Gerald Fast, et al v. Applebee's International

Filing

OPINION FILED - THE COURT: DIANA E. MURPHY, DAVID R. HANSEN and MICHAEL J. MELLOY. David R. Hansen, Authoring Judge (PUBLISHED) [3779549] [10-1725, 10-1726]

United States Court of Appeals
FOR THE EIGHTH CIRCUIT

________________
Nos. 10-1725/10-1726
________________
Gerald A. Fast; Talisha Cheshire;
Brady Gehrling,
Appellees/Cross-Appellants,
v.
Applebee's International, Inc.,
Appellant/Cross-Appellee.
_______________________
National Employment Lawyers
Association; Secretary of Labor,
United States Department of Labor,
Amici on behalf of
Appellees/Cross-Appellants,
National Council of Chain
Restaurants; National Restaurant
Association,
Amici on behalf of
Appellant/Cross-Appellee.

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Appeals from the United States
District Court for the
Western District of Missouri.
[PUBLISHED]

________________
Submitted: January 13, 2011
Filed: April 21, 2011
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Appellate Case: 10-1725

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Date Filed: 04/21/2011 Entry ID: 3779549

Before MURPHY, HANSEN, and MELLOY, Circuit Judges.
________________
HANSEN, Circuit Judge.
Applebee's International, Inc. (Applebee's) brings this interlocutory appeal from
the district court's1 denial of summary judgment in this employment wage dispute.
Gerald A. Fast, Talisha Cheshire, and Brady Gehrling represent a class of 5,543
individuals (collectively "the employees") who are current and former servers and
bartenders at Applebee's restaurants. They brought suit under the Fair Labor
Standards Act (FLSA) based on Applebee's use of the "tip credit" to calculate their
wages for purposes of meeting the minimum wage requirements of the FLSA. In
denying Applebee's motion for summary judgment, the district court concluded that
the Department of Labor (DOL)'s interpretation of the FLSA as contained in the Wage
and Hour Division's Field Operations Handbook (Handbook) was reasonable,
persuasive, and entitled to deference. Applebee's challenges that conclusion as
inconsistent with the relevant statutes and the related regulations. The employees
cross-appeal the district court's allocation of the burden of proof. We affirm the
district court's order.
I.
The fighting issue in this case is how to properly apply the "tip credit" to
employees whom both sides agree are "tipped employees" as that term is defined in
the FLSA. The FLSA allows employers to pay a minimum cash wage of $2.13 per
hour to employees in a "tipped occupation" as long as the employee's tips make up the
difference between the $2.13 hourly cash wage and the current federal minimum

1

The Honorable Nanette K. Laughrey, United States District Judge for the
Western District of Missouri, who certified the appeal pursuant to 29 U.S.C. §
1292(b).
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wage, presently $7.25 per hour. See 29 U.S.C. § 203(m); 29 U.S.C. § 206(a)(1). The
plaintiff servers and bartenders claim that Applebee's requires them to perform nontipproducing duties for significant portions of their shift while compensating them at the
lower $2.13 tipped rate. The plaintiff bartenders claim that they were required to
perform such duties as wiping down bottles, cleaning blenders, cutting fruit for
garnishes, taking inventory, preparing drink mixers, and cleaning up after closing
hours. The servers claim that they performed such duties as cleaning bathrooms,
sweeping, cleaning and stocking serving areas, rolling silverware, preparing the
restaurant to open, and general cleaning before and after the restaurant was open.
Applebee's counters that servers and bartenders are in tipped occupations, so that any
incidental duties they perform as part of that occupation are subject to the tip credit
and can be paid at the $2.13 hourly rate, regardless of the amount of time spent
performing these duties, as long as each employee's tips make up the difference
between $2.13 per hour and the full minimum wage rate. While the employees
dispute its relevancy, both sides agree that the plaintiffs received in employer cash
payments and tips a sum at least equal to the required minimum wage per hour for all
hours worked.
The DOL regulations recognize that an employee may hold more than one job
for the same employer, one which generates tips and one which does not, and that the
employee is entitled to the full minimum wage rate while performing the job that does
not generate tips. See 29 C.F.R. § 531.56(e). The DOL's 1988 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. (Appellant's Add. at
32, DOL Handbook § 30d00(e).) The district court deferred to the DOL's
interpretation contained in the DOL Handbook to deny summary judgment to
Applebee's.

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The parties also disputed the proper burden of proof. The employees argued
that they needed to establish only that Applebee's paid them $2.13 per hour for a
period of time and then the burden shifted to Applebee's to prove that it was allowed
to take the tip credit by presenting evidence of the number of hours the employees
worked in a tipped occupation. The district court disagreed, concluding that the
employees had to do more than show that they were paid $2.13 per hour because the
employees did not dispute that they were subject to the tip credit for at least some of
their work. The district court concluded that the employees had to "make a prima
facie showing which hours were not properly paid" (Dist. Ct. Mar. 4, 2010 Order at
19), and if there were no records of the time spent on specific duties, then the burden
would shift to Applebee's to show that the employees' calculations were not
reasonable.
Applebee's filed this interlocutory appeal, arguing, as noted above, that the
Handbook is contrary to the express language of the statute and regulations. The
employees cross-appeal the district court's allocation of the burden of proof to the
employees to prove they were not properly compensated. Both issues are included in
the district court's certification permitting an interlocutory appeal, and we address
them in turn.
II.
A.

Engaged in a Tipped Occupation

In this interlocutory appeal, we conduct a de novo review of the district court's
summary judgment ruling and its statutory interpretation. See Haug v. Bank of Am.,
N.A., 317 F.3d 832, 835 (8th Cir. 2003). The FLSA requires employers to pay a
minimum hourly wage, which is currently $7.25 per hour. See 29 U.S.C. § 206(a)(1).
The "wage" paid to a "tipped employee" is defined as the sum of (1) the cash wage
paid to the employee, which must be at least the minimum cash wage that was
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required to be paid to tipped employees on August 20, 1996 ($2.13 per hour), and (2)
an additional amount based on the tips received by the employee that is equal to the
difference between the amount stated in paragraph (1) and the current rate required
by § 206(a)(1). See 29 U.S.C. § 203(m) (defining "wage"). The amount required by
paragraph (2) is commonly referred to as the "tip credit" because it allows the
employer to avoid a larger cash payment to the employee as long as the employee's
tips make up the difference between $2.13 per hour and the current minimum wage.
A "tipped employee" as used in § 203(m) is defined as "any employee engaged
in an occupation in which he customarily and regularly receives more than $30 a
month in tips." § 203(t). The tip credit does not apply to just any employee who ever
received a tip. It applies only to employees engaged in an occupation where the
employee "customarily and regularly receives more than $30 a month in tips." The
parties do not dispute that the servers and bartenders involved in this case are engaged
in an occupation in which they customarily and regularly receive at least $30 per
month in tips and are "tipped employees" under the statute. The dispute revolves
around whether the servers and bartenders are "engaged" in those occupations when
Applebee's requires them to perform duties that do not directly result in a tip.
Applebee's argues that the statute is focused on the occupation, not the specific duties
performed, such that it can take the tip credit for the entirety of a server's or
bartender's shift, as long as the employee receives sufficient tips during the shift to
make up the difference between $2.13 per hour and $7.25 per hour, regardless of how
much time the employee spends performing tip-producing duties. The employees
argue that Applebee's requires them to perform duties outside of the server and
bartender occupations for significant parts of their shifts, such that they are entitled
to full minimum wage rates when they are not "engaged" in the duties of those
occupations.
As noted previously, an employee is a tipped employee if two things occur: 1)
he is engaged in an occupation, and 2) the occupation is one in which he regularly and
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customarily receives at least $30 in tips per month. § 203(t). "Occupation" is not
defined in the FLSA. The DOL has promulgated regulations to implement the tip
credit. See 29 C.F.R. §§ 531.50-531.60. Where a statute does not define a term, and
"Congress has delegated authority to an agency to implement an ambiguous statute,
we are required to accept the agency's statutory interpretation, so long as it is
reasonable." Eisenrich v. Minneapolis Retail Meat Cutters & Food Handlers Pension
Plan, 574 F.3d 644, 649 (8th Cir. 2009) (citing Chevron U.S.A. Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 844 (1984)). If Congress's intent is clear, we need
not defer to a regulation that is contrary to that clear intent. See Senger v. City of
Aberdeen, 466 F.3d 670, 672 (8th Cir. 2006). "But when Congress's intent is unclear
and the statute contains an explicit or implicit gap, we will defer to the agency's
regulation so long as it is not 'arbitrary, capricious, or manifestly contrary to the
statute.'" Id. (quoting Chevron, 467 U.S. at 844).
The DOL's regulations recognize that an employee may be engaged in dual
jobs. See 29 C.F.R. § 531.56(e) (entitled "dual jobs"); see also 29 C.F.R.
§ 516.28(a)(4) & (5) (requiring employers to keep records for its tipped employees of
"[h]ours worked each workday in any occupation in which the employee does not
receive tips, and total daily or weekly straight-time payment made by the employer
for such hours," and "[h]ours worked each workday in occupations in which the
employee receives tips, and total daily or weekly straight-time earnings for such
hours"). Section 531.56(e) states that if an employee works two jobs, one in which
his work customarily and regularly produces tips and one in which it does not, the
employee must be considered to be employed in two occupations, such that the tip
credit may not be taken for hours of employment worked in the occupation not subject
to tips. See § 531.56(e). The regulation gives the example of a hotel employee who
works both as a bartender and as a maintenance man. "He is employed in two
occupations, and no tip credit can be taken for his hours of employment in his
occupation of maintenance man." Id. It distinguishes that situation from "a waitress
who spends part of her time cleaning and setting tables, toasting bread, making coffee
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and occasionally washing dishes or glasses," and "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." Id. "Such related duties in an occupation that is
a tipped occupation need not by themselves be directed toward producing tips." Id.
The parties do not dispute that § 531.56(e) is entitled to Chevron deference.
They do disagree as to its meaning. While the regulation does provide the example
of the waiter/maintenance man and distinguishes those dual jobs from a waitress or
counterman performing related duties in their occupations, it does not further explain
how to determine if an employee is engaged in dual jobs. The regulation recognizes
that an employee may perform "related duties in . . . a tipped occupation" that are not
themselves tip producing "part of [the] time" and "occasionally," and that the time
spent performing these related duties is subject to the tip credit, but it does not address
the impact of an employee performing related duties more than "part of [the] time" or
more than "occasionally." Nor does it define "related duties" or address a tipped
employee who performs duties unrelated to his tipped occupation. The regulation's
failure to address these questions makes it ambiguous. See Barnhart v. Walton, 535
U.S. 212, 218 (2002) ("[S]uch silence, after all, normally creates ambiguity. It does
not resolve it.").
The DOL has further interpreted its dual jobs regulation through opinion letters,
its 1988 Handbook, and in an amicus brief filed in this appeal. In its 1988 Handbook,
the DOL recognized and repeated the distinctions made in the regulation between the
waiter who also worked as a maintenance man and a waitress who performed some
related nontip-producing work. The Handbook states that an employer can take "the
tip credit for time spent in duties related to the tipped occupation, even though such
duties are not by themselves directed toward producing tips (i.e. maintenance and
preparatory or closing activities)," including the examples of a waiter "who spends
some time cleaning and setting tables, making coffee, and occasionally washing dishes
or glasses." (Appellants' Add. at 32, DOL Handbook § 30d00(e).) The Handbook
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goes on and makes clear however, that such duties must be "incidental to the regular
duties of the server" and must be "generally assigned to the servers." (Id.) The
Handbook concludes that "where the facts indicate that specific employees are
routinely assigned to maintenance, or that tipped employees spend a substantial
amount of time (in excess of 20 percent) performing general preparation work or
maintenance, no tip credit may be taken for the time spent in such duties." (Id.) The
Handbook incorporates answers provided in prior opinion letters, including that: a
waitress assigned to general after-hours cleaning duties was performing tipped work
as long as the duties were assigned generally to all wait staff and not specific
employees, (Appellant's Add. at 22, Dep't of Labor, Wage & Hour Div., Op. Letter
WH-502, 1980 WL 141336 (Mar. 28, 1980)); and a waiter assigned to perform
opening preparatory work, where that waiter was the only one so assigned and spent
30 percent to 40 percent of his shift performing the preparatory work, was not
performing tipped work, (Appellant's Add. at 25, Dep't of Labor, Wage & Hour Div.,
Op. Letter WH-FLSA-854 (Dec. 20, 1985)).
These types of agency interpretations (opinion letters and handbooks) of its own
regulation are not entitled to Chevron deference because they are not subject to notice
and comment rule making procedures. See Gonzales v. Oregon, 546 U.S. 243, 255-56
(2006). Where the rule to be interpreted "is a creature of the Secretary's own
regulations, [however, its] interpretation of it is, under [Supreme Court]
jurisprudence, controlling unless plainly erroneous or inconsistent with the
regulation." Auer v. Robbins, 519 U.S. 452, 461 (1997) (internal marks omitted).
This type of Auer deference is appropriate for DOL interpretations of its own
regulations, where the regulations "g[i]ve specificity to a statutory scheme the
Secretary [of the DOL] [i]s charged with enforcing and reflect[] the considerable
experience and expertise the Department of Labor ha[s] acquired over time with
respect to the complexities of the Fair Labor Standards Act." Gonzales, 546 U.S. at
256-57. Less deference is due an agency when, "instead of using its expertise and
experience to formulate a regulation, it has elected merely to paraphrase the statutory
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language," id. at 257, in which case an agency's interpretation is "entitled to respect"
to the extent it has the "power to persuade," id. at 256 (discussing Skidmore v. Swift
& Co., 323 U.S. 134, 140 (1944)). Nonetheless, "Auer deference is warranted only
when the language of the regulation is ambiguous." Christensen v. Harris County, 529
U.S. 576, 588 (2000).
The regulation at issue here is of the former type. Congress added the tip
provisions to § 203(m) and added the definition of "tipped employee" to § 203(t) in
1966, but it did not define occupation or address the possibility of an employee
working more than one occupation for the same employer. See Pub. L. 89-601, § 101,
80 Stat. 830, 830 (Sept. 23, 1966). The following year, the Secretary of Labor
promulgated the dual jobs regulation in an attempt to further define when an employee
is engaged in a tipped occupation, adding subsection (e) to § 531.56. See Wage
Payments Under the Fair Labor Standards Act of 1938, 32 Fed. Reg. 13,575, 13,58081 (Sept. 28, 1967). Thus, the dual jobs regulation is not a regulation in which the
agency merely parroted the terms of the statute such that the lesser Skidmore
deference should apply. See Gonzales, 546 U.S. at 256-57.
The Supreme Court has accorded Auer deference to agency interpretations of
ambiguous regulations with regular frequency in recent years. The Supreme Court
relied on Auer in deferring to the Federal Reserve System Board's interpretation of
Truth In Lending regulations as revealed in the Board's amicus brief filed with the
Court where the regulation was silent on the issue at hand, making it ambiguous, and
the Board's stated position was consistent with its past views. See Chase Bank USA,
N.A. v. McCoy, 131 S. Ct. 871, 880-81 (2011). It also cited Auer in "accept[ing] as
correct" the Environmental Protection Agency's internal memorandum interpreting the
Clean Water Act where the statute did not speak to the precise question at issue and
the regulation was likewise ambiguous. See Coeur Alaska, Inc. v. SE Alaska
Conservation Council, 129 S. Ct. 2458, 2469-70 (2009). The Supreme Court gave
Auer deference to the Treasury Department's interpretation of anti-alienation
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regulations even though the Department's interpretation had changed over time where
there was "'simply no reason to suspect that the interpretation [did] not reflect the
agency's fair and considered judgment on the matter in question.'" Kennedy v. Plan
Adm'r for DuPont Sav. & Inv. Plan, 129 S. Ct. 865, 872 & n.7 (2009) (quoting Auer,
519 U.S. at 462).
We conclude that the DOL's interpretation of § 531.56(e) is entitled to Auer
deference. The regulation at issue in Auer adopted a salary basis test to interpret 29
U.S.C. § 213(a)(1) for purposes of the FLSA's overtime pay requirements. See Auer,
519 U.S. at 456-57. Likewise, the regulation here created the dual jobs test to further
interpret § 203(t), a statute which the Department of Labor is "charged with
enforcing," and the regulation "reflect[s] the considerable experience and expertise the
Department of Labor ha[s] acquired over time with respect to the complexities of the
Fair Labor Standards Act." Gonzales, 546 U.S. at 256-57. Section 203(t) of the
FLSA does not define when an employee is "engaged in an occupation," and the DOL
promulgated the dual jobs regulation to further clarify that phrase. The regulation is
not a mere recitation of the words used by Congress in the statute, which itself does
not even recognize the possibility of an employee performing more than one
occupation for the same employer, let alone during the same shift. Thus, the dual jobs
test set forth in the regulation is "a creature of the [DOL's] own regulations." Auer,
519 U.S. at 461 (internal marks omitted). Section 531.56(e) is itself ambiguous
because it does not address an employee performing related duties more than "part of
[the] time" or more than "occasionally," which further supports granting Auer
deference to the agency's interpretation. See Christensen, 529 U.S. at 588. The DOL's
interpretation of § 531.56(e) is therefore "controlling unless plainly erroneous or
inconsistent with the regulation." Auer, 519 U.S. at 461 (internal marks omitted).
Applebee's argues that neither the statute nor the regulation places a quantitative
limit on the amount of time a tipped employee can spend performing duties related to
her tipped occupation (but not themselves tip producing) as long as the total tips
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received plus the cash wages equal or exceed the minimum wage. The regulation, to
which we owe Chevron deference, makes a distinction between an employee
performing two distinct jobs, one tipped and one not, and an employee performing
related duties within an occupation "part of [the] time" and "occasionally." §
531.56(e). By using the terms "part of [the] time" and "occasionally," the regulation
clearly places a temporal limit on the amount of related duties an employee can
perform and still be considered to be engaged in the tip-producing occupation.
"Occasionally" is defined as "now and then; here and there; sometimes." Webster's
Third New Int'l Unabridged Dictionary 1560 (1986); see also United States v.
Hackman, 630 F.3d 1078, 1083 (8th Cir. 2011) (using dictionary to determine
ordinary meaning of a term used in the commentary to the United States Sentencing
Guidelines). The term "occasional" is also used in other contexts within the FLSA,
such as in § 207, which allows a government employee to work "on an occasional or
sporadic basis" in a different capacity from his regular employment without the
occasional work hours being added to the regular work hours for calculating overtime
compensation. See 29 U.S.C. § 207(p)(2). The DOL's regulation defines occasional
or sporadic to mean "infrequent, irregular, or occurring in scattered instances." 29
C.F.R. § 553.30(b)(1). Thus, the DOL's regulations consistently place temporal limits
on regulations dealing with the term "occasional."
A temporal limitation is also consistent with the majority of cases that address
duties related to a tipped occupation. The length of time an employee spends
performing a particular "occupation" has been considered relevant in many cases. For
example, even when the nontip-producing duties are related to a tipped occupation,
if they are performed for an entire shift, the employee is not engaged in a tipped
occupation and is not subject to the tip credit for that shift. See, e.g., Myers v. Copper
Cellar Corp., 192 F.3d 546, 549-50 (6th Cir. 1999) (noting that 29 C.F.R. § 531.56(e)
"illustrat[es] that an employee who discharges distinct duties on diverse work shifts
may qualify as a tipped employee during one shift" but not the other and holding that
servers who spent entire shifts working as "salad preparers" were employed in dual
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jobs, even though servers prepared the very same salads when no salad preparer was
on duty, such that including salad preparers in a tip pool invalidated the pool);
Roussell v. Brinker Int'l, Inc., No. 05-3733, 2008 WL 2714079, **12-13 (S.D. Tex.
2008) (employees who worked entire shift in Quality Assurance (QA) were not tipped
employees eligible to be included in tip pool even though servers performed QA
duties on shifts when no QA was working; court "agrees that such work likely can be
considered incidental to a server's job when performed intermittently," but
distinguished full shifts). The same is true of nontipped duties performed during
distinct periods of time, such as before opening or after closing. See Dole v. Bishop,
740 F. Supp. 1221, 1228 (S.D. Miss. 1990) ("Because [the] cleaning and food
preparation duties [performed for substantial periods of time before the restaurant
opened] were not incidental to the waitresses' tipped duties, the waitresses were
entitled to the full statutory minimum wage during these periods of time.").
Conversely, where the related duties are performed intermittently and as part of the
primary occupation, the duties are subject to the tip credit. See, e.g., Pellon v. Bus.
Representation Int'l, Inc., 528 F. Supp. 2d 1306, 1313 (S.D. Fla. 2007) (rejecting
skycap employees' challenge to use of the tip credit where "the tasks that allegedly
violate the minimum wage are intertwined with direct tip-producing tasks throughout
the day"), aff'd, 291 F. Appx. 310 (11th Cir. 2008).
Because the regulations do not define "occasionally" or "part of [the] time" for
purposes of § 531.56(e), the regulation is ambiguous, and the ambiguity supports the
DOL's attempt to further interpret the regulation. See Auer, 519 U.S. at 461. We
believe that the DOL's interpretation contained in the Handbook—which concludes
that employees who spend "substantial time" (defined as more than 20 percent)
performing related but nontipped duties should be paid at the full minimum wage for
that time without the tip credit—is a reasonable interpretation of the regulation. It
certainly is not "clearly erroneous or inconsistent with the regulation." Id. The
regulation places a temporal limit on the amount of related nontipped work an
employee can do and still be considered to be performing a tipped occupation. The
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DOL has used a 20 percent threshold to delineate the line between substantial and
nonsubstantial work in various contexts within the FLSA. For example, an "employee
employed as seaman on a vessel other than an American vessel" is not entitled to the
protection of the minimum wage or overtime provisions of the FLSA. See 29 U.S.C.
§ 213(a)(12). The DOL recognized that seamen serving on such a vessel sometimes
perform nonseaman work, to which the FLSA provisions do apply, and it adopted a
regulation that provides that a seaman is employed as an exempt seaman even if he
performs nonseaman work, as long as the work "is not substantial in amount." 29
C.F.R. § 783.37. "[S]uch differing work is 'substantial' if it occupies more than 20
percent of the time worked by the employee during the workweek." Id. Similarly, an
employee employed in fire protection or law enforcement activities may perform
nonexempt work without defeating the overtime exemption in 29 U.S.C. § 207(k)
unless the nonexempt work "exceeds 20 percent of the total hours worked by that
employee during the workweek." 29 C.F.R. § 553.212(a). And an individual
providing companionship services as defined in 29 U.S.C. § 213(a)(15) does not
defeat the exemption from overtime pay for that category of employee by performing
general household work as long as "such work is incidental, i.e., does not exceed 20
percent of the total weekly hours worked." 29 C.F.R. § 552.6. The 20 percent
threshold used by the DOL in its Handbook is not inconsistent with § 531.56(e) and
is a reasonable interpretation of the terms "part of [the] time" and "occasionally" used
in that regulation.
We note that the parties dispute which specific duties are subject to the 20
percent limit for related duties in a tipped occupation and which duties are the tipproducing part of the server's or bartender's tipped occupation itself. The regulation
lists activities such as "cleaning and setting tables, toasting bread, making coffee and
occasionally washing dishes or glasses" as "related duties in . . . a tipped occupation."
§ 531.56(e). The Handbook repeats these examples and states that the 20 percent
limit applies to "general preparation work or maintenance." (Appellant's Add. at 32,
DOL Handbook § 30d00(e).) Although the district court stated that "it was for the
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Court to decide what duties comprise the occupation of a server or bartender" (Dist.
Ct. Order at 6 n.3), the order under review did not do so and concluded only that
"[e]mployees may be paid the tipped wage rate for performing general preparation and
maintenance duties, so long as those duties consume no more than twenty percent of
the employees' working time" (id. at 15). To the extent that questions remain
concerning which duties the 20 percent rule applies to, those issues are beyond the
scope of this interlocutory appeal, and we do not address them. We hold only that the
district court properly concluded that the Handbook's interpretation of § 531.56(e)
governs this case.
B.

Burden of Proof

"[A]n employee who brings suit . . . for unpaid minimum wages . . . has the
burden of proving that he performed work for which he was not properly
compensated." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946),
superceded by statute on other grounds, Portal-to-Portal Act of 1947, Pub. L. No.
49-52, § 5, 61 Stat. 84, 87 (May 14, 1947) (codified at 29 U.S.C. § 216(b)). Noting
that it is the employer's duty to keep employment records, the Court in Mt. Clemens
stated that as long as "the employer has kept proper and accurate records[,] the
employee may easily discharge his burden by securing the production of those
records. But where the employer's records are inaccurate or inadequate and the
employee cannot offer convincing substitutes a more difficult problem arises." Id. at
687. Penalizing the employee in that situation would only encourage employers to fail
to keep proper records, so the Court held "that an employee has carried out his burden
if he proves that he has in fact performed work for which he was improperly
compensated and if he produces sufficient evidence to show the amount and extent of
that work as a matter of just and reasonable inference." Id. "The burden then shifts
to the employer to come forward with evidence of the precise amount of work
performed or with evidence to negative the reasonableness of the inference to be
drawn from the employee's evidence." Id. at 687-88. By contrast, an exemption under
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the FLSA is an affirmative defense, and the employer bears the burden of proof to
establish that an exemption applies. See Corning Glass Works v. Brennan, 417 U.S.
188, 196-97 (1974).
We have applied the Mt. Clemens burden shifting framework in FLSA cases
concerning overtime wages, requiring the plaintiff employees to present evidence that
they worked more than their scheduled hours without compensation. See Hertz v.
Woodbury County, Iowa, 566 F.3d 775, 783-84 (8th Cir. 2009) (requiring employees
to establish they were not relieved of their duties during mealtime, such that it was
compensable time, and distinguishing other circuits that classified mealtimes as an
exemption under the FLSA). Like mealtimes, the tip credit is not contained in the
exemptions listed in 29 U.S.C. § 207(e), where the burden does shift to the employer
to prove, as an affirmative defense, that the exemption applies. Thus, following Hertz,
the Mt. Clemens standard places the initial burden on the employees to establish they
worked hours for which they were not properly paid. Like the employees in Hertz
who carried the burden of establishing "that their actions during their scheduled
mealtimes were for the benefit of the employer and thus not part of a bona fide meal
period," 566 F.3d at 784, the employees here must establish that they spent a
substantial amount of time performing nontip-producing duties such that they were
not performing a tipped occupation for at least portions of their shifts. If Applebee's
did not maintain sufficient records from which the employees can differentiate
between when they performed tipped duties and when they performed related but
nontip-producing duties within the meaning of the dual jobs regulation, then the
employees can use the relaxed Mt. Clemens standard by "produc[ing] sufficient
evidence to show the amount and extent of that work as a matter of just and
reasonable inference." 328 U.S. at 687. The district court properly applied the Mt.
Clemens burden of proof.

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III.
The district court's order is affirmed.
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