Eighth Circuit Holds That Tipped Workers Spending More than 20% of Their Time on Untipped Work are Entitled to Full $7.25/hr. Federal Minimum Wage for That Work (April 21, 2011)
The United States Court of Appeals for the Eighth Circuit has upheld a district court ruling denying summary judgment to the defendant Applebee’s restaurant chain, in litigation brought by employees who are challenging Applebee’s practice of paying them the $2.13 minimum wage for tipped employees for significant time spent performing untipped duties, instead of the standard minimum wage of $7.25.
At issue in the litigation was the proper minimum wage for employees defined as “tipped employees” under the Fair Labor Standards Act (FLSA) who are required to spend significant time doing nontipped work. Fast v. Applebee's Int'l, Inc., 2011 U.S. App. LEXIS 8178, 3 (8th Cir. Mo. Apr. 21, 2011)
. The FLSA allows employers to pay a wage of $2.13 to tipped employees, so long as an individual employee’s tips make up the difference between the $2.13 wage and the current $7.25 federal minimum wage. Id.
at 4. A group of servers and bartenders employed by the Applebee’s restaurant chain filed suit to challenge their employer’s practice of requiring them to perform non tip-producing duties for significant portions of their shift while compensating them at the lower $2.13 tipped rate, in violation of the United States Department of Labor’s interpretation of its own applicable federal regulation, 29 C.F.R. § 531.56(e). Id.
at 4. Under the USDOL’s interpretation of § 531.56(e), if a tipped employee spends a substantial amount of time (defined as more than 20 percent) performing related but nontipped work, such as general preparation work or cleaning and maintenance, then the employer may not take the tip credit for the amount of time the employee spends performing those duties. Id.
The district court ruled that the USDOL’s interpretation of § 531.56(e) was entitled to deference and was reasonable, denying Applebee’s motion for the court to issue a summary judgment in its favor. Id. at 5. Applebee’s then filed an interlocutory appeal of the district court’s decision. Fast v. Applebee's Int'l, Inc., 2011 U.S. App. LEXIS 8178.
The 8th Circuit upheld the district court’s decision, finding that the USDOL’s interpretation of § 531.56(e) is “controlling unless plainly erroneous or inconsistent with the regulation,” Id. at 13-14 (quoting Auer v. Robbins, 519 U.S. 452, 461 (1997)), and is reasonable interpretation of the regulation. The case now returns to the district court for a further litigation on the merits of the case.