LegalSpeak: A court striking down a tipping pool arrangement—Wajcman v. Investment Corp. of Palm Beach (D. Fla. 2009)

Workers’ Compensation Law Read more from
Chapter Employment Law

However, the Court finds that Defendant’s belief regarding its FLSA compliance was not objectively reasonable. First, there are a number of cases which suggest that an employee’s level of customer interaction is the most significant factor in evaluating whether he qualifies as a “tipped employee” under the FLSA….

Here, however, the bulk of the evidence before this Court suggests that the floor supervisors in Defendant’s cardroom had only de minimus customer interaction. Although the written job description mentions that floor supervisors will have “[d]aily contact with customers,” the evidence demonstrates that such contact did not rise to the level of customer interaction usually associated with a tipped employee. Indeed, the testimony at trial indicated that the floor supervisors’ interaction with customers was sporadic and only on an as-needed basis for dispute resolution or when hosts, chip runners or waitresses were unavailable. As their job description sets forth, the floor supervisors’ primary responsibility was to supervise the employees on the cardroom floor, which included assigning the dealers’ table rotations, their break times and ensuring employees’ compliance with the dress code.

Based on this testimony, the Court finds that Defendant overstated the customer interaction component of the floor supervisors’ duties to justify their inclusion in the tip pool. The Court further finds that Defendant underestimated the significance of the “customer interaction” test, relying too heavily on industry practice to support its decision to include the floor supervisors in the tip pool. This combination of errors resulted in Defendant’s grossly miscalculated conclusion that the floor supervisors were proper participants in the tip pool. Indeed, the jury’s verdict suggests that an average person outside the gaming industry would not agree with Defendant’s characterization of the floor supervisors as having significant customer interaction and such a skewed perception cannot be construed by this Court as objectively reasonable.


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