No Private Lawsuits under the Tennessee Tip Statute

No Private Lawsuits under the Tennessee Tip Statute

Hardy v. TPC Southwind, W2014-02286- SC-R11- CV (Tenn. Mar. 8, 2017)

The Tennessee Supreme Court has determined that food service employees and other tipped workers do not have the right under the Tennessee Tip Statute, Tenn. Code Ann. § 50-2- 107, to bring lawsuits against their employers for wrongfully distributing their tips among untipped employees. The Tip Statute requires Tennessee restaurants and clubs to distribute automatically added gratuities only to the employees who rendered service to the tipping customers. The law is enforced through the Department of Labor and Workforce Development, with remedies in the form of fines and violations of the statute constituting criminal offenses. The law does not, however, explicitly provide employees with a private right of action to sue their employers for violations of the statute.

In a unanimous opinion, the Supreme Court declined to read an implied private right of action into the law. The Court observed that although the Tip Statute was enacted to protect and benefit tipped employees, that alone is insufficient to imply a private right of action, and there was nothing in the context language or legislative history indicating that the Legislature envisioned private citizens bringing lawsuits against their employers under the Tip Statute. The Court further declined to presume that the Legislature, in amending the Tip Statute in 2012 and 2013, intended to rely upon a previous opinion interpreting the statute as providing a private right of action to tipped employees.

The Supreme Court’s opinion in Hardy reverses a lower court decision interpreting the Tip Statute as allowing private citizens to file lawsuits against their employers based on violations of the law. While the Tip Statute may not provide tipped employees with a means of recourse against their employers, other statutes still provide some level of protection and the right to bring private legal actions. For instance, a tipped employee’s wages must still meet federal minimum wage requirements, and the Fair Labor Standards Act allows employees to file suit against their employers to enforce that requirement. Indeed, class action lawsuits of this type are commonplace and can lead to a recovery of back pay for the employees and even punitive damages against the employer.

Louis W. Ringger, III

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