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Federal preemption has caused a group of American Airlines skycaps to lose their case on lost tips. The decision was made when the 1st Circuit found that the Massachusetts tips law that the skycaps were arguing for was preempted by federal law, namely the Airline Deregulation Act.
American Airlines originally offered free curbside check in for passenger's baggage. Most passengers tipped their skycaps around $1 per bag. In 2005, American began to institute a new policy, due to inflating costs, and began charging $2 for curbside check in, reports the AP.
As a result, many passengers probably were confused by the $2 fee, and believed that the fee was the skycap's tip. As a result, the tip income that skycaps normally received was drastically reduced, reports the AP.
The skycaps originally argued, according to the 1st Circuit's opinion, that they were entitled to tips because the $2 fee was violating a Massachusetts tip law. The law essentially forbade employers from keeping tips that were intended for the employees.
American Airlines, however, argued that the case fell under federal law, and that the Airline Deregulation Act, which states that no state can "enact or enforce a law, regulation or other provision having the force and effect of law related to a price, route or service of an air carrier."
The 1st Circuit agreed with American, and reversed the District Court's original award of around $330,000 to the skycaps, reports the AP.
What does this mean for other small businesses? Not much, it seems, unless you're an airline, or if your type of business has a federal regulation that can preempt existing state tips laws.
State tips law can vary. Federal regulations caused the skycaps to lose their appeal, but it seems that in other situations in Massachusetts - where there is no overriding statute - the law remains the same: if someone meant for the fee to be a tip, it should be given to the employee.
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