Wage and Hour Defense Blog

On March 23, 2023, Utah Governor Spencer Cox signed into law Senate Bill 73 (“SB 73”) expanding the group of employees eligible for tip pooling by allowing employers to include non-tipped employees in a bona fide tip pooling or sharing arrangement.

Historically, only “tipped employees” were permitted to participate in a tip pooling or sharing arrangement under Utah State law. This form of tip pooling is also allowed under federal law and is otherwise known as a traditional tip pool. A “tipped employee” is one who customarily and regularly receives tips or gratuities.”[1] Common examples of tipped employees include waiters and waitresses, whereas dishwashers, chefs, cooks, and janitors are examples of non-tipped employees.

The lingering morning chill in the air (at least, here, in the Northeast) suggests that summer is not quite here, but as the daylight persists through the evening hours, businesses small and large are gearing up for yet another summer – intern – season.

In anticipation of the arrival of these ambitious and eager workers, companies’ human resources professionals and stakeholders are asking the age-old questions:

Should these interns be classified as “employees” of the company?

Must they be compensated?

Isn’t knowledge and real-world experience the appropriate reward (and maybe some academic credit)?

Is this a wage and hour violation?

The answer to this question is that, it depends, which is a dependably frustrating response from a management-side employment lawyer.

A little over two years ago, the U.S. Court of Appeals for the Fifth Circuit became the first federal appellate court in the country to reject the widespread and longstanding two-step approach of first “conditionally” certifying Fair Labor Standards Act (“FLSA”) collective actions under a very lenient, plaintiff-friendly standard, followed by applying more rigorous scrutiny after the close of discovery at the “decertification” or “final certification” stage.  As we discussed here, the Fifth Circuit concluded in Swales v. KLLM Transport Services, LLC that the FLSA requires not two steps, but instead a single step that carefully examines whether the group of workers at issue is “similarly situated” before a court authorizes any notices to potential opt-in plaintiffs.