Amaral Brothers, Inc. v. Dept. of Labor
155 A.3d 1255
| Conn. | 2017Background
- Amaral Brothers, Inc. (Domino’s franchisee) employs ~40 delivery drivers who own vehicles, are reimbursed for travel, and commonly receive tips; employer requires drivers to report gratuities.
- Plaintiff sought a declaratory ruling that it could apply Connecticut’s tip credit (§ 31-60(b)) to pay drivers a reduced minimum wage because drivers customarily and regularly receive gratuities.
- Department of Labor regulations limit the tip credit to “service employees” whose duties “relate solely to the serving of food and/or beverages to patrons seated at tables or booths,” and disallow credit for nonservice employees; diversified duties must be segregated and recorded to apply any credit.
- Commissioner ruled the regulations valid and that delivery drivers do not qualify as service employees because most of their duties (driving, navigation, vehicle maintenance, remote communication) are not solely serving food to patrons at tables/booths; also noted drivers’ limited opportunities to earn tips.
- Trial court affirmed; plaintiff appealed to the Connecticut Supreme Court arguing the regulations are incompatible with § 31-60(b) (which, after 1980, uses mandatory language) and that the agency’s statutory interpretation deserves less deference.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 31-60(b) (as amended) repealed by implication the department’s long‑standing tip‑credit regulations restricting the credit to service employees | § 31-60(b) requires the commissioner to recognize gratuities for all restaurant employees who customarily and regularly receive them, so regulations limiting credit to waitstaff are incompatible | Statute is ambiguous and delegates to the department the authority to adopt regulations and carve out special classes; longstanding regulations are presumptively valid and consistent with statute | Regulations are not repealed by implication; statute and regulations can be read consistently; deference to agency upheld |
| Whether delivery drivers qualify as “service employees” under the regulations | Drivers perform the same service as servers (delivering food to customers) and thus should qualify for tip credit | Drivers’ predominant duties are nonservice (driving, vehicle upkeep, remote tasks); only brief doorway interaction is analogous to table service; drivers lack continuous tip‑earning opportunities | Drivers do not meet regulatory definition of service employees; agency findings supported by record and reasonable |
| Whether agency application/interpretation of regulations is arbitrary, capricious, or unsupported by evidence | Department has been inconsistent or unwritten in applying rules, reducing deference | Regulations and department guidance (historical orders and a published Guide) demonstrate consistent application and long enforcement; legislative acquiescence supports validity | Agency action was not arbitrary or capricious; findings have substantial evidence and are reasonable |
| Degree of deference owed to agency interpretation of statute and regulations | Court should independently construe statute because amendment changed mandatory language in § 31-60(b) | Agency has long‑standing expertise and broad delegated authority to implement minimum wage rules; ambiguities resolved in agency favor | Court defers to agency; Dugas factors support deference and uphold agency interpretation |
Key Cases Cited
- Dugas v. Lumbermens Mut. Cas. Co., 217 Conn. 631 (Conn. 1991) (four‑factor framework for determining whether a statute impliedly repeals a preexisting regulation; presumption favoring validity of longstanding regulations)
- Velez v. Commissioner of Labor, 306 Conn. 475 (Conn. 2012) (agency regulations interpreting enabling statute warrant deference)
- Rocky Hill v. SecureCare Realty, LLC, 315 Conn. 265 (Conn. 2015) (regulation that adds requirements to legislative authorization does not forbid what legislature authorized)
- Phelps Dodge Copper Prods. Co. v. Groppo, 204 Conn. 122 (Conn. 1987) (courts should give effect to both statute and regulation where reasonably possible)
- West v. Egan, 142 Conn. 437 (Conn. 1955) (purpose of minimum wage law is remedial—to secure fair and just wages—and agency discretion is construed to effect that purpose)
- Pet v. Dept. of Health Servs., 228 Conn. 651 (Conn. 1994) (courts defer to reasonable agency determinations in wage/regulatory matters)