- Restaurant Industry Update: Tennessee Court of Appeal Permits Lawsuit under State Tip Law to Proceed
- July 14, 2015 | Author: Joshua J. Sudbury
- Law Firm: Ford & Harrison LLP - Nashville Office
Executive Summary: The Tennessee Court of Appeal has held that a bartender can proceed with her lawsuit under §107 of the Tennessee Wage Regulation Act (TWRA), claiming her employer failed to pay her and other similarly situated employees tips and that it distributed tips among tipped and non-tipped employees in violation of the law. See Hardy v. Tournament Players Club (July 2, 2015). In reaching this decision, the court held that the General Assembly's 2013 amendments to §50-2-101 of the TWRA, providing that the Department of Labor and Workforce Development will enforce that section and eliminating the reference to civil litigation, did not deprive individuals of the right to bring a lawsuit under §50-2-107 (addressing payment of tips).
Section 101(b) of the TWRA provides, among other things, that employers must inform employees of the wages they will be paid before the employee begins work. Before the 2013 amendments, this section stated, "The amount agreed upon between employer and employee, or employee representative, shall constitute a basis for litigation in civil cases." The 2013 amendments deleted this statement and created §101(d), which provides "the department of labor and workforce development shall enforce this section."
Section 107 of the TWRA addresses how employers are to treat mandatory service charges or tips added to customers' bills. The employer argued that tips under §107 are equivalent to wages under §101 and that the 2013 amendments delegating enforcement to the Department of Labor overruled an earlier appellate court decision that had found a private right of action under §107. See Owens v. University Club of Memphis (1998).
The court rejected these arguments, holding that the 2013 amendments to §101 did not affect §107 and, accordingly, did not overrule its decision in Owens. The court noted that both courts and the General Assembly have treated the TWRA as separate and distinct and that courts have never construed §101 to apply to the entire TWRA. The court also noted that when the General Assembly amended §107 in 2012, it could have explicitly overruled Owens and did not do so.
Employers' Bottom Line: Employers in the restaurant industry should be aware of the court's decision in Hardy. While the legislature may amend the law next session to specifically state whether there is a private right of action under §107, unless and until that happens, and barring any subsequent court decision overruling Hardy, employees will be permitted to bring suit under this section.