Moulton et al v. W.W.I., Inc. et al

Filing 34

MEMORANDUM OPINION AND ORDER: Plaintiffs 27 Motion for Partial Summary Judgment is GRANTED, as further set out in order. Signed by Honorable Judge Andrew L. Brasher on 8/5/2019. (kr, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
SOUTHERN DIVISION
MEGHAN MOULTON, KIANA
RIVERS, STEPHANIE GRIFFIN, and
VICTORIA SEARCY,
Plaintiffs,
v.
W.W.I., INC., d/b/a THINGS &
WINGS RESTAURANTS, and
WILLIAM W. INGRAM,
Defendants.

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Case No. 1:18-cv-67-ALB

MEMORANDUM OPINION AND ORDER
This matter comes before the court on Plaintiffs Meghan Moulton, Kiana
Rivers, Stephanie Griffin, and Victoria Searcy’s (the “employees”) motion for
partial summary judgment. (Doc. 27). Upon consideration, the motion is
GRANTED.
BACKGROUND
Defendants W.W.I., Inc. and William W. Ingram (the “employers”) operate
three restaurants in Dothan, which they refer to as the North, South, and West side
stores. (Doc 26-1 at 5). Ingram is the “sole owner” of W.W.I., Inc., although there
was also an employee shareholder while the employees worked for him. (Doc. 26-1

at 5). Ingram was “the individual that turned the hours worked in to an outside
payroll service called Apex.” (Doc. 26-1 at 7).
Upon hiring a new server, the employers would tell the servers that they would
be paid $2.15 per hour, “[a]nd the tips that they earn will be reported” because the
employers planned to take a “tip credit.” (Doc. 26-1 at 41). Ingram decided to pay
$2.15 rather than the $2.13 required by FLSA because he “wasn’t going to fool with
the two cents.” (Doc. 26-1 at 20).
The employees allege that the employers deducted uniforms, customers’
beverages, and missing silverware from their base wage, which improperly lowered
their wage beneath the $2.13 required by FLSA. (Doc. 27 at 4, 8). The employees
are charged for their initial uniforms, three shirts and two aprons, and any
replacements. (Doc. 26-1 at 25). Ingram acknowledged that both the initial and
replacement uniform purchases were deducted from their pay. (Doc. 26-1 at 25). The
employers require the servers to put what beverage each customer is drinking at the
top of the ticket. (Doc. 26-1 at 17). The employers notified the employees that if they
failed to do so, the employers would take the beverages out of their individual
paychecks. (at 17). But the employees could be reimbursed the $2.50 drink
deduction per customer if they remembered the table drank. (Doc. 26-1 at 19). In
hindsight, Ingram said that “[t]he right choice probably would’ve been just to
terminate them,” but they were having trouble keeping servers. (Doc. 26-1 at 18).
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As for the silverware, Ingram said he “might” have heard about such deductions, but
he would be surprised to learn that it had occurred at his restaurants. (Doc. 26-1 at
22–24).
When confronted with the employees’ allegations, Ingram repeatedly
acknowledged the illegality of his conduct: “Q. You take their beverage money away
from them, which is illegal if you’re [sic] counsel hasn’t advised you already. A.
Yeah. I’m just trying to change behavior, trying to get them to charge for it. They
have bad habits.” (Doc. 26-1 at 37). And again:
“Q. So the money is coming out of somewhere, and the only other
money you're paying them is the 2.15 per hour subminimum wage rate,
right? A. Yeah. Q. So it’s coming out of that? A. Yeah. It has to. It’s
the only thing left. [(Doc. 26-1 at 41)]
“Q. And did Bailey, when she was training individuals, tell them that it
was illegal for you-all to put them below the minimum wage -- A. Yes.
Q.-- and to deduct from that 2.15 per hour? A. Yes. Q. So you-guys
knew what you were doing was illegal? A. Which part? Q. Deducting
the beverages from the 2.15 per hour rate. A. I don’t think that thought
process entered our minds that it was illegal. We were just trying to
change their behavior. Q. Well, you -- A. I don’t think that was a
conscious thought.”
(Doc. 26-1 at 42). And a third time:
“Q. But if it was to get bad again and it would be economically feasible,
you would reinstitute the policy? A. No, not after this meeting. Q. Why?
A. Because you just told me it was illegal. We would … write them up,
take disciplinary action against them or coach them and counsel them
how to avoid it, advise their supervisor to check behind them.”
(Doc. 26-1 at 42).

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In their briefing, neither party provided much support for their respective
positions. The employers provided an employee manual, but later acknowledged that
it was not the correct edition. (Doc. 26-1 at 25). And due to a hard drive crash, the
data for the North side store was lost. (Doc. 26-1 at 15). The status of the other stores’
data is unclear. Ingram remembered attempting to recover the employees’ data from
the south and west side stores, but he could not remember whether he was successful.
(Doc. 26-1 at 15). Later, Ingram said he “honestly, truthfully can’t recall trying to
search for” the west side’s data. (Doc. 26-1 at 44). But he also said, “I could contact
Apex and have them print me up beverage charges through their software. They
could print me a report on uniforms that was deducted from the individuals.” (Doc.
26-1 at 18).
Aside from the computer failure, it seems that the employers’ recordkeeping
left something to be desired, not even tracking their employees’ cash tips: “Q. Do
you know what the average tips are for cash or is that not -- do you track that? A.
No, we don’t track that. I have no way of telling.” (Doc. 26-1 at 44).
Ingram’s plan to make up for the missing evidence about the hours worked
was “[w]itnesses. These four plaintiffs are the only persons that I am aware of that
ever had a complaint in the 26-year history of our company. And I can talk to my
present employees I’ve got and the ones from the past ….” (Doc. 26-1 at 37). Ingram
guessed that interviewing these witnesses would show “very few complaints or
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problems.” (Doc. 26-1 at 37). So, Ingram proposed using “other people’s testimony
and other people’s information and … information I’m aware that I can get from
Apex.” (Doc. 26-1 at 38).
The employers, however, were ultimately able to provide payroll information
from Apex. Griffin worked 29 hours 53 minutes of overtime, Rivers 0 hours 0
minutes, Searcy 5 hours 30 minutes, and Moulton 12 hours 9 minutes.1 (Doc. 29 at
11, 17, 20, 26). The payroll information also shows “miscellaneous pay” and
beverage and uniform deductions. Griffin received $60.74 in miscellaneous pay,
Rivers $0.00 Searcy $92.00, and Moulton $118.00. (Doc. 29 at 11, 17, 20, 26).
Griffin’s beverage deductions were $61.00, Rivers $34.50, Searcy $67.50, and
Moulton $50.50. (Doc. 29 at 11, 17, 20, 26). Griffin’s uniform deductions were
$22.00, Rivers $49.00, Searcy $45.00, and Moulton $56.00. (Doc. 29 at 11, 17, 20,
26).
“Miscellaneous pay” was given either for error correction or to avoid paying
for overtime work by allowing the employees to work off-the-clock. (Doc. 26-1 at
11).

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The employers included a chart in their response brief, but discrepancies exist with the reports
provided. It appears the employers may have added the hours incorrectly. While an
understandable error—most lawyers enter law to avoid math—it is an error nonetheless.
For example, the employers said Victoria Searcy had worked 4.90 hours overtime. On her
timesheet, her total overtime was 5:30 (5 hours 30 minutes). One week, Searcy worked 1:40
overtime, and another week she worked 3:50 overtime. Adding these together would be 4:90,
which is the number the employers supplied. But this would be 4 hours 90 minutes, or 5.5 hours,
not 4.9 hours.
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“Q. And so why would you make them not work the shift? A. Because
of the overtime pay. It’s just—it’s almost an industry standard in not
letting servers work their overtime pay. Q. Yeah. But you’re letting
them work. You’re not just not letting the hours accrue. A. That’s
correct. Q. And that makes it better to you? That makes it legal to you?
A. I don’t know. I’m not a lawyer. That’s just between the server and
the … supervisor.”
(Doc. 26-1 at 11–12). When the employees worked for “miscellaneous pay,” the
employers paid them just $5.00 plus tips. (Doc. 26-1 at 10). Ingram said “I don’t
think [Griffin’s miscellaneous pay] was for overtime. [The supervisor] might have
reimbursed her for … some of her beverage expenses.” (Doc. 26-1 at 45). But Ingram
admitted he did not actually know what it was for. (Doc. 26-1 at 45). And Ingram
said Searcy and Moulton’s miscellaneous pay was “probably” for overtime. (Doc.
26-1 at 45).
The employees now seek partial summary judgment that (1) they were not
paid minimum wages, (2) they were denied overtime compensation, and (3) Ingram
was their employer under FLSA.
STANDARD
The court will grant summary judgment when there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law.
Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000) (en banc). The
moving party need not produce evidence disproving the opponent’s claim; instead,
the moving party must demonstrate the absence of any genuine issue of material fact.
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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In turn, the nonmoving party
must go beyond mere allegations to offer specific facts showing a genuine issue for
trial exists. Id. at 324. When no genuine issue of material fact exists, the court
determines whether the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(c).
DISCUSSION
The issues presented in the motion and response are whether Ingram was the
employees’ “employer” under FLSA and whether the employees received proper
minimum wage and overtime compensation. The employees claim that Ingram was
their employer because he “was an officer and owner of W.W.I., Inc., controlling its
day-to-day operations and finances, as well as matters in relation to [the employees]
and their compensation.” (Doc. 27 at 10). The employers declined to respond to this
allegation.
The employees also allege that they were not paid minimum wage because
Defendants deducted uniforms, customers’ beverages, and missing silverware from
their paychecks. Ingram admits to the uniform and beverage deductions but claims
ignorance as to the silverware deductions.
The employers allege that the employees’ estimate of uncompensated
overtime is unsubstantiated and speculative, so there is no burden shift requiring the
employers to show the precise amount of work performed. The employers note that
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the employees are responsible for clocking into and out of the system; the records of
which are turned over to a third party. The employees are paid slightly above
minimum wage at $2.15 with overtime at $5.78, the difference being made up by
tips. The employers then assert that because the employees did not keep track of
their cash tips, there is no way to determine whether their total compensation fell
below the minimum and overtime wage thresholds, so their claim must fail.
The employers fail to address the employees’ allegations by focusing on the
tip credit without addressing the underlying base minimum wage violations. The
court finds that the employees should be granted summary judgment on the
minimum wage and overtime violations and that Ingram was their employer.
I. Ingram was Plaintiffs’ Employer Under FLSA
The employees contend that Ingram was their employer under FLSA because
he “was an officer and owner of W.W.I., Inc., control[ed] its day-to-day operations
and finances, as well as matters in relation to [the employees] and their
compensation.” (Doc. 27 at 10). The employers do not contest this issue.
To determine whether a person is an employer under FLSA, the court
considers the facts of the case “in light of the ‘economic reality’ of the relationship
between the parties.” Villarreal v. Woodham, 113 F.3d 202, 205 (11th Cir. 1997)
(quoting Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33 (1961)). “The
economic reality test includes inquiries into: whether the alleged employer (1) had
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the power to hire and fire the employees, (2) supervised and controlled employee
work schedules or conditions of employment, (3) determined the rate and method of
payment, and (4) maintained employment records.” Villareal v. Woodham, 113 F.3d
202, 205 (11th Cir. 1997) (quoting Bonnette v. Cal. Health & Welfare Agency, 704
F.2d 1465, 1470 (9th Cir. 1983)).
Here, Ingram stated that he is the “sole owner” of W.W.I., Inc., although there
was an employee shareholder at the time the employees worked for him. (Doc. 26-1
at 5). The structure of the business is that the employees report to their supervisor,
who reports to a head supervisor, who reports to Ingram. (Doc. 26-1 at 6). Ingram
determined the pay rate, noting that he paid $2.15 instead of $2.13, because he
“wasn’t going to fool with the two cents.” (Doc. 26-1 at 20). And Ingram “turned
the hours worked in to an outside payroll service called Apex.” (Doc. 26-1 at 7).
Ingram does not dispute that he was the employees’ employer, and the law supports
holding Ingram to be the employees’ employer under FLSA.
II. Not Paid Minimum Wage
Ingram more-or-less admitted in his deposition testimony that his deductions
from the employees’ base pay were illegal. Under FLSA, an employer may pay its
employees below minimum wage so long as the difference is made up in tips. 29
U.S.C. §203(m)(2)(A). It is the employer’s duty to show it qualifies for this “tip

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credit.” Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 467 (5th Cir. 1979).2
The base wage of $2.13 must be paid “free and clear.” 29 C.F.R. § 531.35. No part
of the employee’s wage may “kick[]-back directly or indirectly to the employer or
to another person for the employer’s benefit….” 29 C.F.R. § 531.35. For example,
if an employee must provide their own tools, there is a FLSA violation when the
employee’s purchase of necessary tools “cuts into the minimum or overtime wages
required to be paid him under the Act.” 29 C.F.R. § 531.35.
Here, the briefs discuss two types of FLSA violations: failing to pay the base
minimum wage and failing to make up the tip credit in actual tips. The employers’
response is focused on the latter violation—which the employees do not appear to
be raising—that if the employees cannot show how much cash tips they made, they
cannot determine whether their total compensation fell below the minimum wage
threshold. Total compensation, however, is completely irrelevant to determining
whether the employees received their base $2.13 wage. An employee could earn
hundreds of dollars in tips, but a FLSA violation still occurs if the employer does
not pay that employee the $2.13 hourly wage he owes her. See P&K Rest. Enter.,
LLC v. Jackson, 758 F. App’x 844, 848 (11th Cir. 2019) (per curiam) (noting that
“employer must pay a tipped employee at least $2.13 per hour, regardless of how

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The Eleventh Circuit has adopted as binding precedent all of the decisions of the former Fifth
Circuit handed down prior to the close of business on September 30, 1981. Bonner v. City of
Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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much money the employee earns in tips”);  29 U.S.C. § 203(m); 29 C.F.R. §
516.28(a)(3). Had the employees’ tips not at least equaled the employers’ tip credit,
the employers would have committed a FLSA violation. But resolving that issue is
not necessary to finding a FLSA violation on what the employees are actually
alleging.
The employees allege that the employers’ deductions brought their base
wages below minimum. The employers told each employee that he or she would be
paid at $2.15 because the employer planned to take a tip credit. (Doc. 26-1 at 41).
This gave the employers a $0.02/hr buffer for deductions. Looking only at the
beverage and uniform deductions, and laying aside the disputed silverware
deductions, the employers’ deductions repeatedly brought the employees’ base wage
below the minimum wage threshold. Ingram repeatedly acknowledged this conduct:
Q. You take their beverage money away from them, which is illegal …
A. Yeah
…
[Q.] the only other money you’re paying them is the 2.15 per hour
subminimum wage rate, right?
A. Yeah.
Q. So it’s coming out of that?
A. Yeah. It has to. It’s the only thing left.
…
[Q.] you would reinstitute the policy?
A. No, not after this meeting.
Q. Why?
A. Because you just told me it was illegal.

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(Doc. 26-1 at 37, 41–42). Ingram’s only excuse was it never “entered our minds that
it was illegal.” (Doc. 26-1 at 42).
With only a $0.02 buffer between the absolute minimum wage and what the
employers were paying, even a $1.00 deduction would require fifty hours of work
to avoid paying below minimum wage. The deductions that the employees address
in their brief, and that the employers fail to address, were a FLSA violation.
Summary judgment is due to be granted on this issue.
III. Denied Overtime Compensation
The employees’ alleged overtime violation is quite similar to the minimum
wage violation. The required overtime wage for the employees was $5.78,3 with a
$5.10 tip credit that the employers would have had to pay if the employees did not
receive at least that amount in tips. The employers renew their objection that the
employees’ allegations are unsubstantiated and speculative. The evidence shows
otherwise.

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Overtime pay rate is not calculated by simply multiplying the employee’s general pay rate by
1.5, which would result in too large of a tip credit. The employer’s permissible tip credit is the
difference between the general minimum wage and the tipped employee’s base wage. See, e.g.,
Ventura v. Bebo Foods, Inc., 738 F. Supp. 2d 8, 16 n.1 (D.D.C. 2010). Here, the employees are
paid at $2.15, so $7.25 – $2.15 = $5.10 tip credit.
To calculate the general overtime pay rate for tipped employees, multiply by 1.5 the general
minimum wage (not the tipped minimum wage): $7.25/hr x 1.5 = $10.88/hr. See, e.g., id. The
employer’s permissible tip credit is then subtracted from the general overtime rate: $10.88/hr $5.10/hr = $5.78/hr. See, e.g., id.
The tip credit’s legality is also still dependent on actually being offset by the employee’s tips
received during overtime work. See, e.g., id.
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When the employees officially worked overtime, the employers paid them the
required $5.78 hourly. But in an attempt to avoid paying for overtime work, the
employers would sometimes allow off-the-clock work with “miscellaneous pay.”
“Q. And so why would you make them not work the shift? A. Because
of the overtime pay. It’s just—it’s almost an industry standard in not
letting servers work their overtime pay. Q. Yeah. But you’re letting
them work. You’re not just not letting the hours accrue. A. That’s
correct. Q. And that makes it better to you? That makes it legal to you?
A. I don’t know. I’m not a lawyer. That’s just between the server and
the … supervisor.”
(Doc. 26-1 at 11–12).
When the employees worked for “miscellaneous pay,” the employers paid
them just $5.00 plus tips. (Doc. 26-1 at 10). This “miscellaneous pay” was $0.78
short of the required $5.78 overtime wage. So, every hour of “miscellaneous pay”
worked in lieu of overtime was a FLSA violation. As discussed in the previous
section, the employees could have earned hundreds of dollars in tips, but the
employers would still commit a FLSA violation by failing to pay the base wage. See
P&K Rest. Enter., LLC, 758 F. App’x at 848; 29 U.S.C. § 203(m); 29 C.F.R. §
516.28(a)(3). So, the employers’ sole objection that the employees did not track their
cash tips is irrelevant. Summary judgment is due to be granted on this issue as well.
CONCLUSION
Based on the above reasoning, Plaintiffs’ Motion for Partial Summary
Judgment is GRANTED.
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DONE and ORDERED this 5th day of August 2019.
/s/ Andrew L. Brasher
ANDREW L. BRASHER
UNITED STATES DISTRICT JUDGE

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