NEW U.S. DISTRICT COURT DECISION MAY BE OMINOUS FOR RESTAURANT EMPLOYERS

Law Offices of John P. Connell, P.C.: On March 24, 2017, the Honorable Timothy S. Hillman of the United States District Court, District of Massachusetts issued a Memorandum of Decision denying a motion to dismiss a class action complaint filed against the defendants, JK & T Wings, INC. D/B/A Buffalo Wild Wings and BW-Leominster LLC D/B/A Buffalo Wild Wings (“Buffalo Wild Wings”.)

In summary, the plaintiffs were employees of Buffalo Wild Wings restaurants who worked as servers or bartenders. “As server and bartender, the plaintiffs were “tipped employees,” paid $2.63 per hour.” In addition to serving customers, however, the plaintiffs claim they were required to perform certain tasks that were allegedly outside the scope of their terms of employment. For example: “cleaning and sweeping the receiving dock, ‘deck scrubbing’ the break room floor, cleaning trash cans, taking trash to the dumpster, slicing vegetables and portioning cake in the ‘back of the house’ … “scraping gum off tables and chairs, rolling out floor rugs.” The plaintiffs claimed that they should have been paid the minimum wage without the “tip-credit” for all time incurred in performing tasks not traditionally associated with being waitresses and bartenders.

In addition to allegedly having to perform these tasks that were outside the scope of tasks traditionally performed by servers and bartenders, the plaintiffs further claimed they spent a significant amount of their time performing tasks that were “related” to their jobs as servers but that did not generate tips. These “related” services allegedly consisted of making coffee, cleaning the salt and pepper shakers, washing glasses and putting the chairs on top of the tables at the end of the night. Because these “related” tasks did not generate tip income, the plaintiffs claimed they should be paid the minimum wage for such time incurred, without the employer utilizing the “tip-credit.”

The Buffalo Wild Wings defendants used a point-of-sale system in order to document the hours worked by their “tipped employees,” and while the system was capable of recording time spent by those employees on tasks not directly in furtherance of their duties as servers or bartenders, Buffalo Wild Wings did not utilize the point-of-sale system to track the time incurred by the servers into the categories of time spent on service tasks; service related tasks; and tasks outside of the traditional roles as servers.

Plaintiffs alleged that the defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and the Massachusetts Minimum Fair Wage Law (“MFWL”), Mass. Gen. Laws ch. 151, as well as damages for breach of contract and unjust enrichment. Such wage acts carry stiff penalties should an employer be found to be in violations of these statues, such as damages and attorney fees.

The District Judge denied the motion to dismiss the complaint made by Buffalo Wild Wings for the following reasons:

First, the general principal of “tipped employees” under FLSA is such that “tipped employees” can be paid using “tip-credit” for time incurred for “related tasks” provided however, those “related tasks” are only preformed “occasionally.” The issue in this case, and therefore going forward, will be how the Courts can distinguish between “occasionally” related services and providing services more than “occasionally” wherein the tasks essentially then become a “dual job,” which should be paid at regular minimum wage without a “tip-credit.”

The plaintiffs alleged that The Department of Labor (“DOL”) Field Operating Handbook (“Handbook”) applies to their positions. The DOL Handbook provides “that 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.” Buffalo Wild Wings, on the other hand, argued that because the plaintiff’s FLSA claim relied solely on the DOL Handbook standard of the “20% rule,” to which the First Circuit has not yet addressed, the “20% rule” should not be taken into consideration. The Court found the plaintiffs claim to be persuasive, citing other Circuit Courts that have had the occasion to address this issue and which have deferred to the DOL’s “20% rule.” Moreover, the Court found the plaintiff’s complaint to state plausible claims under the FLSA claim and should not be dismissed at this stage of the lawsuit.

Secondly, the MWFL mirrors the provisions set forth in the FLSA. The Court found that while Massachusetts appellate courts have yet to rule on “dual jobs,” the District Court has no basis in assuming that the “Massachusetts tip-credit provision would be interpreted any differently than its federal equivalent, as Massachusetts courts have indicated that at lease some aspects of the MFWL were intended to be essentially identical to the FLSA, and that in interpreting State law, the court looks to how the FLSA has been construed.”

Thirdly, plaintiffs allege that they entered into an employment contract that has been breached by the defendants where the defendants were unreasonably withholding payment for work performed by the plaintiffs. “Plaintiffs assert their common law claims do not arise not from breach of the statue, which creates a separate cause of action related to minimum wage, but rather a breach of contract to perform work from tips.” The plaintiffs further contend that the breach of contract remedy they seek is outside the constraints of the statue, as they wish to recover “for the time period outside of the applicable statutory time limits for actions relating to minimum wage violations.” Because Buffalo Wild Wings did not provide adequate support that the MFWL preempts common law remedies, the Judge found the plaintiffs common law claims to be sufficient, and the breach of contract and unjust enrichment claims should stand.

Restaurant employers should be wary of this decision for three reasons:

  1. It is suggested by the Court that employers that use an electronic point-of-sale system capable of breaking down a tipped employee’s time between tipped related tasks performed and non-tipped tasks performed – almost on a minute-by minute basis, should use that technology and a failure to do so may be used against them in cases like these.
  1. This decision basically holds that any restaurant “tipped employee” who performs any task “unrelated” to their job as a waitress or bartender, like taking out the trash or mopping the floor, essentially has grounds for a wage claim lawsuit if the employer does not pay them the minimum wage that the “tipped employee” spent performing that task.
  1. When it comes to tipped “related” tasks for waitress and bartenders, such as marrying the

ketchup bottles at the end of the night or cleaning the salt and pepper shakers, the Court implies that the First Circuit may be moving towards given deference to a Federal Department of Labor handbook rule that such related-tasks cannot make up more than 20% of the “tipped employee’s” time in a pay cycle. Should this lawsuit result in the adoption of this 20% rule down the road, should it get that far, than you may see a new requirement in the law that employers in fact must track “minute by minute” what tasks their tipped employees are conducting, and not allow related-server tasks to consume more than 20% of a server’s time.

© Law Offices of John P. Connell, P.C. March 2017

Submitted by Jacqueline Sparaco

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