SAN FRANCISCO (AP) — Businesses cannot collect tips given to waiters, casino dealers or other service employees to share with support staff such as dishwashers even if the tipped employees are receiving minimum wage, a federal appeals court has ruled.
The 2-1 decision by the 9th U.S. Circuit Court of Appeals upheld a 2011 U.S. Labor Department rule.
The 9th Circuit said Tuesday the rule was reasonable and consistent with Congress’s goal of ensuring tips stay with employees who receive them. The court overturned rulings in Nevada and Oregon.
The 9th Circuit ruling would largely apply to states that require workers to get the state minimum wage on top of any tips.
Seven states fall into that category, according to the labor department — Minnesota, Montana, Nevada, Oregon and Washington.
“The premise is the tip is never the employer’s,” said Reuel Schiller, a labor law professor at the University of California, Hastings in San Francisco. “The employer doesn’t have the power to take that from the waiter and give it to a dishwasher because it’s not the employer’s money.”
