Thomas et al v. Bayou Fox, Inc. (JOINT ASSIGN)(MAG2)
MEMORANDUM OPINION AND ORDER DENYING 44 MOTION TO DISMISS, as further set out in order. Signed by Honorable Judge Keith Starrett on 5/31/17. (Attachments: # 1 civil appeals checklist)(djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
MARIAH THOMAS, ET AL.
CIVIL ACTION NO. 1:15-CV-623-KS-GMB
BAYOU FOX, INC., ET AL.
MEMORANDUM OPINION AND ORDER
For the reasons below, the Court denies Defendants’ Motion to Dismiss .
Plaintiffs Mariah Thomas, Harley Yancey, Victoria Rendfelt, Shauna Bennett, Alexis
Campbell, Hannah Cobb, Kassidy Gilley, Kayla Hobbs, Kalee McSwain, Jarrika Morrow, Cherish
Osbourne, Taylor Rodgers, Bethany Sellers, Constance Shoaf, Courtney Smith, Kayla Stille,
Haylie Wells, Tiffany Wells, Norma Williams, and Bridget Worrell (“Plaintiffs”) filed their
Second Amended Complaint  with this Court on September 16, 2016, against Defendants
Bayou Fox, Inc., d/b/a Hooters; Dothan Wings, Inc.; Gulf Coast Wings, Inc.; Homestar Restaurant
Group, LLC; Robert L. Fox; Stuart K. Houston; and Phil Robinson (“Defendants”). (2d Am.
Compl. .) This action centers around Plaintiffs’ employment as servers by Defendants in their
Dothan, Alabama, and Panama City, Florida, restaurant locations. Plaintiffs bring a claim against
Defendants for violating the minimum wage provisions of the Fair Labor Standards Act (“FLSA”).
Plaintiffs allege that “Defendants violated the minimum wage requirements of the FLSA
by taking a tip credit against their minimum wage obligations for substantial non-tipped work
servers were required to work.” (2d Am. Compl.  ¶ 40.) Plaintiffs claim that this “non-tipped”
work was compensated at $2.13 per hour, and that there was no opportunity to earn tips during the
time they were performing this work because “they were no longer serving customers.” (2d Am.
Compl.  ¶ 48.) “[N]on-tipped” work performed prior to the restaurants’ opening included
“taking down chairs, wiping tables and menus, setting out menus, making tea, rolling silverware,
filling salt and pepper shakers, inspecting and cleaning glasses when necessary, cutting fruits and
vegetables, filling ice machines, [and] attending” meetings. (2d Am. Compl.  ¶ 44.) Plaintiffs
also allege that they were required to perform additional “side work” while the restaurant was open
that included “washing and rolling silverware, sweeping their area, cleaning tables, filling
condiments, making tea, refilling ice machines and running checkout.” (2d Am. Compl.  ¶ 47.)
Plaintiffs claim that they could work up to 2.5 hours in a 4.5-hour or 7.5-hour shift performing
“non-tipped” work. (2d Am. Compl.  ¶¶ 49, 53.) Plaintiffs assert that they spent more than
20% of their working time performing “non-tip-producing activities,” (2d Am. Compl.  ¶ 56),
and as a result “are entitled to $7.25 per hour for all of the time they were engaged in non-tipped
duties . . . .” (2d Am. Compl.  ¶ 58.)
Standard of Review
Defendants filed their Motion to Dismiss  under Federal Rule of Civil Procedure
12(b)(6). For a claim to survive a Rule 12(b)(6) motion, it must include “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). In evaluating the motion, the Court accepts “the allegations in
the complaint as true and construe[s] them in the light most favorable to the plaintiff.” Ray v.
Spirit Airlines, Inc., 836 F.3d 1340, 1347 (11th Cir. 2016). However, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal,
556 U.S. at 678. “While legal conclusions can provide the framework of a complaint, they must
be supported by factual allegations.” Id. at 679.
FLSA Minimum Wage Claim
Defendants argue that Plaintiffs fail to adequately plead an FLSA minimum wage claim
because Plaintiffs do not allege that their total pay for a workweek divided by the number of hours
worked is below the minimum wage of $7.25 per hour. (Br. Supp. Defs.’ Mot. Dismiss [44-1] p.
8.) Defendants rely on the holding in United States v. Klinghoffer Bros. Realty Corp. to assert that
the Court should only consider the total amount of compensation in a given week to determine if
the FLSA’s minimum wage requirements are satisfied. United States v. Klinghoffer Bros. Realty
Corp., 285 F.2d 487, 490 (2d Cir. 1960).
While Defendants are correct that “[c]ompliance with the FLSA is measured by the
workweek,” Arriaga v. Fla. Pac. Farms, L.L.C., 305 F.3d 1228, 1237 (11th Cir. 2002), the FLSA
contains other requirements for tipped employees that are not accounted for under Defendants’
suggested approach. The FLSA requires that tipped employees be compensated at a rate of $2.13
per hour in addition to the money they receive in the form of tips, as long as the sum of their wages
and tips is at or above the minimum wage, $7.25 per hour. 29 U.S.C. §§ 203(m), 206(a)(1). The
difference between the minimum wage and the lower rate of compensation for tipped employees
is commonly referred to as the “tip credit.” Pellon v. Bus. Representation Int’l, Inc., 528 F. Supp.
2d 1306, 1309-10 (S.D. Fla. 2007). Under Defendants’ reasoning, the requirement that tipped
employees be paid any cash wage would effectively be read out of the statute. As long as a tipped
employee collected enough in tips to make the minimum wage on average in a workweek, the
employer could pay the employee nothing and still not be subject to an FLSA claim. Romero v.
Top-Tier Colo. LLC, 849 F.3d 1281, 1285 (10th Cir. 2017). Klinghoffer was decided in 1960, well
before Congress amended the FLSA to include the tip credit provision in § 203(m), and it does not
account for the statutory requirements that currently apply to wages for tipped employees. Id. Even
if a tipped employee receives more in wages than the minimum wage for a given week, there may
still be a violation of the FLSA due to the employer’s failure to satisfy the requirements of the tip
credit provision. See Perez v. Palermo Seafood, Inc., 548 F. Supp. 2d 1340, 1347-48 (S.D. Fla.
The tip credit provision only applies to tipped employees. 29 U.S.C. § 203(m). A tipped
employee is defined as “any employee engaged in an occupation in which [s]he customarily and
regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Plaintiffs do not allege that
they are not tipped employees. Recognizing that employees can sometimes work in multiple
occupations for the same employer, the U.S. Department of Labor (“DOL”) promulgated a
regulation clarifying that employees working in both a tip-generating occupation and an
occupation that does not generate tips are only subject to the tip credit provision for the time spent
in the tip-generating occupation and are entitled to the full minimum wage for time spent in the
occupation that does not generate tips. 29 C.F.R. § 531.56(e). Additionally, the regulation clarifies
that employees in tip-generating occupations are subject to tip credit wages when performing
“related duties” that are not directed at producing tips “occasionally” or “part of [the] time.” Id.
However, the regulation does not clarify how employees should be paid when they are in tipgenerating occupations but perform related duties not directed at producing tips more than
occasionally. The regulation provides no definition for “occasionally” and “part of [the] time.”
“The regulation’s failure to address these questions makes it ambiguous.” Fast v. Applebee’s Int’l,
Inc., 638 F.3d 872, 877 (8th Cir. 2011) (citing Barnhart v. Walton, 535 U.S. 212, 218, 122 S. Ct.
1265, 152 L. Ed. 2d 330 (2002)).1
The DOL’s Field Operations Handbook (“FOH”) further defines the application of the dual
jobs regulation, 29 C.F.R. § 531.56(e). U.S. Dep’t of Labor, Field Operations Handbook § 30d00(f)
(Nov. 17, 2016), https://www.dol.gov/whd/FOH/FOH_Ch30.pdf (visited May 30, 2017).
Employers may “take a tip credit for time spent in duties related to the tipped occupation of an
employee, even though such duties are not by themselves directed toward producing tips, provided
such related duties are incidental to the regular duties of the tipped employees and are generally
assigned to the tipped employee.” Id. When a tipped employee spends over 20% of her work hours
in related duties, the employee is entitled to the full minimum wage for those hours. Id.
The dual jobs rule was created by the DOL, and its interpretation is controlling unless
“plainly erroneous or inconsistent with the regulation.” Auer v. Robbins, 519 U.S. 452, 461, 117
S. Ct. 905, 137 L. Ed. 2d 79 (1997). In this case, the DOL’s interpretation is neither plainly
erroneous nor inconsistent with 29 C.F.R. § 531.56(e). The dual jobs rule in § 531.56(e) indicates
that “a waitress who spends part of her time cleaning and setting tables, toasting bread, making
coffee and occasionally washing dishes or glasses” is still subject to the tip credit provision of the
FLSA. The inclusion of the words “part of her time” and “occasionally” indicate some temporal
threshold under which the tip credit may still be invoked. The DOL interpretation in the FOH is
consistent with the regulation because it further defines and clarifies the dual jobs rule without
In several rulings, the District of Arizona has held that the tip credit provision and the dual jobs
regulation are unambiguous. E.g., Kirchgessner v. CHLN, Inc., 174 F. Supp. 3d 1121, 1126 (D.
Ariz. 2016). However, the overwhelming majority of other courts have held that the statute and
regulation are ambiguous and have accepted the FOH’s 20% rule. E.g., Driver v. Appleillinois,
LLC, 739 F.3d 1073, 1076 (7th Cir. 2014); Fast v. Applebee’s Int’l, Inc., 638 F.3d 872, 880-81
(8th Cir. 2011); Crate v. Q’s Rest. Grp. LLC, 2014 WL 10556347, at *4 (M.D. Fla. May 2, 2014).
The Court chooses to follow the approach of the majority of courts that have addressed this issue.
contradicting it. Because Plaintiffs have alleged that they spent “in excess of 20% of their working
time during a shift or week . . . performing . . . non-tip-producing activities” during which they
were paid the tip credit wage, Plaintiffs have stated a claim sufficient to survive Defendants’
Motion to Dismiss . (2d Am. Compl.  ¶¶ 48, 56.)
Defendants also contend that the 20% rule as expressed in the FOH should be rejected
because it is unworkable. (Br. Supp. Defs.’ Mot. Dismiss [44-1] pp. 17-20.) They argue that the
application of the rule would be too unwieldy because “side work” for servers occurs both during
service hours and outside of service hours, making timekeeping difficult. The Court does not need
to address this issue in the abstract. In this case, Plaintiffs allege that they performed non-tipproducing work before and after their shifts, and after being “called off” from serving customers
in tip-producing work. (2d Am. Compl.  ¶¶ 41, 47, 54.) Plaintiffs only seek compensation for
the non-tip-producing work that occurred in discrete time periods when they were not serving
customers. (Pls.’ Resp. Defs.’ Mot. Dismiss  p. 32.) Defendants rely on Pellon v. Business
Representation International, Inc. as support for the idea that the 20% rule is unworkable. (Br.
Supp. Defs.’ Mot. Dismiss [44-1] p. 23.) The court in Pellon rejected the application of the 20%
rule to skycaps because it was unfeasible for the skycaps to divide the various tasks they performed
over a workday to calculate what portion of time was spent on tasks that did not produce tips.
Pellon v. Bus. Representation Int’l, Inc., 528 F. Supp. 2d 1306, 1313-14 (S.D. Fla. 2007), aff’d,
291 F. App’x. 310 (11th Cir. 2008). But Pellon is distinguishable because Plaintiffs state several
discrete periods during which they were performing duties that were not directed at producing tips.
Accordingly, Plaintiffs’ claim is sufficient to survive Defendants’ Motion to Dismiss  in light
of the DOL’s 20% rule.
IT IS THEREFORE ORDERED AND ADJUDGED that the Motion to Dismiss  is
SO ORDERED AND ADJUDGED, on this, the
day of May, 2017.
UNITED STATES DISTRICT JUDGE
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