• Ninth Circuit Denies Deference to DOL's Interpretative Guidance on FLSA Tip Credit Regulation
  • November 6, 2017 | Authors: E. Fredrick Preis; Sunny Mayhall West; Rachael M. Coe; Melissa M. Shirley; Leo C. Hamilton; John T. Andrishok; Rachael Jeanfreau; Jacob E. Roussel; Steven B. Loeb; Jerry L. Stovall; Eve B. Masinter; Murphy J. Foster
  • Law Firms: Breazeale, Sachse & Wilson, L.L.P. - Baton Rouge Office; Breazeale, Sachse & Wilson, L.L.P. - New Orleans Office; Breazeale, Sachse & Wilson, L.L.P. - Baton Rouge Office
  • In a recent consolidated case brought by a group of former servers and bartenders against several restaurants, plaintiffs argued that they worked "dual jobs," but were not paid full minimum wage when performing non-tipped job duties. According to the FLSA, employers must pay non-exempt employees at least the federal minimum hourly wage, $7.25 per hour. However, if the employee is a "tipped" employee, employers can pay as little $2.13 per hour if the employee regularly earns more than $30 a month in tips. If they do not make $30 in tips, with the employer making up the difference between the tipped employee's lower hourly rate and the federal minimum wage via a "tip credit." The Department of Labor has issued interpretative regulations for the "tip credit" in which it explains that employees who perform more than one job for a single employer, and where one or more of the jobs does not regularly result in tips, are considered "dual employees." FLSA regulations prohibit employers from using tip credits to reduce a "dual employee's" hourly rate below the statutory minimum wage when they perform non-tipped jobs. In the recent Ninth Circuit case, the employed servers and bartenders argued that they were dual employees and were not paid appropriate minimum wage when they performed non-tipped duties such as cleaning bathrooms or drink dispensers. The employees relied upon the DOL's Field Operation Handbook, which states that employees who spend more than 20% of their time performing duties not designed to originate tips are performing in a dual job capacity. Thus, they should be paid minimum wage for performance of the non-tipped duties. The Ninth Circuit found the interpretation to be inconsistent with federal regulations and refused to defer to the Field Operation Handbook. The plaintiffs were not completing two separate jobs and to expect employers to parse out which jobs were "tipped" and which were "non-tipped" was impractical in this situation according to the Ninth Circuit.