A three-judge panel of the 11th Circuit Court of Appeals recently ruled that the diner chain failed to pay proper wages to servers. At issue were tasks that did not relate directly to their positions as servers. The lead plaintiff, Lindsay Rafferty, is a former Denny’s waitress who claims that she spent only half of her time as a server, and spent the other half performing untipped duties. These non-tipped responsibilities included:
- Cutting salad bar items
- Cleaning the restaurant
- Preparing take-out orders for delivery services
- Rolling silverware into napkins
In reliance on a 2018 opinion letter from the U.S. Department of Labor (DOL), the lower Florida case dismissed Rafferty’s case. This opinion letter stated that it was impractical for employers to precisely track tasks as being either tipped or non-tipped, which made it easier for employers to pay their employers the reduced “tipped-worker” wages, regardless of what sort of tasks those employees actually performed. On appeal, the three-judge panel found that the 2018 letter interpreted the Fair Labor Standards Act (FLSA) in a way that was unreasonable and not faithful to the act because it created obstacles to achieving its original purpose. Moreover, the panel held that the lower court judge in Florida who dismissed the case should not have relied on the DOL letter.
The 80/20 rule
The Biden Administration revived the so-called 80/20 rule to replace the Trump Administration-era DOL letter. The 80/20 rules states that employers must pay employees at least the minimum wage if they spend more than 20% of their time working on tasks that do not specifically generate tips. those of the 8th and 9th circuits, which determined that tipped wages apply to workers who spend at least 80% of their time on tipped work.
Others guilty of wage theft too
While the Denny’s case is pending, TGI Fridays settled a suit for $19.1 million to pay current and former servers for wage theft. A restaurant chain in New York State, Red Robin, was also ordered to pay $900,000 for wage theft. Restaurant chains like these tend to be less responsive to individual employees’ concerns regarding the 80/20 rule and wage theft. Therefore, attorneys often initiate legal action to address what may be an issue among dozens or hundreds of restaurants.