A federal appeals court has cleared the way for servers and bartenders to sue restaurants for not paying the full hourly minimum wage for side work or job-related functions that don’t earn the employees gratuities.
The measure is expected to open the door to lawsuits seeking back payment of wages from full-service restaurant companies. The ruling will result in an “unfair and unexpected imposition of staggering liability” for industry employers, wrote Judge Sandra Ikuta in her dissent from the majority opinion.
Yesterday’s ruling affected nine operators, including J. Alexander’s, P.F. Chang’s, Arriba Mexican Grill, O’Charley’s, Ninety Nine, Village Inn, Bakers Square and franchisees of Denny’s and IHOP.
The AMC Theatres cinema chain is also part of the legal action.
The ruling by the U.S. Court of Appeals for the Ninth District overturned a lower court’s decision that servers, bartenders and other tipped employees in essence do not perform two jobs. The lower court’s ruling allowed restaurants to pay tipped employees on a single scale, a lower direct wage, provided gratuities made up the rest of the minimum compensation they were due under law on a weekly basis. In its opinion, restaurants weren’t required under federal law and stated Department of Justice guidelines to pay employees a different wage for pre-shift work like cleaning restrooms, slicing fruit for the bar, or cleaning the heads of soft-drink dispensers.
Hourly discrepancies were not an issue.
But the Ninth District court decided that the DOJ guidelines were not consistent with the intent of federal labor laws. It decided in effect that a bartender deserved the whole minimum wage from his or her employer for pre- and post-shift work, when there’s no chance of earning gratuities.
Whether the plaintiffs are entitled to the money they seek was not technically decided. Rather, the Ninth court’s ruling merely allowed the legal action filed by employees to continue against the named plaintiffs.
In June, the National Restaurant Association's litigation, the Legal Center, sued DOL for proposing that servers' positions be viewed as a dual job: Serving guests, and doing side work, or non-tipped functions like rolling silverware. The association argued that the change in view was being taken outside the usual process for a rule change or amendment to a law.