106 F. Supp. 3d 729
D.S.C.2015Background
- Plaintiff John P. Irvine, a former server at Wild Dunes resort, sues under the FLSA claiming defendants paid $2.13/hour by taking a tip credit while requiring substantial non‑tipped work.
- Alleged non‑tipped duties included polishing/organizing dishes, cleaning tables, prepping sweet tea, stocking/cleaning coolers, restaurant cleanup, event setup/breakdown, and work before/after shifts.
- Plaintiff alleges non‑tipped duties exceeded 20% of work time and some duties were unrelated to a tipped occupation, making the tip credit improper.
- Defendants moved to dismiss the FLSA claim, arguing the Department of Labor Field Operations Handbook’s (FOH) “20% rule” is nonbinding and not entitled to deference; they proposed using O*NET instead.
- The court evaluates whether the complaint plausibly alleges that (1) dual‑occupation rules under 29 C.F.R. § 531.56(e) apply and/or (2) the FOH 20% guideline renders the tip credit unavailable.
- The court denies the partial motion to dismiss, finding Irvine plausibly alleged FLSA violations under both the dual‑occupation theory and the FOH’s 20% guideline.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint plausibly alleges improper use of tip credit for hours spent on unrelated, non‑tipped duties (dual‑occupation) | Irvine: performed non‑related duties so hours should be paid at full minimum wage under §531.56(e) | Defendants: FOH guidance (20% rule) is nonbinding; employers need not track duties as plaintiff suggests | Court: Complaint plausibly alleges a §531.56(e) dual‑occupation claim; survives dismissal |
| Whether FOH’s “substantial amount (>20%)” guideline can support a plausible FLSA claim | Irvine: FOH §30d00(e) (20% rule) properly limits use of tip credit when related non‑tipped duties exceed 20% | Defendants: FOH 20% rule lacks notice‑and‑comment rulemaking and is not entitled to deference; prefer O*NET‑based analysis | Court: Gives Auer deference to FOH and finds 20% rule a reasonable, widely accepted standard; claim is plausible |
| Whether courts should adopt O*NET as the controlling test for what duties are "related" to a tipped occupation | Irvine: FOH quantitative guidance is more appropriate to determine when a tipped occupation ends | Defendants: O*NET occupational definitions should govern what duties are within a tipped occupation | Court: Rejects adoption of ONET as substitute; ONET does not resolve when related duties consume too much time |
| Whether plaintiff met Twombly/Iqbal plausibility standard at Rule 12(b)(6) stage | Irvine: factual allegations (types and amount of non‑tipped work) permit reasonable inference of wage violations | Defendants: legal challenge to the use of FOH guidance renders claim implausible | Court: Allegations are sufficient to state a plausible FLSA claim; denial of motion to dismiss |
Key Cases Cited
- E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175 (4th Cir.) (Rule 12(b)(6) facts assumed true)
- Republican Party of N.C. v. Martin, 980 F.2d 943 (4th Cir.) (12(b)(6) standards)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for complaints)
- Auer v. Robbins, 519 U.S. 452 (deference to agency interpretation of its own regulations)
- Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir.) (giving Auer deference to FOH §30d00(e))
- Driver v. AppleIllinois, LLC, 739 F.3d 1073 (7th Cir.) (accepting the 20% guideline)
- Time Warner Cable Inc. v. FCC, 729 F.3d 137 (2d Cir.) (rulemaking logical outgrowth discussion)