Perez et al v. Prime Steak House Restaurant Corp.
Filing
27
OPINION AND ORDER re 19 Motion to Dismiss for Failure to State a Claim. The Court DENIES defendants' motion to dismiss plaintiffs' FLSA claims, but will not consider any theory of FLSA violation predicated on taking a tip credit in excess of fifty percent of minimum wage or on miscalculation of sick and vacation payments. Signed by Judge Francisco A. Besosa on 04/17/2013. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
MOISES
PEREZ
and
ALEJANDRO
VELEZ-CESPON,
on
behalf
of
themselves and others similarly
situated,
Plaintiffs,
v.
Civil No. 12-1248 (FAB)
PRIME STEAK HOUSE RESTAURANT
CORP.
a/k/a
PRIME
STEAK
RESTAURANT CORPORATION d/b/a
RUTH’S CHRIS STEAK HOUSE P.R.,
et al.,
Defendants.
OPINION AND ORDER1
BESOSA, District Judge.
Before the Court is the motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) by defendant
Prime Steak House Restaurant Corp. (“defendant PSHRC”).
(Docket
No. 19.) Having considered the arguments in the motion to dismiss,
the opposition filed by plaintiffs Moises Perez (“plaintiff Perez”)
and
Alejandro
“plaintiffs”),
Velez-Cespon
(“plaintiff
(Docket
23),
(Docket No. 26),
No.
and
Velez”)
defendant
(collectively,
PSHRC’s
reply,
the Court DENIES the motion to dismiss for the
reasons discussed below.
1
Katherine Hedges, a second-year student at the University of
New Hampshire School of Law, assisted in the preparation of this
Opinion and Order.
Civil No. 12-1248 (FAB)
I.
2
BACKGROUND
A.
Procedural History
On April 13, 2012, plaintiffs filed a complaint, seeking
damages from defendant PSHRC and other unnamed defendants. (Docket
No. 1.)
In response to defendant PSHRC’s first motion to dismiss,
(Docket No. 10), plaintiffs filed an amended complaint on August 2,
2012.
(Docket No. 17.)
Plaintiffs assert claims, on behalf of
themselves and other similarly situated persons,
that defendant
PSHRC violated the Fair Labor Standards Act, 29 U.S.C. § 201 et
seq. (“FLSA”); Puerto Rico Law No. 180 of July 27, 1998, P.R. Laws
Ann. tit. 29, § 250 et seq. (“Law 180”); and Puerto Rico Law
No. 379 of May 15, 1948, P.R. Laws Ann. tit. 29, § 271 et seq.
(“Law 379”).
Id.
On September 4, 2012, defendant PSHRC filed a motion to
dismiss pursuant to Rule 12(b)(6), claiming that plaintiffs failed
to plead enough facts to establish a plausible FLSA claim or to
sustain a collective action.
plaintiffs
filed
their
(Docket No. 19.)
opposition,
factual allegations had been pled.
On August 21, 2012,
contending
that
(Docket No. 23.)
sufficient
On October 2,
2012, defendant PSHRC replied, maintaining again that plaintiffs
failed
to
complaint.
include
sufficient
(Docket No. 26.)
factual
allegations
in
their
Civil No. 12-1248 (FAB)
B.
3
Factual Background
In
their
complaint,
plaintiffs
allege
the following
facts, which the Court accepts as true for the purpose of resolving
defendant PSHRC’s motion to dismiss:
Defendant PSHRC employed plaintiff Perez as a Runner and
Server2 until he resigned on August 30, 2011.3
Defendant PSHRC
employed plaintiff Velez as a Server until he resigned on December
8, 2011.
(Docket No. 17 at p. 2.)
Plaintiffs were scheduled to
work five days a week, and “the regular shifts were six (6) or
seven (7) daily hours.” Id. at pp. 13-14. Plaintiffs participated
in a “tip pool”4 while they were employed with defendant PSHRC.
Id. at p. 3.
2
At the restaurant, the “Runner” is responsible for
expediting service. A Runner is responsible for arranging orders,
taking them to the table, serving orders if the Server is
unavailable, serving appetizers and desserts, preparing take-out
orders, and helping with other preparation duties. A “Server” is
responsible for taking orders, serving food and beverages,
requesting identification when alcoholic beverages are ordered,
suggesting courses and wine, answering questions about food
preparation, handling bills, and various other related duties.
(Docket No. 17 at p. 5.)
3
The complaint omits the date when any of the plaintiffs
began to work for defendant PSHRC. (See Docket No. 17.)
4
A tip pool is a method for dividing tips among employees
according to an agreement with the employer. For example, waiters
may put their tips into one fund at the end of the day, and money
from that fund will be split among the waiters and busboys based on
a predetermined percentage. 29 U.S.C. § 203(m) (“section 203(m)”)
requires that only employees “who customarily and regularly receive
tips” can participate in the tip pool if the employer is taking a
tip credit. See 29 C.F.R. § 531.54.
Civil No. 12-1248 (FAB)
Plaintiffs
4
allege
that
defendant
PSHRC
“knowingly,
intentionally and willfully” violated the FLSA in a number of ways.
Id. at pp. 4-17.
They claim that plaintiffs often worked more than
eight hours a day and forty hours a week, but that defendant PSHRC
failed to compensate them adequately pursuant to the FLSA.
Id.
Plaintiffs also allege that they spent two or three hours a day –
outside of their scheduled shifts – preparing the restaurant to
open and close.
of
work
Id.
They contend that those extra hours each day
constituted
overtime
adequately compensated.
work,
for
which
they
were
not
Id.
Defendant PSHRC utilized a “tip credit,” which, pursuant
to the FLSA, allows an employer to pay less than federal minimum
wage by crediting an amount of the employee’s actual tips towards
the minimum wage requirements.
Id. at p. 9.
Plaintiffs allege
that defendant PSHRC failed to provide employees with notice of the
tip credit, as required under the FLSA.
Id. at pp. 10-11.
They
also contend that defendant PSHRC violated the FLSA because it
improperly
retained
“operation” costs.
some
of
the
tips
from
Id. at pp. 11-12 & 21.
the
tip
pool
for
Plaintiffs also state
that defendant PSHRC is not entitled to the tip credit because it
took a credit in excess of fifty percent of the federal minimum
wage, and they claim that defendant PSHRC violated the FLSA when it
failed to include plaintiffs’ total salaries, including tips, when
calculating vacation and sick pay.
Id. at pp. 5 & 12.
Finally,
Civil No. 12-1248 (FAB)
5
plaintiffs aver that these facts also support claims pursuant to
Commonwealth of Puerto Rico laws.
II.
Id. at pp. 15-17.
LEGAL STANDARD
Rule 12(b)(6) permits the Court to dismiss a complaint that
fails
to
state
a
claim
Fed.R.Civ.P. 12(b)(6).
upon
which
relief
can
be
granted.
The Court must “accept as true all well-
pleaded facts alleged in the complaint and draw all reasonable
inferences therefrom in the pleader’s favor.”
Rodriguez-Reyes v.
Molina-Rodriguez, No.12-1647, 2013 WL 1173679, at *2 (1st Cir.
March 22, 2013)(quoting Santiago v. Puerto Rico, 655 F.3d 61, 72
(1st
Cir.
2001)).
The
Court
“may
augment
these
facts
and
inferences with data points gleaned from documents incorporated by
reference into the complaint, matters of public record, and facts
susceptible to judicial notice.” Rodriguez-Reyes, 2013 WL 1173679,
at *2 (quoting Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir.
2011)).
The factual material pled must be sufficient “to raise a right
to relief above the speculative level,” and to permit 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).
The Supreme Court has held
that a plaintiff’s pleading must cross
“the line between possibility and plausibility.”
v. Twombly, 550 U.S. 544, 577 (2007).
Bell Atl. Corp.
“[A] prima facie case is not
the appropriate benchmark for determining whether a complaint has
Civil No. 12-1248 (FAB)
6
crossed the plausibility threshold.”
1173679, at *1.
Rodriguez-Reyes, 2013 WL
Nevertheless, “[t]hose elements are part of the
background against which a plausibility determination should be
made.”
Id. at *4.
A Court must draw “on its judicial experience
and common sense” in evaluating the complaint’s plausibility.
Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012)
(internal citation omitted).
“If the factual allegations in the
complaint are too meager, vague, or conclusory to remove the
possibility of relief from the realm of mere conjecture, the
complaint is open to dismissal.”
SEC v. Tambone, 597 F.3d 436, 442
(1st Cir. 2010)(en banc).
III. DISCUSSION
Defendant PSHRC argues that plaintiffs’ complaint contains
only legal conclusions and fails to provide sufficient factual
allegations to support their contentions. (Docket No. 19 at p. 2.)
Pursuant to Rule 12(b)(6), defendant PSHRC claims that plaintiffs
cannot establish any theory of liability under the FLSA.
First,
defendant PSHRC contends that plaintiffs’ complaint fails to state
a
claim
because
plaintiffs
were
adequately
provisions of Section 203(m) of the FLSA.
informed
Id. at pp. 6-9.
of
the
Second,
defendant PSHRC argues that the FLSA permits employers to deduct
costs from an employee’s tips and that the complaint contains
insufficient factual allegations to establish that defendant PSHRC
wrongly withheld plaintiffs’ tips.
Id. at pp. 9-10.
Third,
Civil No. 12-1248 (FAB)
7
defendant PSHRC contends that it did not violate the FLSA when it
took a tip credit above fifty percent of the wage.
Fourth, defendant
PSHRC
points
to
plaintiffs’
Id. at p. 7.
“contradictory”
tallies of hours worked to argue that plaintiffs fail to allege a
claim that they received no overtime pay.
Id.
at pp. 11-15.
Fifth, in a footnote, defendant PSHRC argues that did not have to
pay
sick
leave
and
vacation
time
based
on
the
total
salary
plaintiffs earned because it is only required to calculate sick and
vacation leave based on federal minimum wage.
(Docket No. 19 at
p. 15, n. 15.)
Finally, defendant PSHRC claims that plaintiffs
fail
enough
to
allege
designation.
facts
to
Id. at pp. 15-20.
support
a
collective
action
The Court addresses each argument
in turn.
A.
Failure to Inform Pursuant to Section 3(m) of the FLSA
Defendant
PSHRC first
argues
that
plaintiffs
cannot
establish that it violated section 203(m) of the FLSA because it
complied with the notice requirement of the section.
No. 19 at pp. 6-8.)
(Docket
Section 203(m) allows an employer to pay a
tipped employee5 at a reduced cash wage by permitting the employer
to take a credit towards the federal minimum wage requirement if
the employee’s tips, combined with the cash wage, add up to minimum
5
The FLSA defines a tipped employee as “any employee engaged
in an occupation in which he customarily and regularly receives
more than $30 a month in tips.” 29 U.S.C. § 203(t).
Civil No. 12-1248 (FAB)
wage.
8
29 U.S.C. § 203(m)(2006).
The statute, however, forbids an
employer from taking the tip credit:
unless such employee has been informed by the employer of
the provisions of this subsection, and all tips received
by such employee have been retained by the employee,
except that this subsection shall not be construed to
prohibit the pooling of tips among employees who
customarily and regularly receive tips.
Id.
In its motion to dismiss, defendant PSHRC attached two
acknowledgments, which show plaintiff Perez and plaintiff Velez
signed
a
statement
explaining
that
because
they
are
“tipped
employees,” the restaurant “takes a tip credit with regard to the
wages paid to [each plaintiff].”6
(Docket Nos. 19-1 & 19-2.)
Defendant PSHRC contends that this was sufficient to inform its
employees of the provisions of section 203(m) because it is only
required to notify the employee of its intent to take a tip credit.
(Docket No. 19 at pp. 7-8.)
Plaintiffs contend that defendant had a duty to inform
them
of
existence
6
the
of
actual
the
statutory
tip
credit.
provisions,
Plaintiffs’
not
simply
argument
of
is
the
that
At the motion to dismiss stage, the Court normally would not
consider attached documents of this type. The Court only considers
the factual allegations in the complaint and “may augment these
facts and inferences with data points gleaned from documents
incorporated by reference into the complaint, matters of public
record, and facts susceptible to judicial notice.”
RodriguezReyes, 2013 WL 1173679, at *2 (quoting Haley v. City of Boston, 657
F.3d at 46). The documents were submitted by defendant PSHRC, not
the plaintiffs, so they cannot be considered incorporated by
reference to the complaint. The Court notes, however, that even if
it considered these acknowledgment forms as incorporated into the
complaint, the complaint would still survive the motion to dismiss.
Civil No. 12-1248 (FAB)
9
section 203(m) requires employers to inform the employee of:
the
amount of cash wage that is being paid to the employee; the amount
the employer claims as a tip credit; that the tip credit cannot
exceed the amount the tipped employee actually receives; that the
employee
must
retain
all
tips,
except
for
tip
pools
with
customarily and regularly tipped employees; and, that the employer
cannot take the tip credit unless the employee was informed of
those provisions.
(Docket No. 23 at p. 4.)
Defendant PSHRC argues
that these are “new notice requirements” from a recent amendment to
the statute and that “the majority of the courts have held that an
employer
is
simply
required
to
inform
its
employees
of
its
intention to treat tips as satisfying part of the employer’s
minimum wage obligations.”
(Docket No. 26 at p. 4.)
Defendant
PSHRC is correct that the requirements that plaintiffs list are
included in an amendment to the statute, which went into effect on
May 5, 2011.
The Court finds, however, that plaintiffs have made
out a plausible claim of a failure to provide notice pursuant to
section 203(m) under the previous version of the rule.
Contrary to defendant PSHRC’s argument, a majority of
courts require employers to provide their employees with more than
mere notice of an intention to take a tip credit.
The First
Circuit Court of Appeals, for example, held section 203(m) to
“require at the very least notice to employees of the employer’s
intention to treat tips as satisfying part of the employer’s
Civil No. 12-1248 (FAB)
10
minimum wage obligations.” Martin v. Tango’s Rest., Inc., 969 F.2d
1319, 1322 (1st Cir. 1992).
It also noted, however, that “[i]t
could easily be read to require more,” but the First Circuit Court
of Appeals declined to explicitly enumerate such requirements. Id.
The Sixth Circuit Court of Appeals found that employers are not
obligated
to
explain
the
details
of
section
203(m)
because
informing employees requires something less than an explanation.
Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 29899 (6th Cir. 1998) (finding that the required notice was provided
when all employees had been given a file folder that included a
written “Outback Tip Policy,” which stated the tip credit would be
taken against the employers minimum wage requirement and which
“also
fully
§ 203(m)”).
quoted
subsection
3(m)
of
the
FLSA,
29
U.S.C.
Courts have also held that the recent amendment to the
rule “does not require employers to do anything other than what
they were already obligated to do under section 3(m), which is
‘inform employees of the provisions of this subsection.’”7
7
Nat’l.
Other courts have considered whether the new rule applies
retroactively as a clarification of existing law, and have declined
to apply the rule retroactively.
See, e.g., Dorsey v. TGT
Consulting, LLC, 888 F.Supp.2d 670, 683-84 (D.D.C. 2012)(finding a
genuine issue of material fact at summary judgment when no written
notice had been provided and testimony from plaintiff and defendant
contradicted each other on whether oral notification took place).
The Court finds, however, that it is unnecessary to determine
whether the rule applies retroactively in this case because
plaintiffs have adequately made out a plausible claim under the
rule in place during their employment.
Civil No. 12-1248 (FAB)
11
Rest. Ass’n. v. Solis, 870 F.Supp.2d 42, 56 (D.D.C. 2012) (quoting
29 U.S.C. § 203(m)).
A reasonable inference can be made from the complaint
that defendant PSHRC failed to provide the type of notice required
by section 203(m) before the recent amendment.
The complaint
explicitly states that defendant PSHRC failed to inform them of the
provisions of section 203(m).
Defendant PSHRC does not argue that
plaintiffs pled insufficient facts to support a claim, but instead
argues that it was only required to tell plaintiffs it was taking
a tip credit.
Even if the Court considered the tip acknowledgment
form defendant PSHRC submitted, the form makes no mention of
minimum wage, and the statute requires, at a minimum, that the
employer inform the employee of its intention to use the tip credit
towards satisfying the federal minimum wage requirements.
As the
First Circuit Court of Appeals reasoned, to meet the statute’s
requirements, defendant PSHRC likely needed to provide additional
information besides the mere existence of the tip credit in order
to inform its employees of section 203(m)’s provisions.
Thus, the
Court finds that the plaintiffs’ complaint contains a plausible
claim that defendant PSHRC failed to provide adequate notice
pursuant to section 203(m).
B.
Sharing of Tips with Non-Tipped Employees
Defendant PSHRC next argues that plaintiffs fail to plead
sufficient factual allegations establishing that it improperly
Civil No. 12-1248 (FAB)
12
retained its employees’ tips, because employers are permitted “to
deduct several costs from an employee’s tips.”8
p. 9-10.)
(Docket No. 19 at
Plaintiffs contend that there is no indication that the
tips defendant PSHRC retained were kept for permissible uses, and
that it is the employer that has the burden of demonstrating a
permissible use for the deduction.
(Docket No. 23 at pp. 6-7.)
An
employer qualifies to take advantage of the tip credit only if “all
tips received by such employee have been retained by the employee,
except that this subsection shall not be construed to prohibit the
pooling of tips among employees who customarily and regularly
receive tips.”
29 U.S.C. § 203(m).
Some courts have recognized
permissible reasons for employers to retain some money from tips
while still maintaining eligibility for the tip credit. See, e.g.,
Myers v. Cooper Cellar Corp., 192 F.3d 546, 553 (6th Cir. 1999)
(finding that “an employer may subtract a sum from an employee’s
charged gratuity which reasonably compensates it for its outlays
sustained in clearing that tip, without surrendering its section
203(m) partial set-off against minimum wages”).
8
Defendant PSHRC also argues that plaintiffs fail to allege
enough facts to support a plausible claim that non-tipped employees
other than the employer itself participated in the tip pool.
(Docket No. 19 at p. 10.)
Plaintiffs respond, however, by
clarifying that they only allege defendant PSHRC impermissibly
participated in the tip pool, and not that any others participated.
(Docket No. 23 at p. 8.) Accordingly, the Court will not address
defendant PSHRC’s arguments regarding other, non-tipped employees.
Civil No. 12-1248 (FAB)
13
The Court finds unavailing defendant PSHRC’s contention
that plaintiffs fail to plead sufficient facts “to support a
reasonable inference as to whether or not the alleged deductions
made by defendant with respect to plaintiffs were prohibited or
allowable
under
the
FLSA.”
(See
Docket
No.
19
at
p.
10.)
Plaintiffs pled that defendant PSHRC retained tips from the tip
pool in violation of the FLSA, and it attached a document showing
that some of the monies from the tip pool were being retained for
“operation” costs which the defendant does not identify or explain.
(Docket No. 17 at p. 21.)
As a general rule, in order to qualify
for the tip credit, non-tipped employees cannot participate in a
tip pool.
Thus,
The restaurant itself certainly is not an employee.
plaintiffs
have
alleged
that
a
non-tipped
employee
participated in the tip pool, and defendant PSHRC is ineligible for
the tip credit as a result.
At the motion to dismiss stage,
plaintiffs are not required to rebut defendant PSHRC’s defense that
the tips were retained for a permissible purpose.
Viewing the
factual allegations in the light most favorable to the plaintiff,
a
reasonable
inference
can
be
made
that
defendant
PSHRC
participated in the tip pool in violation of the FLSA.
Defendant PSHRC also argues that plaintiffs failed to
allege enough facts to support a claim that it acted knowingly and
willfully when it violated the FLSA tip credit requirements.
(Docket No. 19 at p. 11.)
The complaint does state, however, that
Civil No. 12-1248 (FAB)
14
defendant PSHRC was aware of the FLSA requirements because it took
advantage
of the
tip credit
and the
additionally supports that contention.
Docket No. 23 at pp. 8-9.)
tip
acknowledgment
form
(Docket No. 17 at p. 12;
Taking the factual allegations as true
and in the light most favorable to plaintiffs, the Court finds that
a reasonable inference can be made that defendant PSHRC was aware
of the requirements of the FLSA and that it violated it willingly
and knowingly.
Thus, plaintiffs’ allegation that defendant PSHRC
violated the FLSA by improperly retaining tips survives the motion
to dismiss.
C.
Taking a Tip Credit in Excess of Fifty Percent of the
Wage
Plaintiffs
additionally
allege
that
defendant
PSHRC
impermissibly took more than fifty percent of the federal minimum
wage in a tip credit.9
(Docket No. 17 at p. 12.)
Plaintiffs cite
Martin and Kilgore in support of their position that defendant
PSHRC took a tip credit in excess of what is allowable by statute.
See Kilgore, 160 F.3d at 298 (quoting 29 U.S.C. § 203(m)(1994)’s
provision that a tip credit can be taken of “an amount determined
by the employer, but not by an amount in excess of . . . 50 percent
of the applicable minimum wage rate after March 31, 1991”); Martin,
9
In their complaint, plaintiffs detail each position for
which defendant PSHRC took a tip credit and what the cash wage was.
(Docket No. 17 at p. 14.) It alleges that for each position, the
tip credit defendant PSHRC took was larger than the cash wage,
which they claim was a violation of the statute. Id. at p. 12.
Civil No. 12-1248 (FAB)
15
969 F.2d at 1322 (quoting 29 U.S.C. § 203(m)(1982)’s language that
a tip credit can be taken “up to ‘an amount determined by the
employer but not . . . in excess of 40 per centum of the applicable
minimum
wage’”).
Defendant
PSHRC
argues
that
the
proper
calculation of the maximum tip credit is not based on a percentage.
It subtracts the minimum cash wage – $2.13 per hour – from the
federal minimum wage – $7.25 per hour – to calculate the maximum
tip credit – $5.12 per hour.
(Docket No. 26 at p. 6.)
The FLSA limits the amount of tip credit an employer may
rightfully take.
See 29 U.S.C. § 203(m)(2006).
An employer must
pay the tipped employee a wage:
equal to –
(1) the cash wage paid such employee which for purposes
of such determination shall be not less than the cash
wage required to be paid such an employee on August 20,
1996; and
(2) an additional amount on account of the tips received
by such employee which amount is equal to the difference
between the wage specified in paragraph (1) and the wage
in effect under section 206(a)(1) of this title.
29 U.S.C. § 203(m)(2006). This means that when the federal minimum
wage is $7.25 per hour and the minimum cash wage is $2.13 per hour,
an employer can take a tip credit of up to $5.12 per hour.
See
Fast v. Applebees’s Inter., Inc., 638 F.3d 872, 874-75 (8th Cir.
2011) (citing 29 U.S.C. § 203(m); 29 U.S.C. § 206(a)(1)).
The
cases on which plaintiffs rely quote earlier versions of section
203(m).
During the period relevant to this complaint, the newer
Civil No. 12-1248 (FAB)
version
of
the
statute,
16
which
did
not
include
limitations on the tip credit, was effective.
§ 203(m) (2006).
in
the
light
percentage
See 29 U.S.C.
Viewing the factual allegations in the complaint
most
favorable
to
plaintiffs,
the
complaint
demonstrates that plaintiffs were all paid above the minimum cash
wage and, therefore, no reasonable inference can be made that
defendant PSHRC violated the tip credit limitation.
Thus, the
Court will not consider the claim of a FLSA violation based on the
amount of tip credit taken.
D.
Payment for Overtime
Next, defendant PSHRC argues that plaintiffs failed to
allege facts sufficient to support a claim that it breached the
FLSA when it neglected to pay plaintiffs adequately for overtime.
(Docket No. 19 at pp. 11-15.)
Defendant PSHRC contends that the
facts pled in the complaint do not establish a prima facie case of
a failure to properly compensate employees for overtime because:
the factual allegations in the complaint contradict themselves and
show that plaintiffs did not actually work overtime; plaintiffs did
not specifically allege how many hours of overtime they worked; and
the complaint lacks factual allegations to show defendant PSHRC was
aware of the overtime hours plaintiffs worked.
respond
that
what
defendant
PSHRC
frames
as
Id.
Plaintiffs
“contradictory
statements” establish that plaintiffs were scheduled to work fewer
than forty hours a week but were actually required to work more,
Civil No. 12-1248 (FAB)
17
for which they were not adequately compensated.
p. 9.)
(Docket No. 23 at
Based on the factual allegations in the complaint, the
Court agrees with plaintiffs and finds that a reasonable inference
can be made that plaintiffs worked overtime for which they were not
adequately compensated.
The FLSA requires an employer to pay an employee for any
hours worked above forty hours a week at a rate of “time and a
half” of the employee’s regular wage. 29 U.S.C. § 207(a)(1)(2006).
To show a violation of the FLSA’s overtime requirements, plaintiffs
must “allege (1) that they were employed by [defendant PSHRC];
(2) that their work involved interstate activity; and (3) that they
performed work for which they were under-compensated.”
See Pruell
v. Caritas Christi, 678 F.3d 10, 12 (1st Cir. 2012).
In Pruell,
the plaintiffs appealed the district court’s dismissal of a FLSA
claim when plaintiffs only generally alleged the legal conclusion
that they “‘regularly worked’ over 40 hours a week and were not
compensated for such time.”
Id.
The First Circuit Court of
Appeals found that a simple statement that plaintiffs worked more
than forty hours per week was inadequate to establish a FLSA claim
where no examples or estimates of unpaid time were given to
substantiate the claim, but that “some latitude has to be allowed
where a claim looks plausible based on what is known.”
Id. at 14
(finding that plaintiffs should be allowed to file a second amended
Civil No. 12-1248 (FAB)
18
complaint to provide additional information about how many unpaid
hours they worked and what type of work they performed).
Here, plaintiffs allege in their complaint that they were
regularly scheduled to work five days per week “and the regular
shift was six (6) or seven (7) daily hours.”
p. 14.)
(Docket No. 17 at
Plaintiffs also state that the overtime hours they worked
came from working “2 or 3 daily hours devoted to tasks related to
preparing [d]efendant [PSHRC’s] establishment before it opened its
doors
to
its
clients
establishment.”
and
related
Id. at p. 4.
to
the
closing
of
the
These allegations go beyond the
legal conclusion that plaintiffs regularly worked more than forty
hours a week deemed insufficient in Pruell.
Rather, plaintiffs’
allegations provide both an estimate of the hours worked and a
general
idea
of
the
type
of
work
performed.
Viewing
the
allegations in the light most favorable to plaintiffs, the Court
draws a reasonable inference that in addition to the six or seven
hours a day plaintiffs were scheduled to work, they worked an
additional two or three hours each shift and that resulted in
plaintiffs working over forty hours a week, for which they were not
adequately compensated.
A reasonable inference can also be made
that defendant PSHRC was aware of plaintiffs’ hours because as an
employer, it was responsible for scheduling employees and would be
aware that someone prepared the restaurant to open and close.
Accordingly, plaintiffs’ allegations survive the motion to dismiss.
Civil No. 12-1248 (FAB)
E.
19
Calculation of Sick and Vacation Leave Wage
In a footnote, defendant PSHRC also argues that it did
not violate the FLSA by failing to include plaintiffs’ total
income, including tips, when calculating sick and vacation pay.
(Docket No. 19 at p. 15, n. 15.)
Instead, it alleges that it is
only required to calculate the paid time off based on the federal
minimum wage.
Id.
In response, plaintiffs contend that, pursuant
to Puerto Rico law, wages and tips have to be factored into the
calculation of sick and vacation leave payments. (Docket No. 23 at
pp. 9-10.)
Federal law does not currently require paid sick or
vacation leave.
See generally Family Medical Leave Act, 29 U.S.C.
§ 2612 (requiring unpaid leave in certain situations and not
requiring employers to provide paid leave when they do not normally
offer it). The computation of sick and vacation pay is governed by
arrangements between the employer and the employee and Commonwealth
law.
See, e.g., Hernandez v. Sea-Land Service, Inc., 614 F.Supp.
675 (D.P.R. 1985) (evaluating excess sick leave payment in light of
a collective bargaining agreement and Commonwealth law).
No
plausible inference can be made, therefore, that defendant PSHRC
violated the FLSA when it declined to include tip amounts above
minimum wage in its calculations of sick and vacation pay, because
federal law does not require paid time off.
Contrary to defendant
PSHRC’s argument, however, plaintiffs do bring their claims of
Civil No. 12-1248 (FAB)
incorrect
calculation
Commonwealth law.
20
of
sick
and
vacation
law
pursuant
to
Because defendant PSHRC failed to address it in
their motion to dismiss, the claim for incorrect vacation and sick
leave pay
may
proceed
pursuant
to
Commonwealth Law,
but
not
pursuant to the FLSA.
F.
Class Certification
Finally, defendant PSHRC argues that plaintiffs fail to
plead
sufficient
facts
to
support
a
claim
for
class
action
certification because plaintiffs do not show a common policy or
plan that violated the law, or that any other plaintiff would want
to join in the class action.
(Docket No. 19 at pp. 15-20.)
Plaintiffs respond by contending that because they listed other
similarly situated employees and explained how they were harmed,
plaintiffs pled sufficient factual allegations to designate a class
action.
(Docket No. 23 at pp. 10-12.)
arguments
around
the
requirements
certification under 29 U.S.C. § 216(b).
It
is
too
soon,
however,
for
the
Both parties frame their
for
conditional
class
(See Docket Nos. 19 & 23.)
Court
to
address
whether
plaintiffs have alleged sufficient factual allegations to warrant
conditional class certification under 29 U.S.C. § 216(b) because
plaintiffs have not presented the Court with a motion for class
notification.
Contrary to defendant PSHRC’s argument, plaintiffs
are not required at the time the complaint is filed to file the
Civil No. 12-1248 (FAB)
21
written consent to sue from other plaintiffs.10
Melendez Cintron
v. Hershey Puerto Rico, Inc., 363 F.Supp.2d 10, 17 (D.P.R. 2005).
The Court will address whether it is appropriate to send notices
once plaintiffs have moved for the potential class to be notified.
Id. (finding that plaintiffs should have requested authorization
from the Court before providing notice to potential class members.)
Thus, the Court will not consider these arguments at this time.
IV.
CONCLUSION
For the reasons expressed above, the Court DENIES defendants’
motion to dismiss plaintiffs’ FLSA claims, but will not consider
any theory of FLSA violation predicated on taking a tip credit in
excess of fifty percent of minimum wage or on miscalculation of
sick and vacation payments.
IT IS SO ORDERED.
San Juan, Puerto Rico, April 17, 2013.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
10
The mechanism providing for class action certification under
29 U.S.C. § 216(b) requires plaintiffs to “opt-in” to the class
action, rather than “opt-out,” as is required in class actions
brought pursuant to Federal Rule of Civil Procedure 23(b)(3).
Melendez Cintron, 363 F.Supp.2d at 14, n. 3.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?