United States District Court, E.D. Arkansas, Western Division
JACQUELINE ESRY, individually and on behalf of all others similarly situated PLAINTIFFS
P.F. CHANG'S BISTRO, INC., d/b/a P.F. Chang's China Bistro DEFENDANT
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
Esry brings this collective action against her former
employer, P.F. Chang's China Bistro, alleging violations
of the Fair Labor Standards Act (“FLSA”), 29
U.S.C. § 201, et seq., and the Arkansas Minimum
Wage Act (“AMWA”), Ark. Code Ann. §
11-4-201, et seq. Esry was a server at the P.F.
Chang's restaurant in Little Rock, Arkansas. The
complaint is based on P.F. Chang's use of a “tip
credit” to calculate servers' wages for purposes of
meeting the minimum wage requirements of the FLSA and the
AMWA. P.F. Chang's has filed a motion to dismiss pursuant
to Federal Rule of Civil Procedure 12(b)(6). For the
following reasons, the motion is denied.
complaint alleges that P.F. Chang's paid its servers less
than minimum wage, relying on the FLSA's “tip
credit.” Document #1 at 4, ¶ 23 (citing 29 U.S.C.
§ 203(m)). P.F. Chang's did not distinguish between
tip-producing duties and nontip-producing duties; it paid the
servers less than minimum wage each hour they worked.
Id. at 5, ¶¶ 26-30. Esry and other servers
spent more than 20 percent of their time performing
nontip-producing duties for P.F. Chang's, such as opening
and closing the restaurant, rolling silverware, and
performing side-work. Id. at 1, ¶ 2. P.F.
Chang's did not inform the servers of the law governing
the tip credit prior to taking a tip credit against the
minimum wage. Id. at 4, ¶ 24.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (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, 129 S.Ct. 1937, 1949, 173
L.Ed.2d 868 (2009). The Court accepts as true all of the
factual allegations contained in the complaint and draws all
reasonable inferences in favor of the nonmoving party.
Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th
Cir. 2014). The complaint must contain more than labels,
conclusions, or a formulaic recitation of the elements of a
cause of action, which means that the court is “not
bound to accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555,
127 S.Ct. at 1965.
Chang's argues that there is no rule precluding an
employer from taking advantage of the tip credit when an
employee spends more than 20 percent of her time performing
nontip-producing duties and, therefore, the complaint should
be dismissed. Document #8 at 10-11. The FLSA requires
employers to pay a minimum hourly wage, which is currently
$7.25 per hour. 29 U.S.C. § 206(a)(1)(C). But with the
tip credit, the “wage” an employer must pay a
“tipped employee” is the sum of (1) the cash wage
paid to the employee, which must be at least the minimum cash
wage that was required to be paid to tipped employees on
August 20, 1996 ($2.13 per hour) and (2) an additional amount
based on tips received by the employee that is equal to the
difference between the $2.13 cash wage and the current $7.25
minimum wage. 29 U.S.C. § 203(m). The FLSA defines
“tipped employee” as an “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). The parties agree that Esry and those
similarly situated are employed in a tipped occupation; they
disagree as to whether P.F. Chang's must pay the current
minimum wage to those employees, as opposed to the tip
credit's cash wage, for the time they were performing
FLSA itself does not mention the 20 percent rule, nor does it
explain when an employee is “engaged” in a tipped
occupation. But recognizing that there are situations in
which employees have more than one occupation under one
employer-some occupations that are tipped and some that are
not-the Department of Labor (“DOL”) promulgated a
“dual jobs” regulation interpreting and
implementing the tip credit. See 29 C.F.R. §
531.56(e). The agency provides the example of a hotel
employee working as a maintenance man and a server: The
employer cannot take the tip credit for the employee's
hours of employment as a maintenance man, but the employer
can take the tip credit for the employee's hours of
employment as a server. Id. The regulation explains
that the hotel employee working a dual job-maintenance man
and server-is different from a server “who spends part
of her time cleaning and setting tables, toasting bread,
making coffee and occasionally washing dishes or glasses . .
. . Such related duties in an occupation that is a tipped
occupation need not by themselves be directed toward
producing tips.” Id.
regulation itself does not mention the 20 percent rule nor
does it elaborate on what duties are considered
“related, ” but the DOL has further interpreted
its dual jobs regulation in a Field Operations Handbook. The
(f) Dual jobs
(2) 29 CFR 531.56(e) permits the employer to 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 employee. For example, duties related to the tipped
occupation may include a server who does preparatory or
closing activities, rolls silverware and fills salt and
pepper shakers while the restaurant is open, cleans and sets
tables, makes coffee, and occasionally washes dishes or
(3) However, where the facts indicate that tipped employees
spend a substantial amount of time (i.e., in excess
of 20 percent of the hours worked in the tipped occupation in
the workweek) performing such related duties, no tip credit
may be taken for the time spent in those duties. All related
duties count toward the 20 percent tolerance.
Dep't of Labor, Wage and Hour Division Field Operations
Handbook ch. 30d00(f) (2016), available at
complaint hinges on whether the Court must look to the
Handbook to determine when an employer is precluded from
using the tip credit to pay its employees in tipped
occupations. P.F. Chang's maintains that this section of
the Handbook is “arbitrary, capricious, contrary to
law, and unworthy of deference.” Document #8 at 10.
Eighth Circuit held in Fast v. Applebee's Int'l,
Inc. that the DOL's interpretation of the dual jobs
regulation was entitled to deference pursuant to Auer v.
Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79
(1997) (calling for deference to an agency's
interpretation of its own ambiguous regulation) and that the
DOL's interpretation was not “clearly erroneous or
inconsistent with the regulation.”See 638
F.3d 872, 877-881 (8th Cir. 2011) (cert. denied, 565
U.S. 1156, 132 S.Ct. 1094, 181 L.Ed.2d 977 (2012)). Though
Fast is directly on point, P.F. Chang's argues
that it is no longer binding precedent in light of two
“subsequent developments:” (1) Christophe ...