Marsh v. J. Alexander's LLC, No. 15-15791 (9th Cir. 2017)
Annotate this CaseNo provision with the force of law permits the Department of Labor to require employers to engage in time tracking and accounting for minutes spent in diverse tasks before claiming a tip credit. The Ninth Circuit vacated the district court's final orders and judgments in favor of defendants in an action brought by former servers and bartenders under the Fair Labor Standards Act (FLSA), 29 U.S.C. 206(a)(1)(c). Plaintiffs alleged that their employers improperly claimed their tips as a credit toward the required minimum wage. The panel held that the DOL's interpretation, in its Field Operations Handbook, of 29 C.F.R. 531.56(e), a regulation addressing application of the FLSA's tip credit provision to the situation in which an employee works for an employer in two different jobs, did not merit controlling deference because the DOL's interpretation was inconsistent with the dual jobs regulation and attempted to create de facto a new regulation. In this case, plaintiffs could not state a claim under section 206 by alleging that discrete "related" tasks or duties, which were performed intermittently over the course of the day and were intermingled with their duties directed at generating tips, comprise a dual job when aggregated together over the course of a workweek. The panel remanded to allow plaintiffs opportunities to propose new amended complaints.
Court Description: Labor Law. The panel vacated the district court’s final orders and judgments in favor of the defendants in actions brought under the Fair Labor Standards Act by former servers and bartenders who alleged that their employers improperly claimed their tips as a credit toward the required minimum wage. Disagreeing with the Eighth Circuit, the panel held that the Department of Labor’s interpretation, in its Field Operations Handbook, of 29 C.F.R. § 531.56(e), a regulation addressing application of the FLSA’s tip credit provision to the situation in which an employee works for an employer in two different jobs, did not merit controlling deference because the DOL’s interpretation was inconsistent with the dual jobs regulation and attempted to create de facto a new regulation. The panel held that no provision with the force of 6 MARSH V. J. ALEXANDER’S law permitted the DOL to require employers to engage in time tracking and accounting for minutes spent in diverse tasks before claiming a tip credit. The panel held that the plaintiffs could not state a claim by alleging that discrete “related” tasks or duties, which were performed intermittently over the course of the day and were intermingled with their duties directed at generating tips, comprised a dual job when aggregated together over the course of a workweek. The plaintiffs also could not state a claim by alleging the performance of “unrelated” duties that were similarly dispersed and generally assigned. The panel vacated the district court’s final orders and judgments and remanded to allow the plaintiffs an opportunity to propose new amended complaints in light of the panel’s opinion. Concurring and dissenting, Judge Paez wrote that he would follow the Eighth Circuit and defer to the DOL’s interpretation of the regulation, 29 C.F.R. § 531.56(e). Judge Paez wrote that the DOL’s guidance was entitled to deference because it interpreted the DOL’s own ambiguous regulation and was neither plainly inconsistent with that regulation nor erroneous. Judge Paez would vacate and remand for further proceedings on whether the defendants violated the FLSA by paying their employees well below minimum wage for untipped work.
The court issued a subsequent related opinion or order on February 16, 2018.
The court issued a subsequent related opinion or order on September 18, 2018.
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