KARLA R. SPAULDING, Magistrate Judge.
This cause came on for consideration without oral argument on the following motion filed herein:
On or about September 27, 2016, Plaintiff Yuvonnia Bowe filed her Complaint against Defendant HHJJ, LLC d/b/a IHOP 36-216 Sanford in state court. Doc. No. 1 ¶ 1; Doc. No. 2. Defendant removed the case to this Court on October 24, 2016. Doc. No. 1. In the Complaint, Plaintiff asserts claims for unpaid wages under the Florida Minimum Wage Act ("FMWA"), Fla. Stat. § 448.110 (Counts I and II); improper tip pooling in violation of the FMWA and the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 206(a) and 207(a) (Count III); unpaid overtime under the FLSA (Count IV); and unpaid wages under Art. X, § 24(c) of the Florida Constitution (Count V). Doc. No. 2.
On October 31, 2016, Defendant filed a motion to dismiss Counts I, II, and V of Plaintiff's Complaint. Doc. No. 10. Plaintiff filed a response in opposition to the motion (Doc. No. 13), to which she attached: (1) an amicus brief filed by the Department of Labor in a case that is currently pending before the U.S. Court of Appeals for the Ninth Circuit (Doc. No. 13-1); (2) a report and recommendation recently issued by Magistrate Judge Thomas B. Smith in a similar case (Doc. No. 13-2); and (3) a transcript of a hearing on a similar motion to dismiss and the related order from a state court case (Doc. Nos. 13-3, 13-4). Defendant's motion has been referred to me for the issuance of a Report and Recommendation, and the matter is now ripe for review.
Defendant owns and operates an IHOP restaurant in Sanford, Florida. Doc. No. 2 ¶ 8. Plaintiff was employed as a server by Defendant from approximately May 29, 2015, through approximately March 10, 2016. Id. ¶ 9. During her employment, Plaintiff was a "tipped employee" within the meaning of the FMWA. Id. In addition, during her employment, Defendant took a "tip credit" toward its minimum wage obligation to Plaintiff for all hours she worked—that is, Defendant paid Plaintiff at a rate below the Florida minimum wage and took a "credit" against Plaintiff's tips to make up the difference. Id. ¶¶ 11-12.
Plaintiff alleges that, in addition to her tipped serving duties, Defendant regularly and consistently required her to perform non-tipped duties in excess of 20% of her total work time. Id. ¶¶ 26, 79. Those duties include brewing coffee and tea; stocking glasses, straws, and napkins; cleaning and wiping table tops; setting tables; stocking sugar and sweeteners; polishing and rolling silverware; refilling and restocking dressings and sauces; cleaning entryways and waiting areas; and performing other general cleaning. Id. ¶¶ 14, 35-38. Plaintiff claims that the tip credit should not have applied during the periods she spent more than 20% of her time performing these non-tipped duties. Id. ¶¶ 21-33, 66-86 (Counts I and V). She also claims that the tip credit should not have applied during the periods she performed non-tipped work that was unrelated to her duties as a server (even if she did not spent more than 20% of her time performing these tasks) because she was a "dual occupation" employee. Id. ¶¶ 34-48 (Count II). Plaintiff claims that, under the FMWA and Art. X, § 24(c) of the Florida Constitution, Defendant owes her the difference between the tip credit minimum wage and the full minimum wage for all such periods. Id. ¶ 16.
"To survive a motion to dismiss, a complaint must contain factual matter, accepted as true, to `state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While this pleading standard "does not require `detailed factual allegations,' . . . it demands more than an unadorned the defendant-unlawfully-harmed-me accusation." Id. (quoting Twombly, 550 U.S. at 555). The pleading must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Although a court must accept the well-pleaded allegations of a complaint as true, it is not bound to accept a legal conclusion couched as a factual allegation. Iqbal, 556 U.S. at 678. Moreover, the Court must dismiss a cause of action when, "on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." See Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
At the outset, I note that Plaintiff brings her minimum wage claims under the FMWA and the Florida Constitution—not the FLSA. Because the parties base their briefing on authority related to the FLSA, I begin by briefly addressing the relationship between the FMWA and the Florida Constitution, on the one hand, and that FLSA, on the other hand.
Article X, § 24(c) of the Florida Constitution requires employers to pay employees wages no less than the minimum wage for all hours worked in Florida.
The dispute between the parties centers on whether Defendant properly applied the tip credit provisions of the FLSA. Generally, the FLSA mandates that covered employees receive a minimum wage of at least $7.25 per hour. 29 U.S.C. § 206(a)(1)(c). The FLSA creates an exception, however, for "tipped employees." 29 U.S.C. § 203(m). Rather than paying the full minimum wage, an employer may pay a tipped employee a reduced "tip credit" wage, so long as the employee's tips are sufficient to make up the difference between the tip credit wage and the full minimum wage.
Under the FLSA, a "tipped employee" is one who is "engaged in an occupation in which he customarily and regularly receives more than $30 per month in tips." 29 U.S.C. § 203(t). The FLSA does not define "occupation." The Department of Labor ("DOL") has, however, promulgated regulations implementing the tip credit provisions of the FLSA. 29 C.F.R. §§ 531.50-531.60.
The Department of Labor has offered a further gloss on this regulation by way of its Field Operations Handbook ("FOH"). Since 1988, the FOH has provided:
DOL FOH § 30dd00(e), available at https://www.dol.gov/whd/FOH/FOH_Ch30.pdf (last visited Dec. 6, 2016) (emphasis added). The DOL has since reiterated this "20% rule" in at least two amicus briefs. See Brief for the Secretary of Labor as Amicus Curiae in Support of Plaintiffs-Appellants, Williams v. Am. Blue Ribbons Holdings LLC, No. 16-15118, Doc. No. 17 (9th Cir. July 13, 2016) (also filed as Doc. No. 13-1 in this case); Brief for the Secretary of Labor as Amicus Curiae in Support of Plaintiffs-Appellees, Fast v. Applebee's Int'l, Inc., Nos. 10-1725/26 (8th Cir. Sept. 15, 2010), available at https://www.dol.gov/sol/media/briefs/fast(A)-9-15-2010.htm (last visited Dec. 6, 2016).
The parties do not dispute that Plaintiff is a "tipped employee" under the statute, at least with respect to her work as a server. The dispute centers on whether Plaintiff was engaged in that occupation—and, thus, eligible for the tip credit—when Defendant required her to perform non-tip-producing duties. See Fast, 638 F.3d at 876.
In Counts I and V, Plaintiff alleges that she was required to perform various non-tip-producing "sidework" that was related or incidental to her job as a server and that she performed such work more than 20% of her total time spent working. Doc. No. 2 ¶ 26; see also Doc. No. 13, at 4 ("The legal issue[s] raised in Plaintiff's Complaint relate solely to the time Plaintiff spent engaged in performing . . . non-tipped labor related or incidental to serving tables in excess of 20% of [her] time (Count I and V: 20% Rule) . . . ."). She alleges that Defendant improperly took the tip credit for the time she spent performing these duties, thereby violating the FMWA and Article X, § 24(c) of the Florida Constitution. Defendant argues that Counts I and V are due to be dismissed because they are legally insufficient. Doc. No. 10.
The crux of the parties' disagreement on these counts relates to the DOL's 20% rule and whether the Court should defer to it. Plaintiff contends that the rule is entitled to deference under Auer v. Robbins, 519 U.S. 452 (1997), and, therefore, Counts I and V state claims for relief. Defendant contends that the rule is not entitled to Auer deference because 29 C.F.R. § 531.56(e) is not ambiguous. Doc. No. 10, at 10-11. And, even if it were ambiguous, Defendant argues that the 20% rule is not entitled to deference because the FOH is not controlling, the DOL's position regarding the 20% rule has shifted over time, the rule improperly adds requirements to the dual jobs regulation, the rule is impossible or impractical to administer, and affording deference to the rule poses a constitutional separation of powers problem. Id. at 13-16. Rather, Defendant contends, § 531.56(e) is clear on its face and allows Defendant to take the tip credit for time Plaintiff spent performing tasks related to her job as a server, no matter how much time those tasks consumed. For the reasons explained below, I recommend that the Court find that the 20% rule is entitled to Auer deference and deny Defendant's motion to dismiss Counts I and V.
Agency interpretations of their own regulations (such as those found in opinion letters, handbooks, and amicus briefs) are not entitled to Chevron deference because they are not subject to notice and comment rule making. Fast, 638 F.3d at 878 (citing Gonzales v. Oregon, 546 U.S. 243, 255-56 (2006)). However, under Auer v. Robbins, where the rule to be interpreted "is a creature of the Secretary's own regulations," its "interpretation of [the rule] is . . . controlling unless plainly erroneous or inconsistent with the regulation." 519 U.S. at 461 (internal quotation marks and citation omitted). Auer deference is warranted only where the language of the regulation is ambiguous. Christensen v. Harris Cty., 529 U.S. 576, 588 (2000). In addition, an agency interpretation of a regulation that conflicts with a prior interpretation is entitled to considerably less deference than a consistently held agency view. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 515 (1994) (citation omitted).
There does not appear to be any controlling law from the Florida courts regarding the 20% rule in the context of claims brought under the FMWA or the Florida Constitution.
A smaller number of courts—relied upon by Defendant—have criticized the 20% rule. For example, in Pellon v. Business Representation Int'l, Inc., 528 F.Supp.2d 1306 (S.D. Fla. 2007), aff'd 291 F. App'x 310 (11th Cir. 2008),
I find the majority position more persuasive and recommend that the Court grant Auer deference to the 20% rule. First, 29 C.F.R. § 531.56(e) is ambiguous. It states that a waitress is not engaged in a "dual occupation" if she spends "part" of her time cleaning and setting tables, toasting bread, and making coffee and if she "occasionally" washes dishes or glasses. The regulation does not, however, define "occasionally" or "part of [the] time," thereby making it ambiguous. Fast, 638 F.3d at 880. The regulation is also ambiguous "because it does not address the impact of an employee performing related duties more than `part of [the] time' or more than `occasionally'. . . ." Id. at 879. Thus, I recommend that the Court find that § 531.56(e) is ambiguous.
Second, I recommend that the Court find that the 20% rule is a reasonable interpretation of the regulation. By its use of the phrases "part of [the] time" and "occasionally," the regulation clearly contemplates a temporal limitation on the amount of non-tipped work an employee can perform and still be eligible for the tip credit—although it fails to provide a precise temporal guideline. Interpreting these phrases to prohibit non-tipped work in excess of 20% is a reasonable interpretation and is certainly not "clearly erroneous or inconsistent with the regulation," as would be required to deny the interpretation Auer deference. Indeed, the DOL has used a 20% threshold to differentiate between substantial and nonsubstantial work in various contexts within the FLSA. See Fast, 638 F.3d at 881 (providing examples). Because 29 C.F.R. § 531.56(e) is ambiguous, and the 20% rule is not plainly erroneous or inconsistent with the regulation, I recommend that the Court grant the rule Auer deference.
Defendant's arguments to the contrary are not availing. First, the FOH is an appropriate source of interpretive guidance. Although Defendant cites to an opinion from the District of Arizona which suggests that the FOH should not be relied upon because its introduction states that it "is not used as a device for establishing interpretive policy," the Eleventh Circuit has found another provision of the FOH to be persuasive. See Klinedinst v. Swift Invs., Inc., 260 F.3d 1251, 1255 (11th Cir. 2011). Regardless, the DOL has also set forth the 20% rule in at least two amicus briefs, which are certainly eligible for Auer deference. See Auer, 519 U.S. at 461-62 (deferring to interpretation advanced in amicus brief).
Second, the DOL's position with respect to the 20% rule has not been so inconsistent as to preclude the Court from deferring to the rule. In support of its claim that the DOL has "flip-flopped" on the 20% rule, Defendant sets out a lengthy quotation from Montijo, which purports to establish that the DOL has engaged in an "inconsistent approach" in its opinions regarding the dual jobs regulation. Doc. No. 10, at 14. On closer inspection, however, the only outlier is a 2009 opinion letter that was issued by an acting administrator in apparent response to the Fast litigation.
Third, the 20% rule does not improperly add requirements to the dual jobs regulation such that the rule becomes inconsistent with the regulation. Here, Defendant argues that, because 29 C.F.R. § 531.56(e) does not include an explicit time limitation on the amount of non-tipped work an employee can perform, the 20% rule impermissibly "adds" requirements. This argument, however, ignores the fact that the regulation does have a temporal limitation built into it— § 531.56(e) says that an employer can take a tip credit for a waitress if she spends "part of her time" cleaning and setting tables, toasting bread, and making coffee and "occasionally" washing dishes or glasses. See Fast, 638 F.3d at 879-80 (citations omitted). It is the ambiguity of this temporal limitation that is interpreted by the 20% rule.
Defendant's concerns about the 20% rule being "impracticable" and "impossible" to implement also miss the mark. Here, Defendant conjures up a scenario where plaintiffs are permitted "to scrutinize every day minute by minute" and "attempt to differentiate what qualifies as tipped activity and what does not, and adjust their wage accordingly." Doc. No. 10, at 15 (quoting Pellon, 528 F. Supp. 2d at 1313-14). Defendant relies on Pellon for this argument. Because Pellon did not consider whether the 20% rule was entitled to Auer deference, its criticism of the rule is not persuasive in this case. Indeed, given that the 20% rule is not inconsistent with the dual jobs regulation, it is not clear that the Court can decline to exercise Auer deference simply because the rule might be inconvenient to administer. Moreover, as explained above, the dual jobs regulation itself contains a temporal limitation on non-tipped work, so any inconvenience is attributable to the regulation (the propriety of which Defendant does not dispute), not the DOL's interpretation of that regulation.
Finally, Defendant argues that affording deference to the 20% rule "poses a constitutional separation of powers issue." Doc. No. 10, at 16. The problem with this argument is that the U.S. Supreme Court has held that courts must defer to agency interpretations of ambiguous regulations so long as those interpretations are not "plainly erroneous or inconsistent with the terms of the regulation." Auer, 519 U.S. at 461. This Court is not free to disregard Supreme Court precedent simply because of vaguely-stated separation-of-powers concerns.
Ultimately, I recommend that the Court grant Auer deference to the 20% rule because 29 C.F.R. § 531.56(e) is ambiguous and the 20% rule is not plainly erroneous or inconsistent with the regulation. Because Plaintiff's Complaint alleges in Counts I and V that she spent more than 20% of her time engaged in non-tip-producing activities, she states a minimum wage claim under the FLSA and, thus, the FMWA and the Florida Constitution. Accordingly, I recommend that the Court deny Defendant's motion to dismiss Counts I and V of Plaintiff's Complaint.
In Count II, Plaintiff asserts that she was required to perform various non-tip-producing duties that were unrelated to her server duties, including certain dishwasher, janitorial, hostess, and server assistant duties. Doc. No. 2 ¶¶ 35-38. She alleges that being required to perform these non-related duties means that she was performing a "dual job" within the meaning of the dual occupation regulation, 29 C.F.R. § 531.56(e), and, thus, that Defendant improperly took the tip credit for time she spent performing these duties. See Doc. No. 13, at 4 ("The legal issue[s] raised in Plaintiff's Complaint relate solely to the time Plaintiff spent engaged in performing . . . non-tipped labor that is unrelated to serving tables (Count II Dual Occupation)"; id. at 20 ("As alleged, there is no way that performing these general restaurant maintenance tasks can be considered `related non-tipped' tasks as defined by 29 C.F.R. § 531.56. None of the above tasks bear any relationship with serving food to customers.").
Determining whether duties are "unrelated" to the tip-producing occupation (or, to use Defendant's words, whether the two jobs at issue are "entirely distinct" and "non-overlapping") is fact-sensitive and case-specific. See Knox, 2016 WL 4371630, at *5 (discussing cases that set forth how to determine whether duties are "related" to the tip-producing occupation). It is not a determination that can be made on a motion to dismiss. Here, Plaintiff has alleged that she performed tasks associated with a number of jobs that were unrelated to her job as a server, including dishwasher, janitor, hostess, and server assistant. Doc. No. 2 ¶¶ 35-38. Contrary to Defendant's argument, not all of the duties listed are clearly "incidental" to her server position (e.g. "cleaning entryways and waiting areas"). While Plaintiff may not ultimately be able to prove that she was engaged in a dual occupation, the Court must take her allegations as true at the motion to dismiss stage. Thus, I recommend that the Court deny Defendant's motion to dismiss Count II of Plaintiff's Complaint. See Knox, 2016 WL 4371630, at *5 (denying motion to dismiss "dual occupation" claim).
For the reasons stated above, I
A party has fourteen days from this date to file written objections to the Report and Recommendation's factual findings and legal conclusions. A party's failure to file written objections waives that party's right to challenge on appeal any unobjected-to factual finding or legal conclusion the district judge adopts from the Report and Recommendation. See 11th Cir. R. 3-1.
