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Applebee's Asks High Court To Clarify FLSA Tip Credit

Applebee’s International Inc. asked the U.S. Supreme Court this month to decide whether tipped employees should be paid minimum wage for nontipped tasks, challenging an appeals court ruling finding it underpaid servers in violation of the Fair Labor Standards Act.  The restaurant chain filed its petition for writ of certiorari Oct. 4 seeking to undo the Eighth Circuit's April ruling affirming a Missouri trial court decision that Applebee’s had violated the FLSA by paying its serving staff below minimum wage.  The decision sided with a U.S. Department of Labor handbook rule stating that tipped employees must be paid the full minimum wage for the time they spend performing nontipped duties, if those tasks take up more than 20 percent of the employees' workday.

Tipped employees can be paid below minimum wage under FLSA rules, which offer employers a tip credit that allows them to pay tipped employees as low as $2.13 an hour, as long as employees make enough in tips to cover the difference between that rate and the stipulated minimum wage, according to the employees' July 2006 class action.  Applebee’s is asking the high court to decide whether employers can use the tip credit to pay waiters and bartenders below minimum wage even if they spend more than 20 percent of their time performing nontipped tasks.  It argued that the question of whether the tip credit can be applied depends on whether the employees are considered tipped employees under the FLSA, not how much of their time is spent on nontipped tasks. “The Eighth Circuit’s decision adopting the handbook’s 20 percent rule conflicts with the decisions of two other circuits, which have correctly held that the availability of the tip credit turns on whether the duties a tipped employee performs are related to his occupation and not whether those duties are directed towards producing tips,” Applebee’s said in its petition. (click on link to read full story)

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