Richard v. Marriott Corp.

• Decision Date: 07 February 1977
• Docket Number: Nos. 76-1496,76-1497,s. 76-1496
• Citation: 549 F.2d 303
• Parties: 23 Wage & Hour Cas. (BN 15, 80 Lab.Cas. P 33,477 Paul A. RICHARD et al., Appellees, v. MARRIOTT CORPORATION, Appellant. W. J. Usery, Jr., Secretary of Labor, United States Department of Labor, and Chamber of Commerce of the United States of America, Amici Curiae. Paul A. RICHARD et al., Appellants, v. MARRIOTT CORPORATION, Appellee. W. J. Usery, Jr., Secretary of Labor, United States Department of Labor, and Chamber of Commerce of the United States of America, Amici Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 303

549 F.2d 303

23 Wage & Hour Cas. (BN 15, 80 Lab.Cas. P 33,477

Paul A. RICHARD et al., Appellees, v. MARRIOTT CORPORATION, Appellant.

W. J. Usery, Jr., Secretary of Labor, United States

Department of Labor, and Chamber of Commerce of

the United States of America, Amici Curiae.

Paul A. RICHARD et al., Appellants, v. MARRIOTT CORPORATION, Appellee.

W. J. Usery, Jr., Secretary of Labor, United States

Department of Labor, and Chamber of Commerce of

the United States of America, Amici Curiae.

Nos. 76-1496, 76-1497.

United States Court of Appeals, Fourth Circuit.

Argued Dec. 8, 1976.

Decided Feb. 7, 1977.

Ivan H. Rich, Jr., Washington, D. C., for appellant in 76-1496 and for appellee in 76-1497.

Peter K. Stackhouse, Arlington, Va. (Tolbert, Smith, Fitzgerald & Ramsey, Arlington, Va., on brief), for appellees in 76-1496 and for appellants in 76-1497.

James B. Leonard, Atty., U. S. Dept. of Labor, Washington, D. C. (William J. Kilberg, Sol. of Labor, Carin Ann Clauss, Associate Sol., U. S. Dept. of Labor, Washington, D. C., on brief), for amicus curiae.

Before CRAVEN, WIDENER and HALL, Circuit Judges.

CRAVEN, Circuit Judge:

In 1974 and 1975 the tips were good at Marriott Corporation's Joshua Tree Restaurant in McLean, Virginia. Each waiter and waitress averaged getting above $5.43 an hour, and some made considerably more. Since the average hourly receipt in tips was far and away more than the federal minimum wage, it seemed sensible to management, and perhaps also to the employees at the time, that Marriott simply underwrite the federal minimum hourly wage, i. e., agree to pay it or make up the difference between the tips and the hourly wage in the event the tips did not come to as much as the minimum wage. That was the scheme of employment, and it apparently worked to everyone's satisfaction (because the tips were so large) until Congress amended the Fair Labor Standards Act on May 1, 1974. Section 3(m) of the Act was amended to read as follows:

In determining the wage of a tipped employee, the amount paid such employee by his employer shall be deemed to be increased on account of tips by an amount determined by the employer, but not by an amount in excess of 50 per centum of the applicable minimum wage rate, except that the amount of the increase on account of tips determined by the employer may not exceed the value of tips actually received by the employee. The previous sentence shall not apply with respect to any tipped employee unless (1) such employee has been informed by the employer of the provisions of this subsection, and (2) all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.

29 U.S.C. § 203(m).

The 1974 Senate Report states the purpose of the provision:

This latter provision is added to make clear the original Congressional intent that an employer could not use the tips of a "tipped employee" to satisfy more than 50 percent of the Act's applicable minimum wage.

As early as June 21, 1974, the Wage and Hour Administrator issued an opinion letter that, although not officially published, was widely circulated and reprinted in the National Restaurant Association's newsletter in the July 22, 1974 issue. This opinion letter and subsequent ones repudiated earlier opinions and gave notice to Marriott and other employers that tips had to be retained by the employees, that agreements remitting tips to the employer were henceforth invalid, and that the employer had to pay regardless of the amount of tips, at least one-half of the minimum wage.

The district court held, upon complaint of Marriott's employees, and we agree, that

(1) tips belong to the employee to whom they are left, and

(2) an employer must pay his tipped employees at least one-half of the applicable minimum wage in addition to tips left them by customers.

The district court thereupon awarded damages at the rate of 50 percent of the applicable minimum wage from July 22, 1974, the date on which Marriott learned that its pay practice was in conflict with administrative interpretations, to June 6, 1975, the date that it voluntarily ceased its former pay practice and came into compliance with the Act as amended.

Although it is not perfectly clear, we think from our reading of the oral opinion of the district court that it also held that Marriott had failed to satisfy the objective standard of "good faith" contained in Section 11 of the Portal-to-Portal Act of 1947, 29 U.S.C. § 260, when it continued using a pay practice which was in conflict with, and had been repudiated by, a written administrative interpretation that had been brought to its attention. We agree. See Mayhew, Inc. v. Wirtz, 413 F.2d 658 (4th Cir. 1969).

Only in respect to the measure of damages, and the award of special liquidated damages, did the district court fall into error. Out of a vague sense of fairness and a feeling that $5.43 and up per hour is enough for a wait(e) r(ess), the district judge held that Marriott...