On October 8 2014, a Federal District Judge from the New Jersey District Court denied summary judgment to the Defendant in Naider v. A-1 Limousine, Inc. The motion for summary judgment was pre-emptive–the plaintiffs had not yet requested conditional certification, but the defendant argued that class certification could be denied because the facts from their pleading were not sufficient to support any argument for incorporating any of the plaintiff’s co-workers into his lawsuit.
The court clearly rejected the defendant’s motion: “Importantly, Plaintiff alleges that the subject policies in violation of the Fair Labor Standards Act-no overtime hourly wages and the use of flat fees/service charges as de facto gratuities–are practices that apply to all similarly-situated employees.” “At this juncture,” the court stated, “based on Plaintiff’s pleadings, it is reasonable for the Court to infer that all drivers, employed by Defendant, were treated similarly.” In short, then, the plaintiffs seem to be in good position to expand the case into a class action.
Plaintiff Natan Naider, who has worked for A-1 Limousine for more than five years, alleges that throughout that time he worked between 50 and 65 hours each week without receiving overtime pay. He was compensated at $7.50 per hour, regardless of the number of hours worked.
What makes the case interesting is that the defendant did pay Naider and his fellow drivers additional monies, labeled “gratuities,” and claimed that this justified classifying them as tipped employees under the FLSA. This is likely to be the central issue in the case: the plaintiff argues that adding a service fee to the customers’ bills does not make the company’s drivers “tipped employees” under the law, even if the fees are in fact given to the employees who provide the service. If charging a service fee and labeling it a “tip” did not make Mr. Naider a tipped employee under the law, then he should have been paid one and one-half times his regular pay for the hours he worked above forty per week.
The Plaintiff’s argument seems to be based on a generally correct interpretation of the relevant law. For example, FindLaw gives the following summary: “Service Charges vs. Tips: Mandatory service charges are not considered tips, according to the FLSA. That means a mandatory 15 percent service charge that is paid out to wait staff, for example, cannot be counted as tips received for use as a tip credit. The service charge may be counted as part of the employee’s minimum wage and overtime requirements. However, employees who receive tips in addition to a mandatory service charge are considered tipped employees by the FLSA.”
In fact, if the allegations in his complaint hold up, Mr. Naider appears to be entitled to a substantial amount of overtime pay, at least, and this would be true whether or not he was a tipped worker under the law. The plaintiff alleges that he never received one and one-half times his base rate of $7.50 per hour, even when he worked many hours in excess of 40 per week.
If you are an employee and you believe you have been denied your right to minimum wage or overtime pay under the Fair Labor Standards Act, please contact The Harman Firm, LLP.