Spencer v. Macado's, Inc.

• Decision Date: 08 July 2019
• Docket Number: Case No. 6:18-cv-00005
• Citation: 399 F.Supp.3d 545
• Parties: Jeffrey SPENCER, Jr., et al., Plaintiffs, v. MACADO'S, INC., Defendant.
• Court: U.S. District Court — Western District of Virginia

399 F.Supp.3d 545

Jeffrey SPENCER, Jr., et al., Plaintiffs,

v.MACADO'S, INC., Defendant.

Case No. 6:18-cv-00005

United States District Court, W.D. Virginia, Lynchburg Division.

Signed July 8, 2019

Gordon Ernest Jackson, Pro Hac Vice, Joseph Russ Bryant, Pro Hac Vice, Paula R. Jackson, Pro Hac Vice, Robert Eugene Morelli, III, Pro Hac Vice, Jackson, Shields, Yeiser & Holt, Memphis, TN, Johneal Moore White, Glenn Robinson Cathey Memmer & Skaff, PLC, Roanoke, VA, for Plaintiffs.

Leah Michele Stiegler, Michael Preston Gardner, Victor O'Neil Cardwell, Woods Rogers PLC, Roanoke, VA, for Defendant.

MEMORANDUM OPINION

NORMAN K. MOON, SENIOR UNITED STATES DISTRICT JUDGE

This matter is before the Court upon Defendant Macado's, Inc.'s partial motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. 107). This case is a collective action brought under the Fair Labor Standards Act (FSLA) by current and former Macado's servers and bartenders who allege that Macado's has paid them below minimum wage in three distinct ways. First, Macado's allegedly required Plaintiffs to perform non-tip-producing tasks that were unrelated to their normal work while clocked in as tipped employees (a "dual jobs" claim). Second, Macado's allegedly required Plaintiffs to spend over twenty percent of their time on non-tip-producing tasks that were related to their normal work (a "side work" claim). Third, Macado's allegedly required Plaintiffs to perform unpaid work off the clock before their scheduled shifts.

Macado's seeks to dismiss Plaintiffs' "dual jobs" and "side work" claims on the basis of a recent Department of Labor (DOL) opinion letter and Handbook update. The Court finds that these materials are not entitled to Auer or Skidmore deference, and the Court will therefore deny Macado's motion to dismiss.

I. LEGAL STANDARD

A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim; it "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin , 980 F.2d 943, 952 (4th Cir. 1992). The Court must take all facts and reasonable inferences in favor of the plaintiff, disregard any legal conclusions, and not credit any formulaic recitations of the elements. See Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

II. FACTUAL & LEGAL BACKGROUND

A. Factual Background

Plaintiffs originally filed this action on January 10, 2018. (Dkt. 1). On August 1, 2018, the Court granted Macado's first motion to dismiss in part, dismissing without prejudice Plaintiffs' "dual jobs" and "off-the-clock" claims, primarily because Plaintiffs had not provided sufficient factual specificity about how much time was spent on unrelated non-tip producing tasks and how frequently Plaintiffs were required to perform "off-the-clock" work. (Dkts. 88; 89). Plaintiffs' "side work" claim survived. (Id. ). Plaintiffs' subsequently amended the complaint, bringing all three claims again. (Dkt. 105 ("Complaint")).

Plaintiffs Jeffrey Spencer, Cheyenne Williams, and Travis Hostetter are current and former employees of Macado's Lynchburg location. (Id. ¶¶ 1, 6–8). They receive both an hourly wage and tips. (Id. ¶¶ 6–8). Macado's pays / paid Plaintiffs as tipped employees, providing a wage below the federal minimum wage for untipped employees. (Id. ¶ 52). Plaintiffs allege that Macado's maintained a policy of staffing restaurants with fewer employees than necessary. (Id. ¶ 13). In turn, this policy of understaffing required Plaintiffs (1) to perform unrelated non-tip-producing tasks while clocked-in as tipped employees ("dual jobs"), (2) to perform related non-tip-producing tasks for more than twenty percent of their work time while clocked in as tipped employees ("side work"), and (3) to perform work "off the clock" before their scheduled shifts. (Id. ¶ 13).

In Count One (Plaintiffs' "dual jobs" claim), Plaintiffs allege Macado's required them to perform various forms of non-tipped work unrelated to their tipped jobs as servers and bartenders. (Id. ¶ 53). Such unrelated work included "cleaning bathrooms and scrubbing toilets, cleaning kitchen staff's dishes, cleaning dishes, taking out trash, [and] scrubbing kitchen floors." (Id. ). Plaintiffs allege that they "and putative class members routinely spend one (1) to three (3) hours of each shift performing tasks entirely unrelated to their tip-producing duties." (Id. ¶ 19).

In Count Two (Plaintiffs' "side work" claim), Plaintiffs also allege they were required to perform various forms of non-tipped work that was related to their tipped jobs. (Id. ¶ 61). Such related work included "refilling sugar caddies, salt and pepper shakers, ice, and condiments, cleaning chairs, tables, booths, and performing pre-closing cleaning tasks [ ]such as vacuuming and/or sweeping the server's assigned area and checking dishes, napkins, and utensils, cleaning the bar, wiping down bottles, restocking beer, cleaning taps and bar, cleaning bar area tables, and washing bar glasses[.]" (Id. ). Plaintiffs were allegedly required to engage in these tasks for one to three hours per shift, "in excess of 20% of [Plaintiffs'] work time." (Id. ¶¶ 35, 61, 63).

In Count Three (Plaintiffs' "off-the-clock" claim), Plaintiffs allege they were required to perform "off the clock" work such as "helping other tipped employees deliver food to their customers, filling cups of toothpicks for the cooks to use in cooking/food preparation, washing dishes, cleaning the dining area, and helping ... with food preparation." (Id. at ¶ 68). This work occurred "before and/or after [Plaintiffs'] regularly scheduled shifts," "at least one (1) to two (2) hours per week." (Id. ¶ 34).

In the present motion to dismiss, Macado's seeks to dismiss only Counts One and Two under Rule 12(b)(6).

B. Relevant FLSA Provisions and DOL Regulations

The Court first provides an overview of FLSA's minimum wage provisions and the various regulatory sources of Plaintiffs' "dual jobs" and "side work" claims. FLSA sets the current federal minimum wage at $7.25 an hour. 29 U.S.C. § 206(a)(1)(C). However, if an employee receives tips, their employer may pay them an hourly wage below the minimum wage:

In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee's employer shall be an amount equal to—

(1) the cash wage paid such employee which for purposes of such determination shall be not less than [$2.13 per hour]; 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 [$7.25 per hour].

The additional amount on account of tips may not exceed the value of the tips actually received by an employee.

29 U.S.C. § 203(m) ; Trejo v. Ryman Hosp. Properties, Inc. , 795 F.3d 442, 447 (4th Cir. 2015) ("An employer can thus pay tipped employees (1) a cash wage of $2.13 plus (2) an additional amount in tips that brings the total wage to the federal minimum wage."). FLSA defines "tipped employee" to mean "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).

DOL has issued the following regulation to interpret the phrase "more than $30 a month in tips":

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man. Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable 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. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

29 C.F.R. § 531.56(e). Plaintiffs' claims arise out of the intersection of these statutes, regulations, and further DOL guidance.

With respect to Plaintiffs' "dual jobs" claim in Count One, following 29 C.F.R. § 531.56(e), "[c]ourts recognize ‘dual jobs’ claims where plaintiffs sufficiently demonstrate that while engaged by an employer as a tipped employee, they spent a portion of their time performing non-tip-producing tasks that were unrelated to their primary role and that more closely resemble tasks traditionally performed in [a] minimum wage occupation[ ] such as a janitor ...." See Barnhart v. Chesapeake Bay Seafood House Assocs., L.L.C. , No. CV JFM-16-01277, 2017 WL 1196580, at *4 (D. Md. Mar. 31, 2017).

Plaintiffs' "side work" claim also has its roots in 29 C.F.R. § 531.56(e). As relevant here, that regulation states:

[A dual jobs] situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable 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. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

29 C.F.R. § 531.56(e) (emphasis added). These examples of tasks that are related to tipped work, but are not tip-producing themselves, are known as "side work." An employer can receive a...