Contract analysis

I. Executive Summary This memorandum analyzes the compliance posture of Verimark Hospitality Group Inc. ("VHG") with respect to the Florida constitutional minimum-wage provision (Art. X, § 24, Florida Constitution) and the federal Fair Labor Standards Act, 29 U.S.C. § 203(m) (the "FLSA"), as those provisions apply to front-desk and concierge employees at the seven at-issue Verimark-branded properties who participate

II. Scope and Purpose of This Memorandum This memorandum has been prepared for the following purposes: First, to analyze Allegation No. 4 of the GLO demand letter: the alleged failure to pay the Florida minimum wage for tipped employees in compliance with Art. X, § 24, Florida Constitution, as it applies to certain front-desk and concierge roles at VHG's seven at-issue Florida properties whose employees received pool

III. Factual Background A. The Claimant and the Demand Daniela M. Serrano (Employee ID VHG-EMP-20220314-5587) was employed by VHG as a front-desk associate (hourly, non-exempt) at the Verimark Regency Tampa, located at 1200 North Westshore Boulevard, Tampa, FL 33607. Ms. Serrano's employment commenced on March 14, 2022, and terminated on August 22, 2025. Based on VHG's preliminary records, Ms. Serrano was classified

IV. Legal Framework A. Florida Constitutional Minimum Wage — Art. X, § 24, Florida Constitution

Article X, Section 24 of the Florida Constitution, adopted by Florida voters in 2004 as Amendment 5, establishes a state minimum wage that exceeds the federal FLSA minimum of $7.25 per hour. The provision was subsequently amended by Florida voters in 2020 through Amendment 2, which mandated a series of annual increases to the state minimum wage culminating in a $15.00 per hour floor effective September 30, 2026. The

2. Tipped-Employee Minimum Wage

Article X, Section 24(f) of the Florida Constitution permits employers to take a "tip credit" against the minimum wage for "tipped employees" as defined under the FLSA. This is a critical provision for the present analysis. By incorporating the FLSA's definition of "tipped employee" by reference, the Florida Constitution ties the availability of the tip credit in Florida to the federal statutory framework — including

Article X, Section 24(d) of the Florida Constitution provides that employees may bring a civil action for unpaid minimum wages. The remedies available include: • Back pay in the amount of unpaid minimum wages owed; • Liquidated damages equal to the amount of unpaid wages (effectively doubling the back-pay recovery); • Reasonable attorneys' fees and costs. The liquidated-damages provision is mandatory and does not con

1. Definition of "Tipped Employee" — 29 U.S.C. § 203(t) Under the FLSA, a "tipped employee" is defined as "any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips." 29 U.S.C. § 203(t). This definition establishes a threshold that must be satisfied before an employer can take a tip credit under 29 U.S.C. § 203(m). The "customarily and regularly" standard is an

2. Tip Credit Under FLSA — 29 U.S.C. § 203(m)

Section 203(m) of the FLSA permits an employer to take a "tip credit" — that is, to count a portion of an employee's tips toward the employer's minimum-wage obligation — provided that certain substantive and procedural conditions are met. At the federal level, the maximum tip credit is $5.12 per hour (the difference between the $7.25 federal minimum wage and the $2.13 minimum cash wage for tipped employees). However,

3. Tip Pooling Under FLSA — 29 U.S.C. § 203(m)(2)(B) The Consolidated Appropriations Act of 2018 ("CAA") amended FLSA § 203(m) to establish comprehensive rules governing tip-pooling arrangements. The rules differ depending on whether the employer takes a tip credit. Where the employer takes a tip credit (as VHG reportedly does), tips may be pooled only among employees who "customarily and regularly receive tips." 29

4. The 80/20 (and 80/20/30) Rule — Dual Jobs and Tip-Credit Limitations The DOL's 2021 Final Rule on Tip Regulations, published at 86 Fed. Reg. 60,114 (effective December 28, 2021), reinstated and codified a framework for limiting the tip credit when a tipped employee spends a substantial portion of work time performing non-tip-generating duties. This framework, commonly known as the "80/20 rule" (and now expanded to

V. Analysis of VHG's Compliance Risks A. Threshold Issue: Do Front-Desk and Concierge Employees Qualify as "Tipped Employees"? The foundational question in this analysis is whether VHG's front-desk associates and concierge staff meet the statutory definition of "tipped employee" — i.e., whether they are engaged in an occupation in which they "customarily and regularly" receive more than $30 per month in tips. 29 U.S.

VI. Statute of Limitations Considerations Specific to the Tipped-Employee Claim The statute of limitations is a critical factor in assessing VHG's exposure on the tipped-employee claim, and the interplay between the Florida and federal limitations periods warrants separate discussion. Florida Constitutional Claim — Five-Year Period. As discussed in Section IV.A.3, the Florida constitutional minimum-wage claim is subj