Applebee’s Restaurants Sued for Paying Sub-Minimum Wage to Servers for Un-Tipped Work; Court Grants Motion for Class Certification

On August 24, 2014, the Western District of New York Federal District Court granted class certification to Plaintiffs in the case Hicks et al v. T.L. Cannon Management Corp. et al. The Defendants own almost sixty Applebee’s franchises in New York and employ hundreds of servers who earn most of their money from customers’ tips. As is typical in the restaurant industry, these servers are paid a base wage that is well below the minimum wage. Normally a server will expect their earnings with wage plus tips to be much more than the minimum wage, and it is Applebee’s policy that servers who make less than the minumum wage are paid enough to make up the difference between what they actually earned and what they would have earned if paid the minimum wage.

So far, so good. But the plaintiffs claim that they were also regularly paid the subminimum-wage base rate for hours they spent on tasks unrelated to their tip-earning customer service work. Plaintiffs enumerage several examples of such unrelated work in the Complaint:
*cleaning the dining room and all wood work with Murphy’s Oil Soap *dusting the artificats and memorabilia hanging on the walls *windexing all the photos on the walls *scrubbing the legs of all the chairs *dusting all TVs *wiping down the wrought iron *cleaning out the cracks of the booths *cleaning and cutting vegetables, spices, fruits *preparing sanitation buckets *preparing dessert shooters *setting up the salad bar *setting up the expo line *breaking apart and cleaning the soda machine *breaking down the salad bar *breaking down the expo line *removing and cleaning light fixtures *scraping the gum from under every table *removing all the items on the shelves *cleaning and wiping down all the shelves in the kitchen *vacuuming, sweeping, dusting, sanitizing *replacing all paper products in the bathrooms *cleaning bathroom floors *washing the store’s windows *bleaching coffee cups, mugs, pots, tea kettles *cleaning dishes and skillets *rolling silverware *filling creamers *filling salt and pepper shakers *doing expediter duties *stocking beverage stations *preparing entrees and appetizers
Plaintiffs allege that it was Defendants’ policy not to adjust their pay to at least minimum wage when they performed these jobs, even when they spent more than 20% of their work day on these non-tip-earning tasks.

In its August 24th Order, the Court made three key decisions that favored the Plaintiffs. First, it granted the motion for class certification, with some adjustments to the Plaintiffs’ proposed definition of the class.

Second, the Court found the Defendants’ most straightforward argument–that businesses do not have to pay the minimum wage to tipped employees, but only a separate and lower base wage–“without merit” and “flatly contradicted by the statute, the regulations, and the relevant case law.” Defendants argued that “food service workers do not receive a tip allowance or credit” that offsets part of what the employer would normally pay them; rather, they argue, food service workers simply earn a lower wage. The Court pulls up this argument by its roots, concluding that “Defendants have not cited a single case in which a court held that food service workers were subject to a completely different hourly minimum wage, as opposed to receiving a tip credit against the standard minimum wage. Cao, the sole case Defendants cite in support of their argument, actually states the opposite…” In short, the Court accepts the Plaintiffs’ premise that they were entitled to at least minimum wage for all hours they worked.

Finally, third, the Court concluded that Defendants had failed to meet their legal obligation to properly notify Plaintiffs that they would be claiming a “tip credit” for money earned by servers which brought them up to the level of the minimum wage. They also failed to notify servers that they were entitled to makeup pay if they did not earn at least the minimum wage from wages plus tips. Plaintiffs won a consequential victory when the Court granted summary judgment on this point, since it implies that Defendants “were not entitled to take a tip credit and they are therefore liable to (Plaintiff) for paying her less than the standard minimum wage.”

If you are an employee and you believe your rights under the Fair Labor Standards Act have been violated, please contact The Harman Firm, LLP.