The question presented by both these cases is whether a railroad company operating a terminal subject to the Railway Labor Act, 45 U.S.C.A. § 181 et seq. and the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., is required by those statutes, in the absence of a negotiated agreement respecting wages, to pay 'red caps' a fixed minimum hourly wage irrespective of the tips from passengers received by the red caps, or whether an accounting and guarantee plan which leaves all tips with the red caps and assures them that each will receive at least the minimum wage is valid.
The Fair Labor Standards Act is not intended to do away with tipping. Nor does it appear that Congress intended by the general minimum wage to give the tipping employments an earnings-preference over the non-service vocations. The petitioners do not dispute the railroad's contention that, during the entire period, each red cap received as earnings-cash pay plus tips-a sum equal to the required minimum wage. Nor is there denial of increased pay to the red caps on account of the minimum wage guarantee of the challenged plan as compared with the former tipping system. The guarantee also betters the mischief of irregular income from tips and increases wage security. The desirability of considering tips in setting a minimum wage, that is whether tips from the viewpoint of social welfare should be counted as part of that legal wage, is not for judicial decision. We deal here only with the petitioners' assertion that the wages Act requires railroads to pay the red caps the minimum wage without regard to their earnings from tips.
The cases have a common background. Prior to October 24, 1938, the effective date of the Fair Labor Standands Act, the red caps at the terminals in question performed their familiar tasks without reward other than the tips of the passengers, and although subject to considerable supervision by the terminals were not officially considered employees. On September 29, 1938, the Interstate Commerce Commission, acting under § 1 of the Railway Labor Act, 45 U.S.C. § 151, 45 U.S.C.A. § 151, ruled that red caps in cities of over 100,000 population were employees within that Act. 229 I.C.C. 410.
Subsequent to that ruling the parallel series of events culminating in the two controversies now before us, while differing in details, followed the same general pattern. In No. 112 nothing further occurred until the Fair Labor Standards Act became effective. At that time the Jacksonville Terminal, in supposed compliance with the Act, began paying its red caps in cash the amount by which the statutory minimum wage exceeded each red cap's receipts in tips. This system in some form was used at the terminal until July 1, 1940.
In the belief that the Act required payment of the minimum wage wighout deduction of tips, the red caps, by their representative, Williams, brought an action against the terminal in United States District Court for the recovery of unpaid minimum wages between October 24, 1938, and July 1, 1940, and an equal additional amount as liquidated damages. Jurisdiction of the action was conferred by § 24(8) of the Judicial Code, 28 U.S.C. § 41(8), 28 U.S.C.A. § 41(8), and by § 16(b) of the Fair Labor Standards Act, 29 U.S.C. § 216(b), 29 U.S.C.A. § 216(b). The terminal answered and moved for summary judgment. Upon consideration of the exhibits, depositions, and stipulated facts the trial judge granted the motion, and the circuit court of appeals affirmed. 5 Cir., 118 F.2d 324. Because of the importance of the question whether the tips could be treated as payment of the statutory wage, the petition of the red caps' representative for certiorari was granted. 314 U.S. 590, 62 S.Ct. 64, 86 L.Ed. -.
Section 6 of the Act requires every employer to pay each employee engaged in interstate commerce wages at the prescribed rates per hour. Violation of that requirement renders the employer liable for the unpaid wages and for liquidated damages recoverable in an action by the employees' designated agent or representative. Since the terminal admitted by stipulation that Williams was the red caps' authorized representative ad litem, that the red caps were its employees, and that they were engaged in interstate commerce, the sole issue was whether the payment required by § 6 of the Act had been made.
The evidence, taken most favorably to the red caps, discloses the following. About October 24, 1938, the effective date of the Act, the terminal issued a written notice to each red cap:
'Jacksonville, Florida,
'Oct. 24th, 1938.
'To Red Cap ...,
'Jacksonville Terminal Company: