Courts Make it More Difficult for Employees to Pursue Tip Theft by Employers

The federal courts, led by the U.S. Supreme Court, are continuing to look for ways to limit or eliminate employees’ ability to hold employers accountable for failure to pay overtime and other forms of wage theft traditionally actionable under the FLSA.

Greg Mersol at the Employment Class Action Blog posted this article recently on the courts’ efforts to shut these cases down before they even get started. He writes "[a]nyone who has dined at a restaurant is aware of the importance of tipping, even if the exact rules, like the percentage and how it should be calculated, may be a bit fuzzy at times.  From the standpoint of the restaurant, too, the standards of what may or may not be tipped work for taking advantage of the FLSA’s tip credit may be less than clear. A recent case from the Northern District of Indiana demonstrates not only some of the issues to be considered, but also that it may be difficult for a plaintiff to pursue claims challenging the amount of tipped work on a class-wide basis."

In the case, (Roberts v. Apple Sauce, Inc) the plaintiff, a former Applebee’s waitress, brought suit against the franchisee for whom she had worked, contending that it had not properly taken advantage of the tip credit exception contained in the FLSA.  She claimed that she was required, in addition to waiting tables, to perform various non-tipped duties such as dishwashing, food preparation, cleaning the kitchen and bathrooms, and trash removal. As if often the case, she sought to pursue her claims on a collective basis on behalf of the wait staff at 24 Applebee’s restaurants. 

Class and collective actions have been given a bad name through a forceful marketing campaign conducted by the U.S. Chamber of Commerce, its membership and their allies. In the FLSA context, collective actions are often the only way that employees can obtain legal counsel and effectively pursue the wages that have been stolen by their employer.  In such cases, employers often get away with wage theft because they are taking a relatively small amount of money from a large group of people.  These cases can be very expensive for a plaintiff-side employment lawyer to pursue.  The corporation will hire a large legal team who generally send hundreds of document and information requests.  There may be dozens of depositions taken.  All of this attorney time and expense (court reporters and travel around the country doesn’t come cheap) simply is not sustainable on behalf of a single employee who has lost a dollar or two per hour for the last two years.  The only way to make pursuit of such a claim viable is for all of the employees who have been similarly affected to group together and pursue their claims together. This is what companies have been trying to stop for years and where they have recently been finding a sympathetic ear among an increasingly pro-big business federal court system.

In the Applebee’s case, the Court dismissed the bulk of Roberts’ claims before the parties even engaged in discovery under a recent expansion to Federal Rule 12(b)(6). The case is significant because it signals an increasingly willingness on the part of some courts to bar plaintiffs from collective action (and therefore from any remedy at all) without even allowing normal discovery to take place. As a result, we will likely never discover the truth in this case. If the company was indeed engaged in wage theft, it will likely get away with it.  

Read the case opinion here.