Some Things in Life Aren’t Fair... Including Tips for Servers
Many servers love their jobs. They enjoy the opportunity to make better than minimum wage by providing excellent service, hoping that appreciative customers will respond with tips. However, when they are required to engage in tasks such as preparation work in opening or closing the restaurant or maintenance, customers don’t tip for that. If several hours each day must be devoted to this kind of work, it hardly seems fair to make $2.13 per hour for doing it. Sometimes something can be done about it.
In the recent case Rafferty v. Denny's, Inc. (No. 20-13715 (11th Cir. Sept. 15, 2021)), Ms. Rafferty claimed that her employer, Denny’s, violated the Fair Labor Standards Act (FLSA) and the Department of Labor (DOL) regulations on tipped employees. Ms. Rafferty was required to spend a good bit of her time on preparation and maintenance, which were non-tipped job duties. As a result, she was earning sub-
minimum hourly wages for that time. The reality is that there will always be some amount of non-tipped job duties that tipped employees must perform. So, how many hours of non-tipped duties are permissible at a sub-minimum wage tipped job?
The 1988 Field Operations Handbook for the DOL said 20% was the limit. If the server performs non-tipped job duties more than 20% of the time, then at least the minimum wage must be paid for that time. However, in 2018 the DOL abandoned that 80/20 rule and issued a new opinion letter.
Accordingly, when Ms. Rafferty filed suit, the District Court relied on that, ruled in favor of Denny's, and dismissed Ms. Rafferty's claims.
Ms. Rafferty appealed the decision. The 11th Circuit reversed in part based on the FLSA regulation found at 29 CFR §531.56. In an effort to provide some guidance, as well as judicial deference to the District Court, the opinion discussed the issues in depth over 62 pages. Judge Luck concurred over 16 pages.
The court concluded that the 2018 DOL Opinion Letter was ambiguous, had various other flaws, and thus was not a reasonable interpretation of the dual jobs regulation. The court found that after removing deference to the 2018 Opinion Letter, there was a material issue of fact as to whether Ms. Rafferty was
performing work which related to her tipped job. Further, there was an issue as to whether she was spending more than 20% of the time doing non-tipped work. So, Ms. Rafferty was able to pursue her claims.