
USCA1 Opinion

	




          July 31, 1992                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                        _____          No. 91-2213.                           LYNN MARTIN, SECRETARY OF LABOR,                          UNITED STATES DEPARTMENT OF LABOR,                                Plaintiff, Appellant,                                          v.                          TANGO'S RESTAURANT, INC., ET AL.,                                Defendants, Appellees.                                     ___________                                     ERRATA SHEET                    The opinion of this  Court issued on July 20,  1992, is          amended as follows:                    On page 10, section heading  "II" should be changed  to          "III".                    On page  18, section heading "III" should be changed to          "IV".          July 20, 1992                                 ____________________        No. 91-2213                           LYNN MARTIN, SECRETARY OF LABOR,                          UNITED STATES DEPARTMENT OF LABOR,                                Plaintiff, Appellant,                                          v.                          TANGO'S RESTAURANT, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Jose Antonio Fuste, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                  Cyr, Circuit Judge,                                       _____________                            Roney,* Senior Circuit Judge,                                    ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Lauriston H. Long, Attorney, U.S. Department  of Labor, with  whom            _________________        Marshall  J.  Breger, Solicitor  of  Labor,  Patricia M.  Rodenhausen,        ____________________                         ________________________        Regional Solicitor, Monica Gallagher, Associate Solicitor, and William                            ________________                           _______        J. Stone, Counsel for Appellate Litigation, U.S. Department  of Labor,        ________        were on brief for appellant.            Wallace Vazquez Sanabria for appellees.            ________________________                                 ____________________                                 ____________________        _____________________        *Of the Eleventh Circuit, sitting by designation.                  BOUDIN,  Circuit  Judge.       The  Secretary  of Labor                           ______________             brought suit  under the  Fair Labor  Standards  Act of  1938             ("FLSA" or "the  Act"), 29 U.S.C.    201 et  seq., against a                                                      ________             corporation and its owners  ("the defendants") to enjoin and             redress  violations of  the  statute.   After  a trial,  the             district court awarded some but not all of the relief sought             by the Secretary.  The Secretary seeks review on two issues.             On one  of them, we agree with the Secretary and reverse the             district  court; and  on the  other, we  remand  for further             proceedings.                                         -2-                                    I. BACKGROUND                  Tango's Restaurant, Inc. ("Tango's"), is  a corporation             conducting a  restaurant business in Hato  Rey, Puerto Rico.             Its president is Jorge Carcavallo, who manages the  business             together  with his wife,  Vilma Carcavallo, the restaurant's             secretary, treasurer and office manager.  Together, they own             the  business.     The  Secretary,  who is  responsible  for             enforcing the  FLSA, conducted  an investigation of  Tango's             and concluded  that Tango's  was keeping  inaccurate records             and  failing  to pay  minimum  wages  and required  overtime             compensation.  On June 11, 1991, the  Secretary brought suit             in  the  district court,  naming  the  corporation and  both             Carcavallos as defendants.  Although the complaint charged a             number  of violations,  only two  episodes are  pertinent to             this  appeal, and the facts  set forth below  are limited to             those episodes.                  In the district  court, the Secretary  sought back  pay             and liquidated damages for the waiters at Tango's, asserting             that they had not been  paid the minimum wage (FLSA    6, 29             U.S.C.    206) or required overtime compensation.  FLSA   7,             29 U.S.C.   207.  After extensive discovery, a six-day trial             was held before the district judge.   On July 31, 1991,  the             district court  entered judgment, together with  findings of             fact  and  conclusions  of  law, granting  extensive  relief                                         -3-                                          3             against defendants but not  all of the relief sought  by the             Secretary.  The relief granted included, as  provided by the             Act, awards of back  pay and liquidated damages for  most of             the waiters.  FLSA   16, 29 U.S.C.   216.                  The  district  court  ruled  that  15  of  the  waiters             (together with seven other former or present employees) were             entitled to $51,880.68  in back  pay, and a  like amount  in             statutory liquidated damages.  The court found that  Tango's             books reported  these waiters as  working a uniform  40 hour             week at  an hourly  rate of  $2.95 per  hour.   Although the             waiters had  been  paid this  amount  by Tango's,  they  had             generally worked six days a week and had averaged 53 hours a             week.  Further, under  the Act the minimum wage in  force at             the  time of  their employment  was $3.35  per hour  (FLSA               6(a)(1), (c)(1)(B),  29 U.S.C.   206(a)(1), (c)(1)(B)), with             "time and a half"  the employee's regular rate for  hours in             excess  of 40. FLSA    7(a)(1), 29 U.S.C.    207(a)(1).  The             waiters had also  averaged about  $66 per day  each in  tips             which they pooled, divided, and retained.                  The  district   court   held,  over   the   Secretary's             objection, that  the defendants  were  entitled to  treat  a             portion  of the  tips received  by the  waiters as  a credit             against   the   defendants'   minimum   wage   and  overtime             compensation  obligations.   The  Act  permits  such a  "tip             credit"  under certain  conditions, including  a requirement                                         -4-                                          4             (described  more fully  below) of  notice to  the employees.             FLSA   3(m), 29  U.S.C.   203(m).  The district  court found             that  the notice requirement had  been met in  this case and             allowed the defendants to  take a tip credit of 40 cents per             hour for both  the minimum wage  and overtime  compensation.             This  credit eliminated  any underpayment  for the  first 40             hours ($2.95 + 40 cents = $3.35) and reduced the defendants'             liability for overtime hours and liquidated damages.                    The district court declined to order any back pay award             for Manuel Santiago,  who acted both as a waiter  and as the             manager of  other  waiters.   Santiago was  also carried  on             Tango's books as working a 40  hour week at $2.95 per  hour.             In fact he  was paid not  only the book  figure of $118  per             week (40 x $2.95) but an additional off-book payment of $200             per week,  regardless of hours  actually worked.   The trial             judge found  that Santiago's hours of work  varied from week             to  week but averaged 58 hours a week.  Santiago shared tips             on the same basis as the  other waiters.  The district court             ruled that  Santiago's wages  of  $318 per  week  adequately             compensated him  for his 58 hours of work, and it added that             he was in any event an involuntary plaintiff and responsible             for the illegal practices that led to the case.                     This  appeal followed.   In  this court,  the Secretary             contends  that no  tip credit  should have  been allowed  in                                         -5-                                          5             computing  liability to  the waiters  and that  Santiago was             entitled to an award for uncompensated overtime.                                  II. THE TIP CREDIT                  A  stranger   to  the  FLSA  might   suppose  that,  in             determining an employer's minimum wage obligations, the tips             regularly received and retained by an employee either  would             be  treated as  wages  paid  by  the  employer  or,  in  the             alternative,  would  be  wholly  ignored.    Instead,  in  a             legislative compromise, Congress chose  to allow employers a             partial  tip credit if, but  only if, certain conditions are             met.  At  the time of  the employment in this  case, section             3(m) of the Act provided that in computing minimum wages the             employer  could  treat as  wages paid  by the  employer tips             actually  received   by  the  employee  up   to  "an  amount             determined by the employer but not . . . in excess of 40 per             centum of the  applicable minimum  wage."  See  29 U.S.C.                                                           ___             203(m) (1982).   Section 3(m) also  provided, however,  that             this tip credit provision would not apply 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                  retained by  the employee [except that  pooling of                  tips among tipped employees is permitted]."                  In  this  case, the  Secretary  called  at trial  eight             waiters  who testified  uniformly  that defendants  had told             them nothing  about  either  the  minimum  wage  or  Tango's             intention to treat tips as  wages under the Act.   Jorge and                                         -6-                                          6             Vilma Carcavallo each testified at trial, as did the waiter-             manager Santiago, but none of  the three testified that  the             waiters  had been notified of either the minimum wage or the             tip credit.  The Secretary's compliance officer allowed a 40             cent  tip  credit  in  his  investigative  report,  but  the             Secretary tells us that this  was a tentative allowance made             prior  to   the  waiters'  trial  testimony   and  that  the             compliance officer relied  in part on an  affidavit of Vilma             Carcavallo, asserting that at the outset of employment  each             waiter  was told that Tango's  utilized a tip credit against             its  minimum wage obligations.  We are further told that the             affidavit was  not offered at trial nor did Vilma Carcavallo             repeat this assertion in her testimony.                   The  trial judge  nevertheless found that  "the waiters             were told  that the  restaurant would  utilize a  tip credit             against  its  obligations  to  pay  minimum  wages"  to  the             waiters.  The court  said that it did not  find the waiters'             denial  of notice  credible because  employees would  not be             likely to accept employment  at $2.95 an hour when  San Juan             offered many jobs at the  minimum wage of $3.35.   The court             stressed  that  the   waiters  had  received   and  retained             substantial tips and that the compliance officer had allowed             the tip credit on the first 40 hours of work.  The Secretary             contends that  the trial court  erred in ruling  that notice             had been given.  We agree with the Secretary.                                         -7-                                          7                  Section 3(m) requires  as a condition of the tip credit             that  the  employee  be  informed by  the  employer  "of the             provisions of this subsection . . . ."  The core  provisions             of  section  3(m) allow  an employer  to  take a  tip credit             against  the  employer's  minimum  wage  obligations, in  an             amount to be determined by  the employer, subject to certain             limitations.   We read section  3(m) to require  at the very             least  notice to  employees of  the employer's  intention to             treat tips as satisfying part of the employer's minimum wage             obligations.   It could easily  be read to require more--for             example,  notice  of "the  amount .  .  . determined  by the             employer" to constitute wages--but how much more need not be             decided in this case.                  As  the  finder of  fact,  the  district  judge may  be             reversed only where a finding  is "clearly erroneous."  Fed.             R. Civ. P. 52(a);  Anderson v. Bessemer  City, 470 U.S. 564,                                ________    ______________             573  (1985).    As the  record  stands,  we  are pointed  to             substantial, uniform testimony that the minimum wage or  tip             credit  was never mentioned to  the waiters but  cited to no             evidence that Tango's gave its waiters any notice of either.             The inference  that notice  was given,  drawn  by the  trial             judge, seems to us  to be faulty.  The  waiters' willingness             to work for wages of $2.95,  where $3.35 might be earned  in             other available jobs,  might be some proof  that the waiters             expected  to earn  and retain  their tips,  but it  does not                                         -8-                                          8             suggest even mildly  that the waiters  knew anything of  the             minimum  wage laws or  defendants' intention to  claim a tip             credit against their obligations.                    As for the investigating officer, he testified at trial             that  no notice of  the tip credit was  given to the waiters             and  "no one [among the waiters] even knew what a tip credit             meant";  that  in making  his  calculations he  nevertheless             allowed  a 40  cent tip  credit for  each waiter's  first 40             hours  a week;  and  that  he did  so  not because  the  law             warranted it but because the tips were actually paid and the             officer thought a  tip credit "would  be more fair."    This             testimony  plainly undercuts, rather  than supports, a claim             that  notice  was given.   Cases  are ordinarily  decided in             accordance with the evidence presented at trial.  Defendants             have provided no reason or  precedent to bind the government             by its agent's generous  impulse to be "fair" in  making his             computations.                  We have considered  whether defendants  were misled  to             their  prejudice  by  the  Secretary's  change of  position.             Prior to trial the Secretary said that she did not challenge             the tip credit as applied to the waiters' first 40 hours but             only as applied  to their overtime  compensation.  When  the             Secretary  altered her position after trial, in light of the             evidence, defendants  made no claim  that they had  proof of             notice which they had not offered at trial, nor do they make                                         -9-                                          9             such a claim now.  Further, notice of the tip  credit was at             issue in  the trial  (because  of the  Secretary's  overtime             claim), so defendants had  ample reason to offer what  proof             they had, and they apparently offered none.                  It may at first seem  odd to award back pay against  an             employer, doubled by liquidated damages, where the  employee             has actually received and retained base wages and tips  that             together amply  satisfy the minimum wage  requirements.  Yet             Congress has in section 3(m) expressly required notice  as a             condition of  the tip  credit and  the courts have  enforced             that requirement.  See Richard  v. Marriott Corp., 549  F.2d                                ___ _______     ______________             303, 305  (4th Cir.),  cert. denied,  433  U.S. 915  (1977);                                    ____________             Bonham v. Copper Cellar Corp., 476 F. Supp. 98, 101-02 (E.D.             ______    ___________________             Tenn. 1979);  Donovan  v. 75 Truck  Stop Inc., 92 Lab.  Cas.                           _______     ___________________             (CCH)   34,071,  at 44,091  (M.D. Fla. 1981).   It does  not             matter  in this case (although it might were the adequacy of             a specific notice in issue) whether Congress deemed notice a             matter  of fairness to the employee,  a device for enforcing             minimum  wage  payments,  or both.      If  the penalty  for             omitting notice appears harsh, it  is also true that  notice             is not difficult for the employer to provide.                   Accordingly,  on  this  issue we  reverse  the district             court and remand so that the court can recompute defendants'             liability to the waiters with no tip credit allowed.                                    III. SANTIAGO                                         -10-                                          10                  In the  district court, the Secretary  also sought back             pay  for Santiago to  reflect his  overtime work,  which the             trial judge found  to vary widely but to  average 18 hours a             week.  The Secretary concedes that  Santiago's fixed wage of             $318 per week fully covered the minimum wage for a work week             of 40 hours,  as it clearly does  (40 x $3.35 = $134).   Yet             the Secretary's brief asserts that Santiago has "received no             compensation  for  approximately  18 hours  of  overtime per             week."  The Act  not only requires payment for  overtime but             provides that  compensation for  hours in  excess of 40  per             week shall be paid "at a rate not less than one and one-half             times the regular rate at which [the employee] is employed."             FLSA   7(a)(1), 29 U.S.C.   207(a)(1).                  Although  it deemed  Santiago subject  to the  Act, the             district  court denied  any award  to Santiago.   The  court             first  noted that Santiago had received $318 per week and it             ruled that "[t]his amount adequately compensated him for his             forty (40) hours of  regular work and his overtime  hours up             to  fifty-eight (58) hours a week."  The court then observed             that Santiago appeared to be "an involuntary plaintiff," who             supported   Tango's  management  at  the  trial.    Finally,             Santiago was, in the  court's opinion, himself  "responsible             for the implementation of the illegal practices which led to             the filing of this case."                                         -11-                                          11                  Starting with  the district  court's first reason,  the             Secretary  argues  to  us  that the  district  court  has no             warrant under the statute to decide "subjectively" that $318             is adequate  compensation, for the Act  plainly provides its             own  objective  formula  for  minimum  wages   and  overtime             compensation.  It is not clear that the trial judge intended             a  subjective judgment.   Rather, he  might well  have meant             that  the $318 per week not only compensated Santiago at the             minimum wage  for the first 40 hours ($134) but left $184 to             cover Santiago's remaining 18 hours of overtime at an hourly             rate ($184 divided  by 18 hours  = $10.22 per hour)  that is             amply more  than one  and one-half  times  the minimum  wage             (1.5 x $3.35 = $5.03).                    Had the defendants  and Santiago agreed to such  a wage             structure in advance--$134  for the first 40  hours and $184             for  all   required  overtime--it  is  possible   that  this             structure  would  have satisfied  the  Act,  at least  under             certain conditions.  See FLSA    7(f), 29  U.S.C.    207(f).                                  ___             Absent an  advance agreement,  the language  of the Act,  as             construed by  the  Supreme  Court  and  implemented  in  the             Secretary's  regulations,  dictates  a  different  and  less             favorable result.  In Overnight Motor Transp. Co. v. Missel,                                   ___________________________    ______             316 U.S. 572 (1942), the Supreme Court glossed the governing             language  of section  7(a)(1)--"one and  one-half times  the             [employee's]  regular  rate"--in the  case  of  "an employee                                         -12-                                          12             working  irregular hours for a  fixed weekly wage" where the             hours  regularly exceeded 40 hours  a week.   Id. at 573-74.                                                           __             The  Court held,  for reasons  explained in its  opinion and             best  left  to  connoisseurs  of  the FLSA,  that  where  no             "regular rate" has been set by the employer for the first 40             hours,  the Act treats the regular rate for that week as the             fixed weekly wage  divided by the  number of hours  actually             worked in that week, including overtime hours.  Id. at 580.                                                             __                  Overnight's outcome is binding upon us and the district                  _________             judge   and  its  formula  is   in  fact  reflected  in  the             Secretary's regulations for computing  overtime compensation             in  the  case  of   employees  paid  a  "fixed  salary   for             fluctuating  hours."    29  C.F.R.    778.114.    Under  the             Overnight formula,  Santiago's  "regular rate"  varied  each             _________             week depending  on the  number of  overtime hours  he worked             (e.g., for a 58 hour  week, his regular rate per hour  would              ____             be $318  divided by  58).   In  effect such  an employee  is             treated as  having been paid  100% (instead of  the required             150%) of the  regular rate for  each overtime hour,  leaving             50%  to  be  collected  in  the  lawsuit.   The  Secretary's             computation of  back pay due Santiago in the district court,             despite  her  present  claim   that  Santiago  received   no             overtime,  appears to  have followed  the Overnight  formula                                                       _________             although we do not vouch for the actual computation.  T h e             district court's judgment as to Santiago cannot be sustained                                         -13-                                          13             for either of  the other  two reasons offered  by the  trial             judge, even assuming that they were intended as  independent             grounds.  Santiago may be an "involuntary plaintiff," as the             district  court said, but the Secretary can still sue on his             behalf.  FLSA    16(c),  17; 29 U.S.C.    216(c), 217.   See                                                                      ___             International Ladies' Garment Workers' Union v. Donovan, 722             ____________________________________________    _______             F.2d 795, 808-09  (D.C. Cir. 1983),  cert. denied, 469  U.S.                                                  _____ ______             820  (1984);  Donovan v. University of Texas, 643 F.2d 1201,                           _______    ___________________             1205-06  (5th Cir. 1981).  Indeed, payment of back wages, if             proved due, is intended to protect complying competitors  of             the defendants, in  addition to making  the employee  whole.             FLSA   2(a)(3), 29 U.S.C.   202(a)(3); International Ladies'                                                    _____________________             Garment Workers' Union v. Donovan, 722 F.2d at 807-08.  What             ______________________    _______             would happen  if an  employee awarded back  pay declined  to             accept the award is a matter for another day.                  Similarly,  the  district court's  bare  statement that             Santiago was "responsible" for the "illegal practices" seems             to  us an insufficient basis to deny recovery.  The question             whether  an employee  might ever  be debarred  from recovery             under the  Act because of his own role in a violation is not             necessarily answered by cases, cited to us by the Secretary,             that  the duty  to obey the  Act may  not be  "delegated" to             others by the employer.  In this case, however, the district             court has provided nothing to support or explain its cryptic             reference to Santiago's  "responsibility":  we  do not  know                                         -14-                                          14             whether Santiago was aware of the Act, his role in the false             bookkeeping or in the  fixing of waiters' wages, or  his own             culpability in  contrast to that  of defendants.   Given the             policy of  the  Act  to  protect  employees,  more  detailed             findings  and  specific  justification  would  be needed  to             support an  in pari  delicto defense,  assuming that  such a                         ________________             defense would ever be allowed.   The defendants, it appears,             never offered such a defense in this case.                  A  final issue  posed  by the  denial  of an  award  to             Santiago  is his  alleged status  as an  executive employee.             Defendants  asserted in  the trial  court that  Santiago was             exempt from coverage under  the Act because he was  employed             in an "executive . . . capacity" (FLSA   13(a)(1), 29 U.S.C.                213(a)(1))  as the  supervisor  of  other  waiters.   The             district court  rejected that  claim, finding that  Santiago             was at  best  a  "working  foreman"  under  the  Secretary's             regulations.  29 C.F.R.   541.115.  Without cross-appealing,             defendants  remain  free to  defend  the  judgment below  on             grounds not accepted by  the lower court.  United  States v.                                                        ______________             American  Ry. Express, 265  U.S. 425, 435-36  (1924).  Here,             _____________________             defendants' brief  offers a  lengthy  footnote again  urging             that Santiago was  an executive employee  under the  statute             and  the  Secretary's  general   criteria  for  making  this             determination.  29 C.F.R.   541.1.                                         -15-                                          15                  The  regulations have  special importance  here because             section 13(a)(1) does not define "executive .  . . capacity"             but leaves it to  the Secretary to "define[] and  delimit[]"             the terms.  The "working foreman" regulation, closely  read,             does not say that a working foreman invariably falls outside             the statutory category of executive.  Rather, the regulation             offers  a  description  of  types  of  working  foremen   to             illustrate persons  whose  non-executive work  will  usually             exceed the  low  percentage  of  such hours  allowed  to  an             individual under  the Act  and regulations  before executive             status is lost.  See FLSA   13(a)(1), 29 U.S.C.   213(a)(1);                              ___             29 C.F.R.    541.1(e) (40%  for retail and  service workers;             20% for others).                    Santiago,  however, was  not subject to  the percentage             limitation  on hours  because, as  a worker  in Puerto  Rico             earning  over  $200  a  week,  he  is  classified  under the             regulations  as  a high  salaried  employee.   29  C.F.R.                541.119(a)-(b).  A  high salaried employee  is an  executive             employee under the  regulations so long as his "primary duty             consists  of  the management  of the  enterprise  . .  . and             includes the  customary and regular direction of the work of             two or more other employees . .  . ."  29 C.F.R.   541.1(f).             Such a high  salaried employee  also does not  have to  meet             certain  of  the  other  criteria  of  section  541.1   that             defendants claim to satisfy, i.e., 29 C.F.R.   541.1(c)-(d).                                          ____                                         -16-                                          16             See generally Donovan  v. Burger King  Corp., 672 F.2d  221,             _____________ _______     _________________             223-24 (1st Cir. 1982).                  Santiago testified at trial that 80 percent of his time             was spent supervising other waiters and the balance spent as             a waiter.  He said that the extra $200 he received each week             was  for  his manager  duties  which  he described  in  some             detail.  Under the Secretary's regulation, "primary duty" is             judged on all the facts.  29 C.F.R.   541.103.  On its face,             Santiago's  testimony  portrays  him   as  a  high  salaried             employee who spent most of his time engaged in, and was paid             most  of his wages  for, the  supervision of  other waiters.             Unless  these supervisory duties  are not  "management," for             some unspecified  reason, the defendants'  claim appears  to             have  some force.   See  generally   Donovan v.  Burger King                                 ______________   _______     ___________             Corp., 672 F.2d at 226. ("The supervision of other employees             _____             is clearly a management duty.").                  If there is  an easy answer to  defendants' claim, that             answer was  not obvious from  our review of  the Secretary's             more  elaborate  arguments on  this  issue  in the  district             court.   There,  the Secretary  argued that  the payment  to             Santiago of $2.95  per hour for 40 hours and  his sharing of             tips showed that he must have worked 40 hours as a waiter, a             non sequitur that requires  little discussion; even assuming             ____________             doubtfully that the books attributed all of Santiago's first             40  hours  to  his service  as  a  waiter,  those books  are                                         _____________                                         -17-                                          17             admittedly false; and  the  inference that Santiago spent 40             hours as a  waiter (and  only 18 in  supervision) is  flatly             contradicted by Santiago's direct  testimony.  The Secretary             also said  that Santiago's supervisory role  did not include             certain powers  (importantly,  to hire  and fire  employees)             pertinent  under the  criteria of  section 541.1,  but these             criteria need not  be met by  high salaried employees  under             section 541.119.                     We believe that the district court may have been misled             in its treatment  of the executive exemption issue, first by             the  Secretary's  inexact portrayal  of the  working foreman             regulation  as precluding executive  status and,  second, by             the  Secretary's  resort  to  section  541.1  criteria  that             Santiago did not have to meet.  In all events, the governing             questions, not squarely addressed by the district court, are             whether Santiago's "primary  duty" consisted of  supervisory             work or service as a waiter and, if the former, whether that             work involved "management of the enterprise or a customarily             recognized department  or subdivision  thereof .  . . ."  29             C.F.R.   541.1(f).  See also 29 C.F.R.   541.102 (describing                                 ________             management  tasks  as including  "directing  [the] work"  of             other employees).  Because this court cannot know the record             as well as the  parties and the district court,  we conclude             that a remand  for a further determination  of the exemption                                         -18-                                          18             issue is needed  in light  of the evidence  already in  that             record.                                         -19-                                          19                                   IV.  CONCLUSION                  To summarize,  the defendants failed to  give notice as             required by section 3(m).   The award to the 15 waiters must             therefore be recomputed  to reflect the  elimination of  the             tip  credit.  The Secretary's claim on behalf of Santiago is             remanded to  permit the  district  court to  re-examine  his             status  as  an  executive  employee  vel  non  under  FLSA                                                    ________             13(a)(1)  in light of this court's opinion.  If the district             court  concludes  that  Santiago  does  not  qualify  as  an             executive employee, then the formula set forth in  Overnight                                                                _________             and the regulations must be applied in determining  overtime             compensation  due to him.   Of course, the  formula does not             preclude averaging or estimating the number of hours  worked             per week where more specific information is lacking.                  Before  more court  time is  devoted to  this case,  we             encourage the parties, as the district judge wisely did,  to             discuss an amicable resolution.                  The judgment  of the district  court is reversed  as to                  _______________________________________________________             the  waiters other  than Santiago  for whom  defendants were             ____________________________________________________________             allowed a tip credit.   As to Santiago, the judgment  of the             ____________________________________________________________             district court is vacated.  The case is remanded for further             ____________________________________________________________             proceedings consistent with this opinion.             _________________________________________                                         -20-                                          20
