Esry v. PF Chang's China Bistro Inc
4:18-cv-00156
E.D. Ark.May 9, 2018Background
- Plaintiff Jacqueline Esry, a former server at P.F. Chang’s in Little Rock, sued under the FLSA and Arkansas Minimum Wage Act (AMWA) alleging P.F. Chang’s took a tip credit while servers spent over 20% of their time on nontip-producing duties (opening/closing, rolling silverware, side-work) and were not given required notice.
- Defendant moved to dismiss under Rule 12(b)(6), arguing no rule bars taking the tip credit when >20% of time is spent on related nontip duties and challenging deference to DOL interpretations.
- The dispute centers on whether the Department of Labor’s Field Operations Handbook (FOH) 20% guideline limits employers’ ability to take the tip credit and whether that guidance is entitled to deference under Auer.
- The court reviewed the FLSA dual-jobs regulation (29 C.F.R. § 531.56(e)), the DOL Handbook examples (including the 20% tolerance), and Eighth Circuit precedent applying Auer deference.
- The complaint also asserts an AMWA claim; Arkansas regulations refer to reliance on federal interpretations unless a different interpretation is clearly required. The state law issue required determining whether federal guidance can inform AMWA application.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether employer may take FLSA tip credit when servers spend >20% of time on related nontip duties | Esry: FOH 20% rule bars tip credit for hours in excess of 20% spent on related nontip duties | P.F. Chang’s: No categorical 20% limit; FOH contrary to law and not entitled to deference | Court: FOH and DOL interpretation govern; Eighth Circuit precedent (Fast) supports deference; claim survives dismissal |
| Whether DOL’s interpretation (FOH) is entitled to Auer deference | Esry: DOL’s interpretation of ambiguous regulation is entitled to deference | P.F. Chang’s: Subsequent DOL letters/changes and Christopher limit deference; FOH is arbitrary | Court: Auer deference applies here; Christopher does not undermine Fast; FOH may be relied upon |
| Whether AMWA claim must follow federal guidance or be interpreted differently under state law | Esry: Arkansas regs allow reliance on federal interpretations; FOH guides AMWA application | P.F. Chang’s: AMWA does not contain 20% rule; state law should control | Court: No clear need for a different interpretation; federal regs and DOL guidance may be used to interpret AMWA; claim states plausible AMWA violation |
| Pleading sufficiency under Rule 8 | Esry: Complaint alleges employer, employee status, >20% nontip duties, and tip credit taken—adequate facts | P.F. Chang’s: Allegations insufficient to plausibly show violation of 20% rule | Court: Allegations are sufficient to state plausible FLSA and AMWA claims; motion to dismiss denied |
Key Cases Cited
- Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir.) (upholding Auer deference to DOL interpretation of dual-jobs/tip-credit guidance)
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (Supreme Court) (discussing limits on Auer deference in certain circumstances)
- Mullins v. City of New York, 653 F.3d 104 (2d Cir.) (explaining Auer deference principles)