Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 2

Fair Labor Standards Act. Misty Cumbie worked as a waitress at Vita Cafe in Portland, Oregon. The cafe was owned and operated by Woody Woo, Inc. Woody Woo paid its servers an hourly wage that was higher than the state's minimum wage, but the servers were required to contribute their tips into a "tip pool." Approximately one-third of the tip-pool funds went to the servers, and the rest was distributed to the kitchen staff that otherwise rarely received tips for their service. Cumbie sued Woody Woo, alleging that the tip-pooling arrangement violated the minimum wage provisions of the Fair Labor Standards Act (FLSA). The district court dismissed the suit for failure to state a claim. Cumbie appealed. Did Woody Woo's tip-pooling policy violate the FLSA rights of the servers? Explain your answer. [ Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010)]