We challenged the U.S. Department of Labor’s position that it can apply its 2011 federal tip-credit restrictions to employers who do not take a tip credit. Specifically, the DOL said it can prohibit these employers from setting up tip-pooling arrangements that include employees who are not customarily tipped, such as back-of-the-house staff.
We won a decisive victory on this issue in a 2010 case, Cumbie v. Woody Woo Inc., before the 9th Circuit Court of Appeals. We won again in federal district court in 2013, but, in February 2016, a split three-judge panel of the 9th Circuit reversed this to rule in favor of the DOL, ignoring the 9th Circuit’s own precedent in the Woody Woo case. The 9th Circuit denied our petition for a rehearing in September 2016; however, 10 judges issued a blistering dissent, citing Woody Woo and a split among circuit courts on the issue.
These factors opened the door for potential U.S. Supreme Court consideration in 2017. Our co-plaintiffs are the Oregon Restaurant & Lodging Association, the Washington Restaurant Association, and the Alaska Cabaret, Hotel, Restaurant and Retailers Association, along with an Oregon restaurateur and one of the restaurant’s employees.