United States District Court, District of Columbia
MEMORANDUM OPINION [DKT, # 24]
RICHARD J. LEON UNITED STATES DISTRICT JUDGE
are ten individuals employed by Timeco, Inc., as butchers,
stockpersons, meat packers, and deliverymen. Their lawsuit
asserts that Timeco and its president, Houshang Momenian,
paid them unlawful wages in violation of federal and District
of Columbia law. Before the Court is plaintiffs' Motion
for Summary Judgment Regarding Tip Credit [Dkt. #24]. The
Motion attempts to preclude defendants from limiting their
potential liability by counting as wages tips earned by
plaintiffs. Upon consideration of the pleadings, relevant
law, and the entire record herein, the Court determines that
plaintiffs have not met their burden to show that there are
no genuine disputes of material fact regarding the "tip
credit" issue. Accordingly, the Court will DENY
is customary in many industries. The Fair Labor Standards Act
("FLSA") permits employers in such industries to
calculate a "tip credit" and to include that amount
when figuring an employee's total "wage" for
purposes of complying with FLSA's minimum wage
provisions. See 29 U.S.C. § 203(m). The net
result is that an employer can pay an employee less than the
federally-mandated minimum wage if the employee earns enough
in tips to make up the difference. While this practice is
generally thought to benefit employees because they retain
any surplus above the minimum wage, FLSA also imposes certain
safeguards. As relevant here, "an employer is not
eligible to take the tip credit unless it has informed its
tipped employees in advance of the employer's use of the
tip credit." 29 C.F.R. § 531.59(b); see 29
U.S.C. § 203(m)(2).
instant lawsuit asserts claims under FLSA and two D.C.
statutes for defendants' alleged failure to pay minimum
wage or overtime. Anticipating that defendants will rely on
the tip credit to reduce their potential liability,
plaintiffs filed the instant Motion. They assert four facts
in support of the Motion, none of which defendants dispute:
(1) plaintiffs worked for defendants, Pis.' SOF ¶
(2) plaintiffs were paid fixed weekly rates, Pis.' SOF
¶ 2; (3) plaintiffs received tips, Pis.' SOF ¶
3; and (4) Houshang Momenian, President of Timeco, "did
not discuss tips with the [p]laintiffs and did not disclose
that [d]efendants intended to use the tips as a credit toward
minimum wage, " Pis.' SOF ¶ 4.
defendants do not contest these four facts, they proffer
evidence which casts them in a different light. Specifically,
defendants present an affidavit by Mart Dashzegve, the store
manager for Timeco, in which Dashzegve states that he
"supervised all of the plaintiffs." Decl. of Mart
Dashzegve ¶¶ 1-4 ("Dashzegve Deck") [Dkt.
#32-3]; cf. Am. Compl. ¶ 11 (alleging
"Momenian supervised [p]laintiffs directly or
indirectly") [Dkt. #9]. Dashzegve explains that it was
his role, as store manager, to "explain the job to new
workers." Dashzegve Decl. ¶ 5. He also says that he
discussed tips with each new worker, id.
¶¶ 7-10, and further that "[a]ll of the
[p]laintiffs understood that their income was supplemented by
tips, " id. ¶ 9. Plaintiffs did not file a
reply in support of their Motion and thus have not addressed
the Dashzegve declaration.
move for summary judgment. Summary judgment is appropriate
"if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment
as a matter of law." Fed.R.Civ.P. 56(a). "A fact is
material if it 'might affect the outcome of the suit
under the governing law, ' and a dispute about a material
fact is genuine 'if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.'" Steele v. Schafer, 535 F.3d 689,
692 (D.C. Cir. 2008) (quoting Anderson v. Liberty Lobby,
Inc., Ml U.S. 242, 248 (1986)). "In making that
determination, the court 'must view the evidence in the
light most favorable to [the nonmoving party], draw all
reasonable inferences in [their] favor, and eschew making
credibility determinations or weighing the
evidence.'" Calhoun v. Johnson, 632 F.3d
1259, 1261 (D.C. Cir. 2011) (quoting Lathram v.
Snow, 336 F.3d 1085, 1088 (D.C. Cir. 2003)).
prevail on their Motion for summary judgment, plaintiffs must
establish that Timeco failed to inform them that it would use
a tip credit to offset the wages paid by the company.
See 29 U.S.C. § 203(m); 29 C.F.R. §
531.59(b). The only evidence proffered by plaintiffs
in support of this conclusion is deposition testimony that
defendant Momenian did not personally discuss the tip credit
with plaintiffs. Pis.' SOF ¶ 1.
proffer is insufficient to carry their burden. Even without
the Dashzegve declaration, a reasonable jury could infer that
an organization with the resources to hire ten workers is
likely also to employ supervisors who, as part of their
function, discuss company policy with their subordinates.
That is especially so where, as here, plaintiffs have
acknowledged that Momenian, as president of the company, may
have only "indirectly" supervised Timeco's
employees. Am. Compl. ¶ 11.
need not rely only on a negative inference drawn from
plaintiffs' sparse proffer. The Dashzegve declaration
states that Dashzegve discussed with every worker
Timeco's use of tips to supplement regular wages, and
that each of the workers who are now plaintiffs in this case
understood that policy. Although the declaration does not
make clear whether the content of these discussions complied
with all of the requirements set forth in the federal
regulations, viewed in the light most favorable to
defendants, the declaration is sufficient at least to raise a
genuine dispute as to whether Timeco properly disclosed to
plaintiffs that it would use a tip credit. Accordingly,
plaintiffs' Motion for summary judgment on this issue
must be denied.
of the above reasons, the Court will DENY plaintiffs'
Motion for Summary Judgment Regarding Tip Credit. An ...