This week, in a decision favorable to the restaurant industry and companies that employ tipped workers, a district court in Indiana carved out a tip credit claim from a proposed wage and hour collective action brought on behalf of a group of servers, bartenders and hosts against the Applebee's restaurant chain. The Plaintiff, Jessica Roberts, worked as a waitress at Applebee's in South Bend, Indiana. She sued on behalf of the servers, bartenders and hosts at the Applebee's where she worked, as well as 23 additional restaurant locations across the state, claiming that the proposed class members were paid below minimum wage for performing "an array of duties" such as dishwashing, food preparation, kitchen and bathroom cleaning, trash removal and other duties for which they were not tipped.

Roberts' claim was brought under the tip credit provision of the Fair Labor Standards Act (FLSA), which allows tipped employees to be paid $2.13 per hour rather than minimum wage, provided the tipped employees are allowed to keep all of their tips, are informed about the tip credit and earn at least minimum wage each week when their hourly wages and tips are combined. Only those employees who perform job duties that are traditionally tipped are eligible for the tip credit.

Citing Department of Labor (DOL) regulations addressing employees engaged in dual jobs, Roberts claimed that when she and her other proposed class members perform nontipped work, the tip credit is not available and they must be paid minimum wage. United States District Judge Theresa Springmann disagreed, concluding that Roberts' tip credit claim is based on a "faulty legal conclusion." According to Judge Springmann, the regulations and case law do not support Roberts' theory that nontipped duties, like food preparation and dishwashing, could not be incidental to the regular duties of a server. The court noted that the DOL Handbook recognizes that servers may spend some time performing general maintenance and preparation tasks, provided that such duties are "incidental" to their regular duties as a server, do not exceed 20 percent of their time and are assigned to the wait staff generally.

The sparse factual allegations of Roberts' complaint did not allege how much time the proposed class members performed nontipped duties and failed to raise a reasonable inference that the employees' nontipped duties "comprised a substantial amount of their time" and were part of a "separate and distinct nontipped occupation." As a result, the court denied Roberts' request to send collective action notice of the tip credit claim to potential opt-in plaintiffs. The court did, however, allow Roberts to pursue her individual tip credit claim based on her allegation that she was personally required to perform nontipped duties outside her occupation more than 20 percent of the time.

Bottom Line: This case stands as another example of plaintiffs' attorneys who target the restaurant industry for alleged tip credit violations under the FLSA and the courts' continued reluctance to authorize collective action notice to a large number of class members based on bare-bones allegations. Although Roberts was unsuccessful in bringing her tip credit claim on a class-wide basis in this case, employers should be prepared for the filing of similar tip credit claims that may survive judicial scrutiny if enough factual specificity is injected into the complaint.

Obtain a copy of the court's order: Roberts v. Apple Sauce, Inc., et al., Cause No. 3:12-CV-830-TLS (N.D. In. May 13, 2013).