National Restaurant Association v. Solis
870 F. Supp. 2d 42
D.D.C.2012Background
- Plaintiffs National Restaurant Association, Counsel of State Restaurant Associations, Inc., and National Federation of Independent Businesses sue Hilda Solis, Nancy Leppink, and the U.S. Department of Labor for violating the APA in promulgating 29 C.F.R. § 531.59(b) (2011) on tip credit notice.
- The FLSA tip credit allows tips to make up the difference toward the minimum wage if the employer informs tipped employees of the subsection 3(m) provisions; without notice, the employer cannot take the tip credit.
- Historically, 1966 amendments introduced the tip credit; 1974 amendments required notice to inform employees of 3(m); later rulemaking sought to update regulations to conform to amendments.
- NPRM (2008) proposed updating rules and explicitly identified section 3(m) as a subject of the rulemaking, noting courts' views on notice; the final rule added five specific disclosures consistent with the statute.
- Plaintiffs challenge Counts I, II, and IV (notice, arbitrary/capricious, regulatory flexibility) and concede Count III; the court denies the plaintiffs’ motion for SJ and grants defendants’ motion, dismissing or granting summary judgment in defendants’ favor on those counts.
- Judgment is entered for defendants on Counts I, II, and IV; Count III is dismissed as conceded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the notice and comment procedure sufficient? | Plaintiffs argue final rule deviated too much from NPRM and required renoticing. | DOL framed subjects adequately in NPRM; final rule reasonably developed from and followed the statute. | Yes; final rule is a proper logical outgrowth with adequate framing. |
| Is the final rule arbitrary and capricious under the APA? | Final rule conflicts with Kilgore and case law and lacks rational basis. | Final rule tracks the statute and relies on substantial public comments; rational connection shown. | No; final rule not arbitrary or capricious. |
| Did DOL violate the APA by failing to conduct a regulatory flexibility analysis? | RFA requires an analysis of impact on small entities; cost considerations were omitted. | DOL certified no significant impact; RFA analysis not required; cost data unnecessary given statutory framework. | No; RFA certification proper. |
| Does the final rule track the language of section 3(m) and flow from the proposed rule? | Final rule imposes more specific disclosures than NPRM; overstep of proposed scope. | Final rule reasonably tracks and implements the statute; it adds detail but remains within statutory boundaries. | Yes; final rule tracks the statute and develops logically from proposed rule. |
Key Cases Cited
- Conn. Light & Power Co. v. Nuclear Reg. Comm'n, 673 F.2d 525 (D.C. Cir. 1982) (for the 'logical outgrowth' and adequacy test in notice-and-comment adequacy)
- Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294 (6th Cir. 1998) (employer must inform, not necessarily explain, tip credit; notice suffices)
- Reich v. Chez Robert, Inc., 28 F.3d 401 (3d Cir. 1994) (notice requirement for tip credit discussed in context of notice sufficiency)
- Pellon v. Business Representation Int'l, Inc., 528 F. Supp. 2d 1306 (S.D. Fla. 2007) (case illustrating notice versus explanation under 3(m))
- National Mining Ass'n v. Mine Safety & Health Admin., 116 F.3d 531 (D.C. Cir. 1997) (discussion of notice requirements and related framework)