Belt v. P.F. Chang's China Bistro, Inc.

401 F.Supp.3d 512

Steven BELT, et al., Plaintiffs.

v.P.F. CHANG'S CHINA BISTRO, INC., Defendant.

CIVIL ACTION No. 18-3831

United States District Court, E.D. Pennsylvania.

Filed August 15, 2019

Benjamin L. Davis, III, Law Offices of Peter T. Nicholl, Baltimore, MD, Dana L. Scott, Office of General Counsel, Philadelhia, PA, Jay E. Eidsness, Reena I. Desai, Nicholas Kaster, PLLP, Minneapolis, MN, Patricia A. Barasch, Schall & Barasch, Moorestown, NJ, for Plaintiffs.

Paul DeCamp, Maxine Adams, Epstein Becker & Green P.C., Washington, DC, Sheila A. Woolson, Epstein Becker & Green PC, Newark, NJ, for Defendant.

MEMORANDUM

ANITA B. BRODY, District Judge

Plaintiffs Steven Belt, Laura Council, and James Harris bring a putative class and collective action against P.F. Chang's China Bistro, Inc. ("P.F. Chang's"), alleging wage and overtime violations of the Pennsylvania Minimum Wage Act¹ ("PMWA"), 43 Pa. Stat. Ann. §§ 333.104(a), 333.104(c) and the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 206, 207(a).² P.F. Chang's moves for judgment on the pleadings.³ I will deny P.F. Chang's motion.

I. BACKGROUND

A. Factual Background ⁴

P.F. Chang's operates hundreds of restaurants throughout the United States. Compl. ¶ 8. At the time of the filing of the Complaint, Plaintiffs were employed as Servers at various P.F. Chang's restaurants.⁵ Compl. ¶ 30.

Plaintiffs were required to perform three different categories of work: tipped work, untipped work related to their occupation as Servers, and work unrelated to their occupation as Servers.⁶ Plaintiffs' tipped work included "serving food and drinks to patrons," "wait[ing] on tables and describ[ing] daily specials," "regularly check[ing] on patrons throughout their meal," and collecting payment from customers. Compl. ¶ 30. P.F. Chang's also required Plaintiffs to perform work that did not give them the ability to earn tips because it "did not involve interacting with, nor serving food and beverages to customers." Compl. ¶ 31. This untipped work included both tasks related to Plaintiffs' employment as Servers, and tasks unrelated to Plaintiffs' employment as Servers.⁷ The untipped work included:

• Preparatory tasks, such as labeling sauces, preparing drink machines, filling sugar caddies, polishing dishes, and rolling silverware; • Sanitation and maintenance tasks, such as sanitizing the kitchen and dining area and bagging and taking out trash; and

• Cleaning tasks, such as cleaning tables and chairs, dusting, sweeping, and polishing.

Compl. ¶¶ 32-34. Plaintiffs' schedules varied, but they routinely worked between twenty and fifty hours each week, in six- to ten-hour shifts. Compl. ¶ 44. During each shift, Plaintiffs spent approximately thirty to fifty percent of their time performing work that did not give them the opportunity to earn tips. Compl. ¶ 45.

Plaintiffs were paid at the tip-credit minimum wage rate—as opposed to the full minimum wage rate—for the entirety of the hours worked for P.F. Chang's.⁸ Compl. ¶¶ 38-40. They were paid at the tip-credit rate for both their tipped and untipped work. Compl. ¶ 47.

B. Statutory and Regulatory Framework

The Fair Labor Standards Act ("FLSA"), a Department of Labor ("DOL") regulation known as the "Dual Jobs regulation," and a DOL policy document called the Field Operations Handbook ("FOH") set forth the framework for determining when an employer is excused from paying an employee the full minimum wage. I will discuss each of these instruments in turn.

1. The Fair Labor Standards Act

The original FLSA, enacted in 1938, requires employers to pay a minimum hourly wage. 29 U.S.C. § 206(a)(1)(C). In 1966, the FLSA was amended to also allow an employer, under certain circumstances, to utilize the tips of a "tipped employee" to meet its minimum wage obligations. See Fair Labor Standards Act, Pub. L. 89-601, 80 Stat. 830 (1966). Section 203(m) of the FLSA provides:

In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee's employer shall be an amount equal to—

i. the cash wage paid such employee which for purposes of such determination shall be not less than the cash wage required to be paid such an employee on August 20, 1996 [$2.13]; and

ii. an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in clause (i) and the wage in effect under section 206(a)(1) of this title [$7.25].

The additional amount on account of tips may not exceed the value of the tips actually received by an employee. The preceding 2 sentences shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.

29 U.S.C. § 203(m)(2)(A).⁹

Therefore, the FLSA does not preclude an employer from paying a tipped employee a cash wage of $2.13 per hour provided that the employee's tips make up the difference between the $2.13 cash wage and the current federal minimum wage. Id. Section 203(t) of the FLSA defines a "tipped employee" 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). The difference between the cash wage and the federal minimum wage is known as the "tip credit." See 29 C.F.R. § 531.56(d).

2. The Dual Jobs Regulation

Beginning in 1967, the DOL promulgated several regulations to address the 1966 FLSA Amendments. This included a regulation addressing the tip-credit provision in Section 203(m), and importantly, it sought to interpret the definition of "tipped employee" set forth in Section 203(t). See 32 Fed. Reg. 222 (Jan. 10, 1967) (Notice of Proposed Rulemaking); 32 Fed. Reg. 13575 (Sept. 28, 1967) (Promulgation of Final Rule).

The 1967 regulation concerning the tip-credit provision recognizes that an employee may be engaged in two occupations for the same employer but may only qualify as a "tipped employee" in one of those occupations. See 29 C.F.R. § 531.56(e) ("Dual Jobs regulation"). In this situation, an employer may only take the tip credit for the hours an employee spends in the occupation for which he qualifies as a "tipped employee." Id. The Dual Jobs regulation states:

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man. Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

Id.

3. The DOL's Prior Interpretations of the Dual Jobs Regulation

Beginning in 1980, the DOL issued several statements and documents endeavoring to clarify the Dual Jobs regulation. First, the DOL released opinion letters in 1980 and 1985 addressing restaurant servers who spent part of their time performing untipped related duties. The language of the 1980 letter reiterated that when servers only "occasionally" or "part of [the] time" perform untipped related duties, a tip credit may be taken for time spent on those duties. U.S. Dep't of Labor, Wage & Hour Div., Opinion Letter WH-502 (Mar. 28, 1980), 1980 WL 141336. The 1980 letter also stated that the DOL "might have a different opinion if the facts indicated that specific employees were routinely assigned, for example, maintenance-type work such as floor vacuuming." Id. In the 1985 opinion letter, the DOL stated that when a waiter spent 30 to 40 percent of his or her time performing "preparatory activities" before the restaurant opened—such as setting tables, cleaning and filling salt shakers, and checking supplies of napkins and straws—no tip credit could be taken for this time, because it consumed a "substantial" portion of the waiter's workday. U.S. Dep't of Labor, Wage & Hour Div., Opinion Letter FLSA-854 (Dec. 20, 1985), 1985 WL 1259240.

Next, in 1988, the DOL added a section to the Field Operations Handbook ("Handbook") addressing the Dual Jobs regulation. This section read:

(1) When an individual is employed in a tipped occupation and a non-tipped occupation, for example, as a server and janitor (dual jobs), the tip credit is available only for the hours spent in the tipped occupation, provided such employee customarily and regularly receives more than $30.00 a month in tips. See 29 CFR 531.56(e).

(2) 29 CFR 531.56(e) permits the employer to take a tip credit for time spent in duties related to the tipped occupation of an employee, even though such duties are not by themselves directed toward producing tips, provided such related duties are incidental to the regular duties of the tipped employees and are generally assigned to the tipped employee. For example, duties related to the tipped occupation may include a server who does preparatory or closing activities, rolls silverware and fills salt and pepper shakers while the restaurant is open, cleans and sets tables, makes coffee, and occasionally washes dishes or glasses.

(3) However, where the facts indicate that tipped employees spend a substantial amount of time (i.e. , in excess of 20 percent of the hours worked in the tipped occupation

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