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October 14, 1994

DUQUESNE CLUB, a Pennsylvania corporation, Defendant.

The opinion of the court was delivered by: BLOCH

 BLOCH, District J.

 Presently before the Court is defendant's motion to dismiss the fifth paragraph of plaintiffs' amended complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). At a conference on August 8, 1994, the Court informed the parties that it would treat defendant's motion to dismiss as a motion for summary judgment and allowed plaintiffs an opportunity to present evidence in opposition to the motion. For the reasons stated in this opinion, defendant's motion will be granted in part and denied in part.

 I. Background

 Plaintiffs, Platek, Varga, McCullough, Haney, Sr., Rimlinger, Von Geis, Tripodi, Roman and Burton, are wait staff employees of the Duquesne Club (the Club). Plaintiff Malezi was a banquet captain employed by the Club prior to his separation from employment on June 2, 1994. With the exception of Malezi, who no longer works for the Club, and Burton, who is employed by the Club as a waitress, the remaining plaintiffs are employed by the Club as banquet captains.

 The Club currently does not claim a tip credit under § 3(m) of the Fair Labor Standards Act (FLSA). Rather, pursuant to an agreement between the Club and the Duquesne Club Employees Association (Association), employees at banquet functions are paid a wage rate of at least $ 4.25 per hour in addition to certain set sums of gratuities. The parties agree that the gratuities in question are "tips" and that plaintiffs are "tipped employees" under the FLSA. *fn1" From the tips collected by the Club, a set sum of tip money is distributed to specific wait staff employees, including waiters, waitresses and bus persons, and the remaining amount is distributed evenly to the food and beverage director, assistant food and beverage director and the banquet captains.

 Defendant states that all waitresses and banquet captains currently receive wages in excess of the federal statutory minimum wage of $ 4.25 an hour. Plaintiffs Tripodi and Burton acknowledge that they currently receive hourly wage rates in excess of the minimum wage but they contend that the Club's practice of taking their tips and distributing the tip money to employees who do not customarily and regularly receive tips results in a violation of § 3(m). Plaintiff Burton, however, further states that prior to October 1, 1991, the Club paid her at the rate of $ 4.12 an hour to serve dinners and that it claimed a $ 0.13 tip credit.

 The fifth paragraph of plaintiffs' complaint alleges that the Club's payment schedule constitutes willful and repeated violations of FLSA § 3(m) and § 15(a)(2). *fn2" Plaintiffs allege that the Club's practice of requiring wait staff employees to remit their tip monies to the Club to be shared with employees of the Club who are employed in positions that do not "customarily and regularly" receive tips violates § 3(m). Plaintiffs base their argument on administrative opinions and case law which indicate that tips are the property of the tipped employee and that there can be no valid agreement between the employer and employee that allows the employer to appropriate the tip monies for its own purposes or to distribute them to traditionally non-tipped employees.

 Defendant maintains that plaintiffs' claim set forth in paragraph 5 of the complaint fails as a matter of law for two reasons. First, defendant contends that § 3(m) does not apply to the Club because it pays plaintiffs a wage rate in excess of the minimum wage rate. Second, it argues that § 3(m) does not apply to an employer unless the employer claims the tip credit.

 II. Discussion

 A motion for summary judgment may be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering a motion for summary judgment, the Court must examine the facts in a light most favorable to the party opposing the motion. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir.), cert. denied, 507 U.S. 912, 113 S. Ct. 1262, 122 L. Ed. 2d 659 (1993); International Raw Materials, Ltd. v. Stauffer Chemical Corp., 898 F.2d 946, 949 (3d Cir. 1990).

 The issues in this case require an interpretation of FLSA § 3(m). Statutory interpretation begins with an examination of the language of the statute. United States v. Alvarez-Sanchez, 511 U.S. 350, 114 S. Ct. 1599, 1603, 128 L. Ed. 2d 319 (1994); United States v. Schneider, 14 F.3d 876, 879 (3d Cir. 1994). If the language of the statute is expressed in plain terms, then those terms are considered conclusive. Negonsott v. Samuels, 507 U.S. 99, 113 S. Ct. 1119, 1123, 122 L. Ed. 2d 457 (1993). In ascertaining the plain meaning of the statutory language, however, the Court should avoid an interpretation that leads to an absurd result. Anderson v. United States, 203 Ct. Cl. 412, 490 F.2d 921, 928 (Ct. Cl.), cert. denied, 419 U.S. 827, 42 L. Ed. 2d 52, 95 S. Ct. 47 (1974).

 Section 3(m) of the FLSA, which is commonly referred to as the tip credit provision, reads as follows:

In determining the wage of a tipped employee, the amount paid such employee by his employer shall be deemed to be increased on account of tips by an amount determined by the employer, but not by an amount in excess of...50 percent of the applicable minimum wage rate after March 31, 1991, except that the amount of the increase on account of tips determined by the employer may not exceed the value of tips actually received by the employee. The previous sentence shall not apply with respect to any tipped employee unless (1) such employee has been informed by the employer of the provisions of this subsection, and (2) all tips received by such employee have been ...

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