MEMORANDUM OPINION
JAMES
E. BOASBERG UNITED STATES DISTRICT JUDGE
From
2015 to 2017, Plaintiff Koly Camara worked as a server at
Defendant Mastro's Steakhouse here in Washington. He
subsequently brought this lawsuit, alleging that the
company's manner of paying its servers violated the Fair
Labor Standards Act and the D.C. Minimum Wage Revision Act.
His allegations focus on Defendant's use of a so-called
“tip credit” - a method of compensation in which
an employer pays its employees a base wage below the minimum
level set by law; this is permissible so long as the
employees' tips ultimately bring their wages up to the
minimum. Here, however, Plaintiff claims that Mastro's
violated the law by employing a tip-credit system while
requiring servers to share tips with employees -
e.g., wine runners and baristas - who did not
“customarily and regularly receive tips.” 29
U.S.C. § 203(m)(2)(A). In this opening salvo, Defendant
moves to compel arbitration and for dismissal, and Plaintiff
moves for conditional certification of a collective action
under the FLSA and the DCMWRA. Finding merit in
Plaintiff's arguments on both issues, the Court denies
Defendant's Motion and grants Plaintiff's.
I.
Background
The
Court starts by describing the legal framework that applies
to Plaintiff's lawsuit and then explains the factual and
procedural background of this case.
A.
Legal Background
For a
good while now, federal and local law have required employers
to pay their employees a minimum wage. See Fair
Labor Standards Act of 1938 § 6, 29 U.S.C. § 206;
District of Columbia Minimum Wage Revision Act of 1992, D.C.
Code § 32-1003. Currently, the federal minimum wage is
$7.25 an hour, while D.C.'s stands at $13.25.
See 29 U.S.C. § 206(a)(1)(C); D.C. Code §
32-1003(a)(5)(A)(iii).
These
laws make special provision for “tipped
employees” - viz., employees who
“customarily and regularly receive more than $30 a
month in tips.” 29 U.S.C. § 203(t). Employers may
pay such employees a lower base hourly wage on the
understanding that their tips will bring their total wage up
to the minimum. Federal law now requires a base wage of
$2.13; D.C. law $3.89. See 29 U.S.C. §
203(m)(2)(A); D.C. Code § 32-1003(f)(1)(C); see
also 123 Am. Jur. Trials 1, § 8 (Sept.
2018). If an employee's tips do not make up the
difference between the base and minimum wages, the employer
must pay the difference. See 29 U.S.C. §
203(m)(2)(A); D.C. Code § 32-1003(f)(1). As mentioned at
the outset, this arrangement is known as a tip credit.
An
employer may only avail itself of the tip credit if it
informs its employees of the arrangement and allows them to
retain all of their tips, except that an employer may require
employees to pool their tips with other employees who
“customarily and regularly receive tips.”
See 29 U.S.C. § 203(m)(2)(A). This exception
for tip pooling is at the heart of this case. T o determine
whether an employee customarily and regularly receives tips,
so as to allow her to share in another's tips, courts
typically look to “the extent of an employee's
customer interaction.” Montano v. Montrose Rest.
Assocs., Inc., 800 F.3d 186, 192-93 (5th Cir. 2015). If
an employer keeps an employee's tips or requires an
employee to share tips with non-tipped employees, it loses
the ability to invoke the tip credit. See 29 U.S.C.
§ 203(m)(2)(A); see also Montano, 800 F.3d at
189 & n.6; Ventura v. Bebo Foods, Inc., 738
F.Supp.2d 1, 7 (D.D.C. 2010). Employees may sue to recover
underpaid wages in violation of these requirements under the
Fair Labor Standards Act and the D.C. Minimum Wage Revision
Act.
B.
Factual Background
Given
the stage of the proceedings, the Court recites the facts in
the light most favorable to Plaintiff. See Aliron
Int'l, Inc. v. Cherokee Nation Indus., Inc., 531
F.3d 863, 865 (D.C. Cir. 2008) (applying summary-judgment
standard to motion to compel arbitration); Dinkel v.
MedStar Health, Inc., 880 F.Supp.2d 49, 52 (D.D.C. 2012)
(explaining that at conditional-certification stage
plaintiffs need only offer “modest factual
showing” and that court should refrain from resolving
factual disputes) (quoting Myers v. Hertz Corp., 624
F.3d 537, 555 (2d Cir. 2010)).
Plaintiff
worked as a server at Mastro's in D.C. from the summer of
2015 to November 2017. See ECF No. 1 (Compl.),
¶ 16. During his time there, the company compensated
Camara and other servers like him using a tip credit, paying
them a base hourly wage below the federal minimum with
servers' tips credited against the remainder of the
minimum. Id., ¶¶ 17-18. At the same time,
Mastro's required servers to pool more than 40% of their
tips with other employees like wine runners, food runners,
and baristas. Id., ¶ 19. Certain of those
employees, according to Plaintiff, did not regularly and
customarily interact with customers. Id.,
¶¶ 20-23. Wine runners, for instance, “spend
almost all their time working in or near the restaurant's
wine cellar and have little to no interaction with restaurant
customers.” Id., ¶ 21. And baristas
“spend almost all their time working in or near the
kitchen and have no interaction with restaurant
customers.” Id., ¶ 23. (Defendant
disputes Plaintiff's allegations about wine runners and
baristas, see ECF No. 18 (Def. Opp.), Exh. A
(Declarations), but its disagreements are left for another
day in light of the posture of the case.)
C.
Procedural Background
Plaintiff
filed this lawsuit against Mastro's on May 25, 2018.
See Compl. He alleges that it violated the FLSA and
the DCMWRA when it paid servers using a tip credit while
requiring them to share tips with some employees who do not
ordinarily receive tips. Id., ¶¶ 40- 42,
48. Although not at issue in these Motions, Camara also
appears to argue that Mastro's violated the DCMWRA by
failing to pay him for overtime work and the D.C. Wage
Payment and Wage Collection Law for similar reasons.
Id., ¶¶ 28-29, 47, 50-57.
Both
parties now seek the Court's intervention. Defendant has
filed a Motion to Compel Arbitration and for Dismissal.
See ECF No. 17. It asserts that Plaintiff previously
signed a binding arbitration agreement and that the Court
should therefore compel arbitration and dismiss the case.
Id. Plaintiff has simultaneously filed a Motion for
Notice to Similarly Situated Persons, which the Court refers
to as a Motion for Conditional Certification of a Collective
Action. See ECF No. 14. Based on his factual
allegations and declarations from servers at other
Mastro's locations around the country, he asks the Court
to certify under the FLSA and DCMWRA (limited to D.C.
servers) a collective action of “[a]ll employees who
worked as servers and received an hourly wage less than $7.25
an hour at any Mastro's location in the United States
from May 22, 2015 to the present.” ECF No. 21 (Pl.
Reply) at 2 (emphasis omitted).
II.
Analysis
As a
threshold issue, the parties debate which Motion the Court
should address first. Defendant insists that it should start
with the Motion to Compel Arbitration because its resolution
could moot Plaintiffs Motion. See Def Mot. at 10-12.
Plaintiff rejoins that the Court should rule first on its
Motion for Conditional Certification. See Pl. Reply.
at 5. Since the Court denies Defendant's Motion, it does
not matter in which order the issues are addressed. In any
event, the Court believes it simpler to begin with
arbitration before moving on to conditional certification.
A.
Arbitration
Defendant
asks the Court to compel arbitration under the Federal
Arbitration Act and dismiss the case. The Court starts with
the applicable legal standard and then turns to the merits.
1.
Legal Standard
The
Federal Arbitration Act provides that certain arbitration
agreements are “valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. The Act
“is a congressional declaration of a liberal federal
policy favoring arbitration agreements.” Moses H.
Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S.
1, 24 (1983). Courts must therefore “‘rigorously
enforce' arbitration agreements according to their
terms.” Am. Express Co. v. Italian Colors
Rest., 570 U.S. 228, 233 (2013) (quoting Dean Witter
Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985)).
The Act
comes into play, however, only when there is an enforceable
arbitration agreement. Id (“[Arbitration is a
matter of contract.”). “Accordingly, the first
task of a court asked to compel arbitration . . . is to
determine whether the parties agreed to arbitrate that
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