to make “a sufficient showing on an
essential element of her case with respect to which she has
the burden of proof, ” the moving party is entitled to
summary judgment. Celotex, 477 U.S. at 323.
“In reviewing whether the nonmoving party has met its
burden, the court must stop short of weighing the evidence
and making credibility determinations of the truth of the
matter. Instead, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in
his favor.” Tipton v. Bergrohr GMBH-Siegen,
965 F.2d 994, 998-999 (11th Cir. 1992).
move for partial summary judgment on: 1) the personal
liability of the individual Shipp defendants as FLSA
employers; 2) Defendants' failure to satisfy Section
203(m)'s prerequisites before claiming a tip credit; 3)
Defendants' improper shifting of business expenses for
uniforms to employees; 4) the willfulness of Defendants'
FLSA violations; and 5) Defendants' failure to provide
evidence in support of their 9th, 10th,
12th and 13th affirmative defenses.
Defendants as FLSA Employers
"agree they are 'Employers' as defined by the
Act and are therefore subject to liability." (Doc. 158
at 2). Thus, "there is no dispute that Robert Shipp and
Regina Shipp each own 50% of Sportsman Fish House, LLC d/b/a
Shipps Harbour Grill and that they maintained operational
control of the enterprise at all times relevant to this
litigation….Defendants…concede they are
employers as defined by the Act." (Id. at 3).
As such, Plaintiffs' motion is GRANTED as to the claim
that Robert Shipp and Regina Shipp are individually liable
Tip Credit - Section 203(m)
contend that the Defendants' improperly claimed a tip
credit to satisfy their minimum wage payment obligations. As
grounds, Plaintiffs assert that the Defendants failed to
inform them of Section 203(m)'s requirements, and that an
employer cannot take a tip credit for an employee
"unless such employee has been informed by the employer
of the provisions of this subsection.” 29 U.S.C. §
FLSA requires employers to pay employees the $7.25/hour
federal minimum wage. 29 U.S.C. § 206(a)(1)(C).
"Employers can meet this obligation through a base wage
or by a tip credit equal to the difference between the base
wage and the statutorily required minimum wage."
Dalley v. CG RYC, LLC, 2018 WL 7629048, *2 (S.D.
Fla. Aug. 31, 2018). Pursuant to the FLSA, minimum
wage employees who receive more than $30/month in tips are
defined as tipped employees within the minimum wage system
(i.e., tipped minimum wage employees), and may be paid via a
tip credit process tied to the federal minimum wage rate. The
maximum tip credit against minimum wage is $5.12/hour and the
minimum cash wage is $2.13/hour (to total the federal minimum
wage rate of $7.25/hour). As discussed in
Gutierrez v. Galiano Enterp. of Miami, Corp., 2019
WL 2410072, *5 (S.D. Fla. Jun. 7, 2019):
….if the employee is a “tipped employee, ”
[29 U.S.C. § 203(m)]authorizes an employer to pay the
employee (1) an hourly wage of $2.13 plus (2) an additional
amount in tips that brings the total wage up to the federal
minimum wage of $7.25 an hour. 29 U.S.C. § 203(m). An
employer who uses an employee's hourly tips to reach the
minimum hourly wage due the employee is said to take a
“tip credit.” This means that a tip credit is the
difference between the minimum wage and the amount paid to a
tipped employee. See Crate v. Q's Rest. Grp.
LLC, 2014 WL 10556347, at *2 (M.D. Fla. May 2, 2014). It
essentially allows an employer of a tipped employee to pay a
reduced minimum wage if the difference between the current
minimum wage rate and the reduced rate that the employer pays
is covered with the employee's actual tips. See 29 U.S.C.
See also e.g., Malivuk v. Ameripark, LLC,
694 Fed.Appx. 705, 706-707 (11th Cir. 2017)
(same); P&k Rest. Ent., LLC v. Jackson, 758
Fed.Appx. 844, 847-848 (11th Cir. 2019).
for an employer to be able to claim the tip credit, the
employer must establish that the tipped employee was informed
about the tip credit. As stated in Pellon v. Business
Rep. Int., Inc., 528 F.Supp.2d 1306, 1309-1310 (S.D.
Fla. 2007), aff'd 291 Fed.Appx. 310
(11th Cir. 2008) (per curiam) (emphasis added):
…The difference between the amount an employee must be
paid under the minimum wage law and the amount directly paid
to a tipped employee is commonly referred to as a “tip
credit.” See 29 U.S.C. § 203(m); 29
C.F.R. § 531.51. The tip credit is not an exemption;
instead, it is set forth in the definition of the required
minimum wage. The following requirements must be met to
satisfy Section 203(m): (1) the tip credit must be
claimed for qualified tipped employees; (2) the employees
must receive proper notice of Section 203(m); and
(3) all tips received by the employees must be retained by
203(m)(2)(A) further provides that:
(2)(A) In determining the wage an employer is required to pay
a tipped employee, the amount paid such employee by the
employee's employer shall be an amount equal to--(i) the
cash wage paid such employee which for purposes of such
determination shall be not less than the cash wage required
to be paid such an employee on August 20, 1996; and (ii) an
additional amount on account of the tips received by such
employee which amount is equal to the difference between the
wage specified in clause (i) and the wage in effect under
section 206(a)(1) of this title.
The additional amount on account of tips may not exceed the
value of the tips actually received by an employee. The
preceding 2 sentences 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 ...