“I give God 10% why do you get 18,” wrote a pastor from St. Louis on an Applebee’s receipt, ostensibly protesting the restaurant’s 18% autogratuity for parties larger than six. Pastor Alois Bell’s Applebee’s receipt was uploaded on Reddit and the story spread across the Internet. The Applebee’s waitress was fired for sharing customer information.
The Applebee’s waitress told consumerist.com, “I’ve been stiffed on tips before…but this is the first time I’ve seen the Big Man has been used as reasoning. I am expected to portray a canned personality that has been found to be least offensive to the greatest amount of people … I come home exhausted, sore, burnt, dirty, and blistered on a good day. And after all that, I can be fired for ‘embarrassing’ someone who directly insults their server on religious grounds.” Applebee’s claimed its termination of the server was for violating the customer’s “right to privacy” and that “a meal check is private customer information which cannot be shared publicly.”
A lawsuit alleging that an Applebee’s restaurant in Bismarck, North Dakota permitted its restaurant general manager to create a pattern and practice of sexual harassment and retaliation against employees was resolved by a consent decree approved by U.S. District Judge Daniel L. Hovland on September 2, 2011. Under the terms of the decree reached with the EEOC, the restaurant will pay out $1 million in compensatory damages to seventeen female employees who were subjected to sexual harassment and retaliation during their employment. The decree also requires that the restaurant implement a training program to enable Applebee’s employees to identify sexual harassment and properly investigate internal complaints.
The lawsuit claimed that between 2002 and the end of 2007, Applebee’s General Manager, Mike Cordova, regularly groped female employees, solicited sexual relations, and exposed himself. He also allegedly exposed female employees to pornography, told sexually explicit stories and jokes, made highly personalized sexual comments designed to demean and humiliate female employees, and on at least one occasion, allegedly coerced an employee into giving him oral sex in exchange for a raise. The EEOC’s lawsuit alleged that despite repeated complaints by employees and customers, Applebee’s failed to discipline or stop Cordova’s behavior. Five women previously employed at the same location then filed charges of discrimination with the EEOC.
John Rowe, Director of the EEOC’s Chicago District, said in a press release, “This case demonstrates in a rather emphatic way that sexual harassment is still a challenge for women at some of our best known neighborhood businesses.” Sexual harassment, and retaliation for complaining about it, violates Title VII of the Civil Rights Act of 1964.
A tipped waiter who spends more than twenty percent of his time performing work which does not generate tips should receive the full federal minimum wage of $7.25 per hour and not the reduced wage for tipped employees allowed under the law, according to the Eighth Circuit Court of Appeals. The Court’s decision in Fast v. Applebee’s International, Inc., a class action case, was issued on April 21, 2011. The decision addresses important issues as to the proper rate of compensation for servers in restaurants who perform significant “side work.”
A “tipped employee” as used in § 203(m) of the Fair Labor Standards Act is defined as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” The tip credit, which allows restaurants to pay a reduced minimum wage (in New York that rate is now $5.00 per hour), applies only to workers engaged in an occupation where the employee “customarily and regularly receives more than $30 a month in tips.” The parties in the Applebee’s case did not dispute that the servers and bartenders involved in the case were engaged in an occupation in which they customarily and regularly received at least $30 per month in tips and were “tipped employees” under the FLSA. The dispute before the Court revolved around whether the servers and bartenders were “engaged” in those occupations when Applebee’s required them to perform duties that did not directly result in a tip, such as cleaning and maintenance duties commonly referred to in the restaurant industry as “side work.” Applebee’s argued that the statute is focused on the occupation, not the specific duties performed, such that the restaurant could take the tip credit for the entirety of a server’s or bartender’s shift, as long as the employee received sufficient tips during the shift to make up the difference between $2.13 per hour and $7.25 per hour, regardless of how much time the employee spent performing tip-producing duties. The employees argued that Applebee’s required them to perform duties outside of the server and bartender occupations for significant parts of their shifts, such that they were entitled to full minimum wage rates when they were not “engaged” in the duties of those occupations.
The Court of Appeals agreed with a lower court decision that as long as the time spent performing non-tipped duties is substantial, the tip credit may not be used for these hours performing non-tipped work. The Court adopted the twenty percent threshold set by the United States Department of Labor’s Field Operations Handbook as a guide to determine whether the non-tipped work was substantial or merely incidental to the employee’s tipped duties.
In January of this year, the New York State Department of Labor issued a Hospitality Industry Wage Order in which it also adopted an “80/20” rule, stating that on any day that a service employee or food service worker works at a non-tipped occupation (a) for two hours or more, or (b) for more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day.
Under the Fair Labor Standards Act (“FLSA”), employers are allowed to take a “tip credit” and pay waiters, bussers, and bartenders below the federal minimum wage of $7.25 per hour. For example, the “tip credit” for waitstaff in New York is currently $2.25 per hour, meaning that waiters, busboys, and bartenders can be paid an hourly minimum wage of $5.00 per hour. The United States Department of Labor regulations provide, however, that a restaurant will not qualify for the “tip credit” for employees that spend more than 20% of their time performing non-tipped work.
In Fast v. Applebee’s International, a group of servers and bartenders filed a lawsuit alleging that Applebee’s had violated the Department of Labor’s “twenty percent rule” by requiring employees to work more than 20% of their time performing non-tipped tasks such as cleaning the bathrooms, sweeping the restaurant, cleaning and stocking service areas, and rolling silverware, while still taking the “tip credit” for all of the time worked. Applebee’s argued that the Department of Labor’s “twenty percent rule” was contrary to the terms of the FLSA and that once an employee is classified as a “tipped employee” their employer may take a tip credit for all hours worked, regardless of the actual tasks performed. Alternatively, Applebee’s argued that all work done by their tipped employees contributed to the enjoyment of their customers and was, therefore, related to the occupation of server or bartender. A federal district court in Missouri ruled for the employees. However, the court’s Order was appealed to the Eighth Circuit Court of Appeals. A decision from the Court of Appeals on this important workers’ rights issue is expected in the months ahead and will have a significant nationwide impact.
Restaurant workers and employers in New York State should note that the twenty percent rule is already in effect for waiters, bussers, and bartenders in New York. The New York State Department of Labor’s newly revised Hospitality Wage Order specifically provides a twenty percent rule for restaurants that take a “tip credit.” Subpart 146-2.9 of the Hospitality Wage Order states:
On any day that a service employee or food service worker works at a non-tipped occupation (a) for two hours or more, or (b) for more than twenty percent (20%) of his or her shift, whichever is less, the wages of the employee shall be subject to no tip credit for that day.