United States District Court, E.D. Pennsylvania
STEVEN BELT, et al., Plaintiffs.
P.F. CHANG'S CHINA BISTRO, INC., Defendant.
B. BRODY, J.
Steven Belt, Laura Council, and James Harris bring a putative
class and collective action against P.F. Chang's China
Bistro, Inc. (“P.F. Chang's”), alleging wage
and overtime violations of the Pennsylvania Minimum Wage
(“PMWA”), 43 Pa. Stat. Ann. §§
333.104(a), 333.104(c) and the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. §§ 206,
207(a). P.F. Chang's moves for judgment on the
pleadings. I will deny P.F. Chang's motion.
Chang's operates hundreds of restaurants throughout the
United States. Compl. ¶ 8. At the time of the filing of
the Complaint, Plaintiffs were employed as Servers at various
P.F. Chang's restaurants. Compl. ¶ 30.
were required to perform three different categories of work:
tipped work, untipped work related to their occupation as
Servers, and work unrelated to their occupation as
Servers. Plaintiffs' tipped work included
“serving food and drinks to patrons, ”
“wait[ing] on tables and describing] daily specials,
” “regularly check[ing] on patrons throughout
their meal, ” and collecting payment from customers.
Compl. ¶ 30. P.F. Chang's also required Plaintiffs
to perform work that did not give them the ability to earn
tips because it “did not involve interacting with, nor
serving food and beverages to customers.” Compl. ¶
31. This untipped work included both tasks related to
Plaintiffs' employment as Servers, and tasks unrelated to
Plaintiffs' employment as Servers. The untipped work
• Preparatory tasks, such as labeling sauces, preparing
drink machines, filling sugar caddies, polishing dishes, and
• Sanitation and maintenance tasks, such as sanitizing
the kitchen and dining area and bagging and taking out trash;
• Cleaning tasks, such as cleaning tables and chairs,
dusting, sweeping, and polishing.
Compl. ¶¶ 32-34. Plaintiffs' schedules varied,
but they routinely worked between twenty and fifty hours each
week, in six- to ten-hour shifts. Compl. ¶ 44. During
each shift, Plaintiffs spent approximately thirty to fifty
percent of their time performing work that did not give them
the opportunity to earn tips. Compl. ¶ 45.
were paid at the tip-credit minimum wage rate-as opposed to
the full minimum wage rate-for the entirety of the hours
worked for P.F. Chang's. Compl. ¶¶ 38-40. They
were paid at the tip-credit rate for both their tipped and
untipped work. Compl. ¶ 47.
Statutory and Regulatory Framework
Fair Labor Standards Act (“FLSA”), a Department
of Labor (“DOL”) regulation known as the
“Dual Jobs regulation, ” and a DOL policy
document called the Field Operations Handbook
(“FOH”) set forth the framework for determining
when an employer is excused from paying an employee the full
minimum wage. I will discuss each of these instruments in
The Fair Labor Standards Act
original FLSA, enacted in 1938, requires employers to pay a
minimum hourly wage. 29 U.S.C. § 206(a)(1)(C). In 1966,
the FLSA was amended to also allow an employer, under certain
circumstances, to utilize the tips of a “tipped
employee” to meet its minimum wage obligations.
See Fair Labor Standards Act, Pub. L. 89-601, 80
Stat. 830 (1966). Section 203(m) of the FLSA provides:
In determining the wage an employer is required to pay a
tipped employee, the amount paid such employee by the
employee's employer shall be an amount equal to-
i. the cash wage paid such employee which for purposes of
such determination shall be not less than the cash wage
required to be paid such an employee on August 20, 1996
ii. an additional amount on account of the tips received by
such employee which amount is equal to the difference between
the wage specified in clause (i) and the wage in effect under
section 206(a)(1) of this title [$7.25].
The additional amount on account of tips may not exceed the
value of the tips actually received by an employee. The
preceding 2 sentences shall not apply with respect to any
tipped employee unless such employee has been informed by the
employer of the provisions of this subsection, and all tips
received by such employee have been retained by the employee,
except that this subsection shall not be construed to
prohibit the pooling of tips among employees who customarily
and regularly receive tips.
29 U.S.C. § 203(m)(2)(A).
the FLSA does not preclude an employer from paying a tipped
employee a cash wage of $2.13 per hour provided that the
employee's tips make up the difference between the $2.13
cash wage and the current federal minimum wage. Id.
Section 203(t) of the FLSA defines a “tipped
employee” as “any employee engaged in an
occupation in which he customarily and regularly receives
more than $30 a month in tips.” 29 U.S.C. §
203(t). The difference between the cash wage and the federal
minimum wage is known as the “tip credit.”
See 29 C.F.R. § 531.56(d).
The Dual Jobs Regulation
in 1967, the DOL promulgated several regulations to address
the 1966 FLSA Amendments. This included a regulation
addressing the tip-credit provision in Section 203(m), and
importantly, it sought to interpret the definition of
“tipped employee” set forth in Section 203(t).
See 32 Fed. Reg. 222 (Jan. 10, 1967) (Notice of
Proposed Rulemaking); 32 Fed. Reg. 13575 (Sept. 28, 1967)
(Promulgation of Final Rule).
1967 regulation concerning the tip-credit provision
recognizes that an employee may be engaged in two occupations
for the same employer but may only qualify as a “tipped
employee” in one of those occupations. See 29
C.F.R. § 531.56(e) (“Dual Jobs regulation”).
In this situation, an employer may only take the tip credit
for the hours an employee spends in the occupation for which
he qualifies as a “tipped employee.” Id.
The Dual Jobs regulation states:
In some situations an employee is employed in a dual job, as
for example, where a maintenance man in a hotel also serves
as a waiter. In such a situation the employee, if he
customarily and regularly receives at least $30 a month in
tips for his work as a waiter, is a tipped employee only with
respect to his employment as a waiter. He is employed in two
occupations, and no tip credit can be taken for his hours of
employment in his occupation of maintenance man. Such a
situation is distinguishable from that of a waitress who
spends part of her time cleaning and setting tables, toasting
bread, making coffee and occasionally washing dishes or
glasses. It is likewise distinguishable from the counterman
who also prepares his own short orders or who, as part of a
group of countermen, takes a turn as a short order cook for
the group. Such related duties in an occupation that is a
tipped occupation need not by themselves be directed toward
The DOL's Prior Interpretations of the Dual Jobs
in 1980, the DOL issued several statements and documents
endeavoring to clarify the Dual Jobs regulation. First, the
DOL released opinion letters in 1980 and 1985 addressing
restaurant servers who spent part of their time performing
untipped related duties. The language of the 1980 letter
reiterated that when servers only “occasionally”
or “part of [the] time” perform untipped related
duties, a tip credit may be taken for time spent on those
duties. U.S. Dep't of Labor, Wage & Hour Div.,
Opinion Letter WH-502 (Mar. 28, 1980), 1980 WL 141336. The
1980 letter also stated that the DOL “might have a
different opinion if the facts indicated that specific
employees were routinely assigned, for example,
maintenance-type work such as floor vacuuming.”
Id. In the 1985 opinion letter, the DOL stated that
when a waiter spent 30 to 40 percent of his or her time
performing “preparatory activities” before the
restaurant opened-such as setting tables, cleaning and
filling salt shakers, and checking supplies of napkins and
straws-no tip credit could be taken for this time, because it
consumed a “substantial” portion of the
waiter's workday. U.S. Dep't of Labor, Wage &
Hour Div., Opinion Letter FLSA-854 (Dec. 20, 1985), 1985 WL
in 1988, the DOL added a section to the Field Operations
Handbook (“Handbook”) addressing the Dual Jobs
regulation. This section read:
(1) When an individual is employed in a tipped occupation and
a non-tipped occupation, for example, as a server and janitor
(dual jobs), the tip credit is available only for the hours
spent in the tipped occupation, provided such employee
customarily and regularly receives more than $30.00 a month
in tips. See 29 CFR 531.56(e).
(2) 29 CFR 531.56(e) permits the employer to take a tip
credit for time spent in duties related to the tipped
occupation of an employee, even though such duties are not by
themselves directed toward producing tips, provided such
related duties are incidental to the regular duties of the
tipped employees and are generally assigned to the tipped
employee. For example, duties related to the tipped
occupation may include a server who does preparatory or
closing activities, rolls silverware and fills salt and
pepper shakers while the restaurant is open, cleans and sets
tables, makes coffee, and occasionally washes dishes or
(3) However, where the facts indicate that tipped employees
spend a substantial amount of time (i.e., in excess
of 20 percent of the hours worked in the tipped occupation in
the workweek) performing such related duties, no tip credit
may be taken for the time spent in those duties. All related
duties count toward the 20 percent tolerance.
(4) Likewise, an employer may not take a tip credit for the
time that a tipped employee spends on work that is not
related to the tipped occupation. For example, maintenance
work (e.g., cleaning bathrooms and washing windows)
are not related to the tipped occupation of a server; such
jobs are non-tipped occupations. In this case, the employee
is effectively employed in dual jobs.
Dep't of Labor, Field Operations Handbook, §
30d00(f)(1)-(4) (rev. Dec. 15, 2016). The Handbook provided
that a tip credit may never be taken for time spent
performing work unrelated to the tipped occupation.
Additionally, the Handbook provided that a tip credit could
only be taken for time an employee spends performing
“related, ” but untipped, duties if the employee
spent twenty percent or less of their time performing related
duties. Under this principle-known as the “80/20
Rule”-a server who spent two hours or less filling salt
shakers during a ten hour shift, and who spent the remainder
of his or her shift waiting on customers, could be paid $2.13
an hour for all of the hours he or she worked. But a server
who spent more than two hours filling salt shakers and
performing other untipped related work would be engaged in
dual jobs, and must be paid the full minimum wage for all
hours spent performing untipped related work.
recent years-including as recently as July, 2016-the DOL has
adopted the 80/20 Rule in amicus briefs to the
Eighth, Ninth, and Tenth Circuit Courts of Appeals.
See Brief for the Secretary of Labor as Amicus
Curiae in Support of Plaintiffs-Appellants, Marsh v. J.
Alexander's LLC, 905 F.3d 610 (9th Cir. 2018) (Nos.
15-15791, 15-15794, 15-16561, 15-16659, 16-15003, 16-15004,
16-15005, 16-15118, 16-16033), 2016 WL 3900819; Brief for the
Secretary of Labor as Amicus Curiae in Support of
Plaintiff-Appellant, Romero v. Top-Tier Colo.,
LLC, 849 F.3d 1281 (10th Cir. 2017) (No. 16-1057), 2016
WL 3922687; Brief for the Secretary of Labor as Amicus Curiae
in Support of Plaintiffs-Appellees, Fast v. Applebee
's Int'l, Inc., 638 F.3d 872 (8th Cir.
2011) (Nos. 10-1725/26), 2010 WL 3761133.
The DOL's Current Interpretation of the Dual Jobs
November 8, 2018, the DOL's Wage and Hour Division
(“WHD”) issued an Opinion Letter (“November
2018 Letter”) purporting to supersede the 80/20
Rule. U.S. Dep't of Labor, Wage & Hour
Div., Opinion Letter FLSA2018-27 (Nov. 8, 2018), 2018 WL
5921455. Stating that “the current FOH sections
addressing the tip credit have resulted in some confusion and
inconsistent application, ” the Letter purports to
“clarify our Field Operations Handbook (FOH) section
30d00(e), ” which in turn interprets “the
definition of a ‘tipped employee' in section 3(t)
of the [FLSA].” Id. at *1. According to the
Letter, the 80/20 Rule “has created some
confusion.” Id. at *2. To support this, the
Letter cites to two 2007 district court cases which, under
WHD's reading, arrived at different interpretations of
the 80/20 rule. Id. at *2-*3.
resolve this alleged confusion, the Letter states that WHD
“do[es] not intend to place a limitation on the amount
of duties related to a tip-producing occupation that may be
performed, so long as they are performed contemporaneously
with direct customer-service duties and all other
requirements of the Act are met.” Id. at *3.
with this Opinion Letter, the WHD revised the Handbook on
February 15, 2019 (“Current Handbook”). The
Current Handbook reads, in relevant part:
(1) When an individual is employed in a tipped occupation and
a non-tipped occupation-for example, as a server and janitor
(i.e., dual jobs)-the tip credit is available only
for the hours the employee spends working in the tipped
occupation, provided the employee customarily and regularly
receives more than $30.00 a month in tips. See 29
(2) 29 C.F.R. 531.56(e) permits the employer to take a tip
credit for any time the employee spends in duties related to
the tipped occupation, even though such duties are not
themselves directed toward producing tips.
(3) WHD staff will consult the Occupational Information
Network (O*NET), an online source of occupational
information, and 29 CFR 531.56(e) to determine whether duties
are related or unrelated to the tip-producing occupation.
Duties will be considered related to the tipped occupation
when listed as “core” or
“supplemental” under the “Tasks”
section of the “Details” tab for the appropriate
tip-producing occupation in O*NET.
a. An employer may take a tip credit for any amount of time
that an employee spends on related, non-tipped duties
performed contemporaneously with the tipped duties-or for a
reasonable time immediately before or after performing the
tipped duties-regardless whether those duties involve direct
customer service. See WHD Opinion Letter WH-502
(March 28, 1980), which concludes that a server's time
spent performing related duties (e.g., vacuuming)
after restaurant closing is subject to a tip credit. For
example, the core tasks currently listed in O*NET for waiters
and waitresses (see the O*NET Summary Report for
waiters and waitresses) include: cleaning tables or counters
after patrons have finished dining; preparing tables for
meals, which encompasses setting up items such as linens,
silverware, and glassware; and stocking service areas with
supplies such as coffee, food, tableware, and linens. In
addition, O*NET lists garnishing and decorating dishes in
preparation for serving as a supplemental task for waiters
and waitresses. An employer may take a tip credit for any
amount of time a waiter or waitress who is a tipped employee
spends performing these related duties.
. . .
(5) An employer may not take a tip credit for the time an
employee spends performing any tasks not contained in 29 CFR
531.56(e), or in the O*NET task list for the employee's
tipped occupation, or-for a new occupation without an O*NET
description-in the O*NET task list for a similar occupation.
Some of the time spent by a tipped employee performing tasks
that are not related to a tipped occupation, however, may be