Hart v. Crab Addison- New 20% Sidework Decision

Recently, the United States District Court for the Western District of New York denied Defendant Crab Addison, Inc.’s (“Crab Addison”) motion to dismiss a Plaintiff class’s minimum-wage claim under the Fair Labor Standards Act (“FLSA”) alleging that Defendants paid the Plaintiff class less than the full required minimum wage pursuant to a “tip credit”, while having them spend a significant amount of time performing non-tipped duties. In its prior decision, the Court granted Defendant’s motion to dismiss the FLSA minimum-wage claim because it failed to plausibly allege that Plaintiffs were paid below minimum wage for any particular week. However, Plaintiffs were granted leave to amend their complaint, and now assert that they were required to perform either unrelated non-tipped duties or an excessive amount of related non-tipped duties during every shift. Therefore, Plaintiffs alleged that they were paid less than minimum wage every individual week they worked. Plaintiffs specifically requested the full minimum wage for all unrelated non-tipped duties and for all related non-tip producing work that was performed during more than twenty-percent of a shift.

The FLSA allows for tipped workers to be paid below minimum wage by their employers when tips will account for the difference between wage amounts. The tip credit provision also applies to non-tipped work that is “incidental” to the regular duties of the employee. However, the FLSA has put in additional regulations to prevent abuse by employers. Employers may not use the tip credit provision to pay an employee below minimum wage for non-tipped work unrelated to tip producing duties. They also may not use it to pay employees below minimum wage for work that is related to their tipped work but accounts for over 20% of their time, since anything above that threshold is no longer considered “incidental” to the regular duties of the employee. In this case, Plaintiffs alleged that Defendants have violated both of these regulations.
Defendants argued that Plaintiffs’ claims must necessarily fail if their total hours worked divided by total pay is equal or greater than the minimum wage rate, which would imply that, on average, they were paid above minimum wage rate. However, the court held that an employer cannot rely upon the tips an employee earns from tipped work to balance out time the employer was paid below minimum wage for work outside the scope of the tip credit, or which accounts for over 20% of their time. Defendants also claim that Plaintiffs improperly failed to differentiate between tipped duties, non-tipped duties related to the tipped occupation, and non-tipped duties unrelated to the tipped occupation. On this issue, the court held that Plaintiffs plausible allegations that they performed a series of related, non-tipped tasks which compromised more than 20% of their time, based on factual detail, was sufficient by itself to prevent dismissal. Therefore, the court denied Defendants’ motion to dismiss.

The Employment Lawyers at Fitapelli & Schaffer frequently represent employees who have been paid below minimum wage for labor which does not qualify under a tip-credit provision. Please contact us at (212) 300-0375 to schedule a free consultation to further discuss your rights. For more information, please visit our website,www.fslawfirm.com.