Perez v. Prime Steak House Restaurant Corp.
939 F. Supp. 2d 132
D.P.R.2013Background
- Plaintiffs Perez and Velez-Cespon worked for PSHRC as a Runner/Server and Server respectively until 2011.
- They were scheduled five days per week with regular shifts of six or seven hours.
- They participated in a tip pool while employed by PSHRC.
- Plaintiffs allege FLSA, Puerto Rico Law 180, and Law 379 violations, including improper overtime and tip practices.
- PSHRC moved to dismiss under Rule 12(b)(6); the court denied the motion, allowing several FLSA-related claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Notice under FLSA section 203(m) | PSHRC failed to inform about the provisions of 203(m) | PSHRC notified employees only of the tip credit concept, not the statutory provisions | Plaintiffs plausibly claim inadequate notice under 203(m). |
| Tip pool and tip retention | Tip pool included non-tipped employees; tips retained for operation costs | Tip retention for permissible costs may still qualify for tip credit | Plaintiffs’ claim survives as to improper tip retention and non-tipped employee participation. |
| Tip credit amount (percentage cap) | Tip credit exceeded allowable limits under the statute as interpreted by older versions | Recent statute versions do not impose a percentage cap; calculation based on cash wage vs minimum wage | Court declines to resolve based on the excess-cap theory at this stage; no FLSA violation found from amount of tip credit taken. |
| Overtime pay | Workers regularly worked 2–3 extra hours daily beyond scheduled shifts without proper overtime pay | Pleadings allegedly inconsistent and insufficient to prove unpaid overtime hours | Plaintiffs’ overtime claim survives; plausible inference of unpaid overtime supported by allegations. |
| Sick and vacation leave calculation under FLSA vs Puerto Rico law | Puerto Rico law requires tips to be factored into PTO calculations; FLSA does not require paid leave | FLSA does not require paid sick/vacation leave; calculation under Commonwealth law not addressed in motion to dismiss | FLSA claim regarding sick/vacation pay is not viable; Commonwealth-law claim may proceed. |
Key Cases Cited
- Martin v. Tango's Rest., Inc., 969 F.2d 1319 (1st Cir.1992) (notice to inform of tip credit provisions; discusses extent of information required)
- Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294 (6th Cir.1998) (informing employees can be less than full explanation; outlines notice standard)
- Nat’l Restaurant Ass’n v. Solis, 870 F.Supp.2d 42 (D.D.C.2012) (amendment does not require beyond-notice information; persuasive on notice standards)
- Fast v. Applebee’s Int., Inc., 638 F.3d 872 (8th Cir.2011) (tip credit framework and limitations; practical interpretation)
- Pruett v. Caritas Christi, 678 F.3d 10 (1st Cir.2012) (overtime pleading standards; plausibility at 12(b)(6) stage)