18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 301 Defendant’s motion to dismiss, holding that the Anti-Deficiency Act’s (“ADA”), including the Government Employees Fair Treatment Act of 2019, did not abrogate Defendant’s obligations under the FLSA during a government shutdown. Defendant filed a motion to stay proceedings pending interlocutory appeal. Defendant asked the Court to certify for interlocutory appeal the question of whether Defendant was liable for liquidated damages under the FLSA when Defendant complied with the ADA’s command to defer payment of federal employees’ wages during a lapse in appropriations. The Court granted the motion. The Court determined that the interplay of the two statutes was critical to determining the scope of Defendant’s liability, and a substantial ground for difference of opinion existed with regard to the Court’s conclusion. The Court reasoned that Defendant’s opposition to the Court’s ruling was substantial and supported by a plausible reading of the statutes and related authority. The Court also noted that an appeal would materially advance the litigation and a decision from the Federal Circuit would clarify the road ahead for all parties. The Court therefore granted Defendant’s motion to stay pending interlocutory appeal. (xxxvi) Tip Pooling And Tip Credit Claims Under The FLSA Frank, et al. v. Fresh on the Square LLC, 2021 U.S. Dist. LEXIS 178426 (M.D. Fla. Sept. 20, 2021). Plaintiff, a restaurant server, filed a collective action alleging that Defendant violated the tip pool requirements of the FLSA. Defendant filed a motion for summary judgment, and the Court denied the motion. Plaintiff contended that she was paid an hourly wage that was less than the federal minimum wage and received tip compensation from customers. Plaintiff asserted that Defendant required her to share her tips with other workers, including non- tipped employees, in violation of the FLSA. The Court explained that under the FLSA, an employer may not take a tip credit unless: "(i) the employee at issue is a tipped employee; (ii) the employer informed the employee of the tip-credit provision; and (iii) the employee retained all tips he received, except when an employer requires an employee to participate in a tip pool with other employees who customarily and regularly receive tips." Id . at *5. The Court noted that the fact of whether Plaintiff was required to partake in a tip pool that included non-tipped employees was heavily disputed in the record. Plaintiff asserted that servers were required to share their tips with expeditors, who were back of house employees, and whose job duties included assisting with food preparation and kitchen support, such as plating food according to the ticket, ensuring that the finished food product corresponded with the customers’ orders, garnishing food, and alerting the food runner that the orders were fully assembled and ready to be served to the table. Id . at *6. Defendant contended that expeditors were front of house employees and frequently interacted with customers. Based on the conflicting evidence, the Court concluded that there was a genuine issue of material fact as to whether the tip pool was valid. For these reasons, the Court denied Defendant’s motion for summary judgement. Galleherz, et al. v. Artisanal, LLC, 2021 U.S. Dist. LEXIS 12905 (W.D.N.C. Jan. 25, 2021). Plaintiffs, a group of servers who received tips as part of their compensation, filed an action to recover unpaid minimum wages and overtime under the FLSA. Plaintiffs asserted that Defendant had a policy and practice of failing to pay Plaintiffs minimum wages for all hours worked because Defendant improperly used the federal "tip credit" to supplement its sub-minimum wage rate of $2.13 an hour. Plaintiffs alleged that Defendant could not utilize the tip credit because it failed to provide adequate notice to Plaintiffs of the intention to use a portion of Plaintiffs’ tips toward satisfying the federal minimum wage as required by § 203(m) of the law. In addition, Plaintiffs alleged that Defendant did not properly calculate Plaintiffs’ regular rate/overtime for all hours worked over 40 in a workweek, thereby resulting in overtime violations of the FLSA. Plaintiffs moved for partial summary judgment against Defendant as to their FLSA minimum wage and overtime claims on the issue of liability, and also moved for an award of liquidated damages regarding those claims. The Court granted Plaintiffs’ motion for partial summary judgement in its entirety. The Court concluded that Defendant failed to provide adequate notice to Plaintiffs as required by § 203(m) or the U.S. Department of Labor’s regulation at 29 C.F.R. § 531.59. Plaintiffs testified that Defendant never provided them with any notice that it was paying them the sub-minimum wage, that it was permitted to do so by law, or that it intended to treat their tips as satisfying part of its minimum wage obligations. In ruling that Defendant failed to provide adequate notice to Plaintiffs, the Court rejected Defendant’s assertion that § 203(m)’s notice requirement was easily satisfied through notice of an employee’s hourly wage and prominent posting of the Department of Labor’s FLSA poster. Further, Defendant’s General Manager acknowledged that she did nothing to provide the required notice under the statute or regulation at the time of hire. The onboarding process also did not provide notice of the tip credit. The Court was also unpersuaded by the fact that Defendant’s "New Hire Guide” and Plaintiffs’ paystubs specified their hourly wage