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Spencer v. Macado's, Inc.

United States District Court, W.D. Virginia, Lynchburg Division

August 1, 2018

Jeffrey Spencer, Jr., ET AL., Plaintiffs,
v.
Macado's, Inc., ET AL., Defendants.

          MEMORANDUM OPINION

          NORMAN K. MOON SENIOR UNITED STATES DISTRICT JUDGE

         Judge Norman K. Moon Plaintiffs are servers, waiters, and bartenders at Macado's restaurants that are owned and operated by Defendants.[1] Defendants are various Macado's holding companies and the parent company's president. Plaintiffs allege Defendants have paid them below minimum wage in three distinct ways. First, Plaintiffs allegedly were required to perform non-tip-producing tasks that were unrelated to their normal work while clocked-in as tipped employees (known as a “dual jobs” violation). Second, they allegedly were required to spend over twenty percent of their time on non-tip-producing tasks that were related to their normal work (a “side work” violation). Third, they allegedly were required to perform unpaid work off the clock. Defendants moved to dismiss, primarily arguing these allegations lack sufficient factual content to be plausible. The Court will dismiss the first and third claims without prejudice, but the second claim survives. Macado's president will also be dismissed without prejudice.[2]

         I. Standard

         A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim. “To survive a motion to dismiss, Plaintiffs' factual allegations, taken as true, must ‘state a claim to relief that is plausible on its face.'” Hall v. DIRECTV, LLC, 846 F.3d 757, 765 (4th Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “When ruling on a motion to dismiss, courts must accept as true all of the factual allegations contained in the complaint and draw all reasonable inferences in favor of the plaintiff.” Id. However, a court need not “accept the legal conclusions drawn from the facts” or “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011).

         II. Facts as Alleged

         Plaintiffs are current and former servers, waiters, and bartenders at Defendants' restaurants. (Dkt. 72 at ¶¶4, 20, 21). They receive both an hourly wage from Defendants and tips. (Id. at ¶4). Defendants pay Plaintiffs as tipped employees, providing a wage below the federal minimum wage for untipped employees. (Id. at ¶27). Plaintiffs allege compensation decisions and employment terms are “made through a centralized management team[.]” (Id. at ¶26). Macado's leadership implemented this centralized scheme through routine visits of new locations and preparation of new management. (Id.). Defendants used the visits to enforce a policy of staffing restaurants with fewer employees than necessary. (Id. at ¶27).

         This policy required Plaintiffs (1) to perform unrelated non-tip-producing tasks while clocked-in as tipped employees (“dual jobs”), (2) to perform related non-tip-producing tasks for This analysis requires a fact specific inquiry, and Plaintiffs may be able to plausibly allege that Defendant is an employer. The Court will dismiss him without prejudice. See Goode v. Cent. Virginia Legal Aid Soc'y, Inc., 807 F.3d 619, 626 (4th Cir. 2015) (“[T]hese are precisely the kinds of pleading deficiencies that amendment to the complaint could have cured[.]”). more than twenty percent of their work time while clocked-in as tipped employees (“side work”), and (3) to perform work “off the clock.” (Dkt. 72 at ¶27).

         The alleged “dual jobs” violation.

         Plaintiffs allege they were required to perform various forms of non-tipped work that were unrelated to their tipped jobs as servers, waiters, and bartenders. (Id. at ¶¶4, 57). This work included: “cleaning bathrooms and scrubbing toilets, cleaning kitchen staff's dishes and utensils, cleaning dishes, taking out trash, [and] scrubbing kitchen floors.” (Id. at ¶57).

         The alleged “side work” violation.

         Plaintiffs allege they were required to perform various forms of non-tipped work that was related to their tipped jobs. (Id. at ¶65). This included: “rolling silverware, refilling sugar caddies, salt and pepper shakers, ice, and condiments, cleaning chairs, tables, booths, and performing pre-closing cleaning tasks (such as vacuuming and/or sweeping the server's assigned area and checking dishes, napkins, and utensils, cleaning the bar, wiping down bottles, restocking beer, cleaning taps and bar, cleaning bar area tables, and washing bar glasses[.]” (Id.). Plaintiffs were allegedly required to engage in these tasks one to three hours per shift, which was “in excess of 20% of [Plaintiffs'] work time[.]” (Id.).

         The alleged “off the clock” violation.

         Plaintiffs allege they were required to help “other tipped employees deliver food to their customers, filling cups of toothpicks for the cooks to use in cooking/food preparation, washing dishes, cleaning the dining area, and helping/assisting with food preparation.” (Id. at ¶37). This work occurred “before [Plaintiffs'] scheduled shifts” and was “off the clock.” (Id.).

         Finally, the complaint also contains allegations concerning the putative class members of the collective action, but these allegations are not relevant at this stage. (Id. at ¶¶45-53).

         III. Analysis

         The FLSA sets the current federal minimum wage at $7.25 an hour. 29 U.S.C. § 206(a)(1)(C). However, if an employee receives tips, their employer may pay them an hourly wage below the minimum wage:

In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee's employer shall be an amount equal to-
(1) the cash wage paid such employee which for purposes of such determination shall be not less than [$2.13 per hour]; and (2) an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in paragraph (1) and [$7.25 per hour].
The additional amount on account of tips may not exceed the value of the tips actually received by an employee.

29 U.S.C. § 203(m); Trejo v. Ryman Hosp. Properties, Inc., 795 F.3d 442, 447 (4th Cir. 2015)

         (“An employer can thus pay tipped employees (1) a cash wage of $2.13 plus (2) an additional amount in tips that brings the total wage to the federal minimum wage.”). The FLSA defines “tipped employee” to mean “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” Id. § 203(t).

         The Department of Labor has issued the following regulation to interpret the phrase “more ...


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