Are Banquet Servers Owed Minimum Wage for Prep Time Work?

“Our banquet prep and clean-up work was unrelated to our tipped work as servers and bartenders, so it should be paid at the full minimum wage,” said Ethan, a server at a banquet hall.

Art, his supervisor, disagreed. “We correctly claimed a tip credit for that work time, which is related to your tipped work time,” he said.

Facts: Banquet servers and bartenders were tipped workers who were employed at catered events, such as parties, weddings, showers, and anniversary events. The events, often held at different locations, generally lasted up to six hours. Typically, workers were scheduled to work two hours before the event, setting out and filling glasses, arranging place settings, decorating the space, preparing cake and cookie tables and coffee stations, and doing general cleaning. After the events, the workers removed decorations, stored tables and chairs, disposed of trash, and cleaned up the event area.

The tipped banquet servers and bartenders claimed that their employer improperly took a tip credit for the time they spent on nontipped preparatory and clean-up duties there were performed before and after banquets. The staff members estimated that they spent 20 percent of their workweek performing such duties.

A tip credit cannot be taken for time spent on non-tipped duties in a banquet setting, the servers said, basing their claim on guidance in a 1988 Labor Department “Field Operations Handbook.”

When facts indicate that tipped employees spend a substantial amount of time performing such related duties, defined as more than 20 percent of the hours worked in the tipped occupation in a workweek, no tip credit may be taken for time spent on the nontipped duties, the handbook said. The staff members said the time spent on duties before and after the banquets should have been paid at the standard minimum wage.

The employer said that the duties the workers claim were nontipped were related to their tipped occupations, which allowed a tip credit to be taken. The listing of server and bartender tasks found in the Labor Department’s Occupational Information Network online job-duty database demonstrated that those duties were related to the workers’ tipped occupations, the employer said.

Employers were instructed by the Labor Department in a Nov. 8, 2018, opinion letter (FLSA2018-27) to consult the tasks section of the job-duty database to determine whether duties were related as “core” or “supplemental” to a tip-producing occupation. A tip credit may be taken for time spent performing duties that are core or supplemental to a tip-producing occupation, as long as the activities are performed before, after, or at the same time as direct-service duties. A tip credit may not be taken for tasks that do not appear on the database’s task list.

Issue: Should the banquet servers and bartenders have been paid the full minimum wage for time spent preparing and cleaning up at banquet events?

Decision: The full minimum wage was not required to be paid to the staffers for preparation and cleanup duties at banquet events, a federal district court ruled. The duties were unrelated to their tipped work, the court said, adding that the tasks were associated with their tipped occupations.

The employer properly claimed a tip credit, the court said, giving controlling weight to the Labor Department’s interpretation of its regulations.

The tipped servers based their claims on the belief, without evidence or analysis, the court said, that the banquet set-up and take-down work that they performed were nontipped duties.

The 1988 Labor Department “Field Operations Handbook” established a two-step process for employees to prove that employers are breaking the law. However, the banquet servers focused only on the second step, which required showing that more than 20 percent of a workweek was spent performing nontipped duties for which the employer took a tip credit, the court said.

The tipped banquet servers skipped the first step, which is to prove that the relevant duties are not tip-producing, the court said, noting that the workers also ignored the differences between a restaurant and a banquet hall.

The workers apparently believed that if a service is not tip-producing for a restaurant server or bartender then it also is not tip-producing for a banquet server or bartender, the court said. The duties of a banquet employee and a restaurant employee may overlap, but the evaluation of whether a duty is tipped or nontipped must be different for a banquet setting than for a restaurant because of the difference in the way the work is billed at each facility, the court said. Fundamental differences exist between the banquet setting and the restaurant setting, it said.

The tips that the banquet servers and bartenders received were based on a bill for an entire event, including the charges for the final preparation beforehand and the clean-up afterward, the court said. These duties were tip-producing and the employer was allowed a tip credit for the work, it said.

Additionally, the summary report for waiters and waitresses from Labor Department’s online job-duty database covered the job title “banquet server” and included 25 related tasks, such as cleaning duties, arranging tables or dining areas, and cleaning food-related areas, the court said. The summary report for bartenders also covered the “banquet bartender” title and listed 20 tasks that included cleaning equipment and work areas, and planning, organizing, and arranging the bartending space as well as tables and dining areas, the court said.

The duties that the workers claimed were nontipped actually were related to their tipped occupations as banquet servers and bartenders, the court said. The employer properly claimed a tip credit, the court said, giving controlling weight to the Labor Department’s interpretation of its own regulations.

The case is Matusky v. Avalon Holdings Corp., 2019 BL 112682, N.D. Ohio, No. 4:17CV1535, 3/29/19

Pointers: The Labor Department issued an opinion letter Nov. 8, 2018, that addressed when employers of tipped employees engaged in dual jobs and related duties may take a tip credit for amounts earned for time spent by the employees in those other occupations.

When tipped employees are engaged in more than one occupation, employers may only take a tip credit for the time employees spent on duties related to the tipped occupation, even if those duties were not directed toward producing tips, the FLSA2018-27 opinion letter said, referring to an earlier Labor Department “Field Operations Handbook.”

To determine if a particular duty is part of a tipped occupation, the online Occupational Information Network should be consulted, the opinion letter said. Duties that are listed as core or supplemental for the appropriate tip-producing occupation in the Tasks section of the network’s Details report are to be considered directly related to the occupation’s tip-producing duties, it said. Employers may not take a tip credit for time that employees spend on activities not listed in the O*NET task list, although some of that time may be subject to de minimis-related regulations, the opinion letter said.

For unique or new occupations that qualify as tipped occupations under the Fair Labor Standards Act but that do not have a corresponding O*NET descriptions, the duties of similar O*NET occupations may be considered related, it said.

The Labor Department on Feb. 15, 2019, issued a Field Assistance Bulletin (FAB 2019-2) on dual jobs and related duties under Section 3(m) of the FLSA, building on its FLSA2018-27 opinion letter and establishing that the new standard identified in FLSA2018-27 is to be applied to the department’s Wage and Hour Division enforcement investigations. The Feb. 15 bulletin addressed enforcement rules for investigating employers for potentially improperly paying food servers and other tipped workers.

For more information, see Payroll Administration Guide’s “FLSA Minimum Wage Rules” chapter.