Rafferty v. Denny's, Inc.

• Decision Date: 15 September 2021
• Docket Number: No. 20-13715,20-13715
• Citation: 13 F.4th 1166
• Parties: Lindsay RAFFERTY, Plaintiff - Appellant, v. DENNY'S, INC., Defendant - Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

13 F.4th 1166

Lindsay RAFFERTY, Plaintiff - Appellant,

v.DENNY'S, INC., Defendant - Appellee.

No. 20-13715

United States Court of Appeals, Eleventh Circuit.

September 15, 2021

John Richard Byrne, Leon Cosgrove, LLP, Miami, FL, James L. Simon, Law Offices of Simon & Simon, Independence, OH, Clifford P. Bendau, II, Attorney, Bendau & Bendau, PLLC, Phoenix, AZ, Matthew D. Brady, Edward W. Ciolko, James Patrick McGraw, III, Carlson Lynch, LLP, Pittsburgh, PA, Gerald D. Wells, III, Assistant, Connolly Wells & Gray, LLP, Malvern, PA, for Plaintiff-Appellant.

Luis A. Santos, Todd Sidney Aidman, FordHarrison, LLP, Tampa, FL, Darren W. Ford, Graydon Head & Ritchey, LLP, FT Mitchell, KY, Michael A. Roberts, Robert Kenneth Wellington, II, Graydon Head & Ritchey, LLP, Cincinnati, OH, for Defendant-Appellee.

Before MARTIN, ROSENBAUM, and LUCK, Circuit Judges.

ROSENBAUM, Circuit Judge:

We've probably all read stories about a few fortunate food servers collecting incredibly generous tips.¹ While that, of course, is not the norm,² even the best servers with the most magnanimous customers cannot earn tips during the periods their employers require them to engage in non-tipped work. So the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. ("FLSA"), and the regulations the Department of Labor has promulgated to effectuate it impose rules to ensure that tipped employees—who receive sub-minimum hourly wages with the expectation that tips will be high enough to bring their hourly rates to at least the minimum wage—spend the bulk of their time working in tip-producing tasks.

Plaintiff-Appellant Lindsay Rafferty, who worked as a server at a Denny's restaurant, contends that Defendant-Appellee Denny's, Inc., failed to comply with these rules. Instead, Rafferty claims, Denny's required her to spend much of her time performing untipped duties related to her tipped work and untipped duties that had nothing to do with her tipped work. As a result, she asserts, Denny's paid her the sub-minimum hourly wage for time she worked in non-tip-producing tasks as well as in her tipped occupation. Rafferty also claims that Denny's violated the FLSA by failing to provide the FLSA-required notification to her of the tip rules. Denny's moved for and prevailed on summary judgment on all counts.

After careful consideration and with the benefit of oral argument, we now conclude that genuine issues of material fact concerning Rafferty's non-tipped labor claims preclude the entry of summary judgment. But we agree with the district court that Denny's was entitled to summary judgment on Rafferty's FLSA notice claims. We therefore affirm in part and reverse in part the judgment of the district court and remand for further proceedings.

I.

A. Factual Background

Lindsey Rafferty joined the Denny's team as a server at one of its Akron, Ohio, locations in February 2012. Besides waiting on tables, Rafferty also had to perform some other tasks for her job. When she spent time on these other duties, Rafferty did not interact with customers and could not earn a tip. Denny's required Rafferty to engage in these non-tipped duties before, during, and after every shift worked.³

Rafferty's untipped duties that, according to Rafferty, were related to her occupation as a server consisted of cutting all salad-bar items and filling and refilling the salad bar; stocking all premade dressings; slicing fruits; emptying, cleaning, and refilling all flavored syrup containers; cleaning throughout the front of the restaurant; cleaning, filling, and refilling the server line; cleaning and stocking the drink stations; and rolling silverware by hand into individual place settings. During any given shift, Rafferty testified, she spent between "30 and 50 percent of the time" doing these tasks.

Denny's also required Rafferty to engage in various duties that Rafferty viewed as unrelated to her occupation of serving customers. These included preparing all side and entrée salads and other food items in the back of the restaurant; greeting and seating customers; answering phones and working the cash register; bussing tables; preparing and plating desserts; handling takeout and delivery orders over the phone and from walk-in customers; managing and fulfilling orders from food delivery apps, including Uber Eats, Grubhub, and DoorDash; sweeping and mopping; wiping down the microwave and stoves; cleaning and wiping counters; washing and scrubbing walls; breaking down and cleaning the soda, juice, and coffee machines; wiping down blinds and light fixtures; cleaning chairs; cleaning and scrubbing refrigerators, the ice-cream freezer, sinks, trays, and bins; emptying, washing, and refilling all salt, pepper, syrup, and condiment dispensers, and sugar caddies; detail cleaning the salad bar; and detail cleaning the expeditor line.

Throughout Rafferty's time working as a server for Denny's, Denny's paid Rafferty as a "tipped employee" under the FLSA.⁴ That means Denny's paid her at a rate below the minimum wage, with the expectation that she would make up the rest of her wage rate (at least to the minimum wage) through tips. Denny's claimed a "tip credit" for the amount between what it paid her and the minimum wage. See 29 U.S.C. § 203(m)(2)(A).

Rafferty was required to accurately report all cash tips she received during each shift when she clocked out. If, in any given workweek, a tipped employee reported less in tips than necessary to make up the difference between her wage rate and the minimum wage, Denny's claimed it automatically paid the difference. But Rafferty asserts that Denny's paid her less than the minimum wage and claimed a tip credit on all hours worked, regardless of whether she served customers or engaged in non-tip-producing work. She left her job with Denny's in October 2018.

B. Procedural Background

Not that long afterwards, Rafferty sued Denny's in the United States District Court for the Southern District of Florida. She alleged violations of the FLSA and sought to bring claims on behalf of herself and all similarly situated tipped employees who were subject to Denny's alleged policy or practice of paying these employees sub-minimum hourly wages in violation of the tip-credit provisions of the FLSA. Though six more plaintiffs opted into this collective action over the course of the district-court proceedings, the district court found them not to be similarly situated to Rafferty. So it ultimately dismissed them without prejudice, leaving Rafferty as the sole remaining plaintiff.

Rafferty's complaint alleged three counts under the FLSA. In Count One, Rafferty asserted that Denny's had failed to provide its employees with appropriate notice of the tip credit it claimed under the FLSA. Count Two contended that Denny's took the tip credit for employees’ time when they were required to engage in untipped duties unrelated to their occupation as servers. And Count Three complained that Denny's claimed the tip credit for employees’ time even though the employees were required to work more time than permitted in non-tipped so-called related duties. Denny's moved for summary judgment on all counts, and the district court granted Denny's motion.

As to Count One, the district court found "no genuine issue of material fact regarding Denny's compliance with the tip credit notice requirements set forth in in 29 U.S.C. § 203(m) and 29 C.F.R. § 516.28(a)(3)." On appeal, Rafferty argues that Count One also included a second theory warranting Denny's liability for allegedly violating the notice requirements contained in § 203(m) : that Denny's violated the FLSA by not providing updated notice each time the amount of the tip credit changed. The district court declined to consider this argument because it concluded that Rafferty did not allege this theory in her complaint. And even if she had, the district court reasoned, Denny's gave notice of the required information, sufficient to satisfy 29 C.F.R. § 516.28(a)(3), through its online "Workday" portal.

To resolve Counts Two and Three, the district court relied on a 2018 Opinion Letter that the Department of Labor ("DOL" or "Department") issued interpreting the dual-jobs regulation. Based on this letter, the court held that Rafferty's claims failed because she had not provided any evidence that she had conducted "sidework" at any time that was not "contemporaneous" with her tip-related activities.

Rafferty timely appealed.

II.

We review de novo a district court's grant of summary judgment and apply the same legal standards that governed the district court, viewing all evidence and drawing all reasonable inferences in the nonmoving party's favor. Schumann v. Collier Anesthesia, P.A. , 803 F.3d 1199, 1207 (11th Cir. 2015). Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."

III.

A. Material issues of fact exist concerning Rafferty's dual-jobs-regulation claims (Counts Two and Three), so summary judgment was not appropriate

Rafferty alleges in Counts Two and Three that Denny's violated the Department's dual-jobs regulation in two ways. In Count Two, she asserts that Denny's took the tip credit for hours she worked on duties unrelated to her primary occupation as a server. And in Count Three, Rafferty contends that Denny's claimed the tip credit for hours she worked excessively in untipped duties that were related to her primary job.

Before we analyze these claims, in Section III.A.1, we review the applicable statutory and regulatory background because understanding them is necessary to applying the governing analytical framework. Section III.A.2 considers whether deference to the Department's 2018 Opinion Letter's interpretation of the dual-jobs regulation is appropriate and then construes the dual-jobs regulation. And having established in Sections III.A.1 and III.A.2 the proper analytical framework for ...