United States District Court, D. Arizona
STEPHEN M, MCNAMEE SENIOR UNITED STATES DISTRICT JUDGE.
Pending before the Court is Defendants’ (“Vintage Bar”) motion to dismiss Plaintiff Joseph Durnez’s (“Durnez”) Complaint for failure to state a minimum wage claim under the Fair Labor Standards Act (“FLSA”). (Doc. 14.) The matter is fully briefed and ready for ruling. (Docs. 15, 16.) After review and evaluation of the pleadings,  the Court will deny Vintage Bar’s motion to dismiss.
Durnez was a former employee of Vintage Bar in the occupation of bartender from January 1, 2011, to July 31, 2014. (Doc. 1 at 2.) It is undisputed that Durnez in his occupation as a bartender for Vintage Bar was a tipped employee. Under the FLSA, 29 U.S.C. § 203(t), “‘Tipped employee’ means any employee engaged in an occupation in which she customarily and regularly receives more than $30 a month in tips.” Durnez alleges that while working for Vintage Bar he was paid an hourly wage in an amount below the applicable minimum wage and that Vintage Bar took a tip credit for the remainder of his minimum wage payment. (Id.)
Durnez further alleges that he was required to participate in a tip pooling arrangement in which he contributed two percent (2%) of his gross sales each shift to a tip pool that included a general manager, an employee who did not customarily and regularly receive tips. (Id. at 3, 6.) Because Vintage Bar required that tip pooling be shared with employees who do not customarily and regularly receive tips, Durnez alleges that Vintage Bar was disallowed from taking a tip credit from its tipped employees’ hourly wages. (Id. at 3.) Therefore, the amount Vintage Bar paid him as a wage, after deducting the disallowed tip credit, violated the minimum wage provisions of the FLSA.
STANDARD OF REVIEW
Motion to Dismiss
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the “grounds” of his “entitlement to relief” requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact). Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (further citation and footnote omitted). A complaint must contain sufficient factual matter to “state a claim that is plausible on its face.” Id. at 570. “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
When deciding a motion to dismiss, all allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). A court may dismiss a claim either because it lacks “a cognizable legal theory” or because it fails to allege sufficient facts to support a cognizable legal claim. See SmileCare Dental Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th Cir. 1996). “Dismissal without leave to amend is improper unless it is clear, upon de novo review, that the complaint could not be saved by any amendment.” Polich v. Burlington N., Inc., 942 F.2d 1467, 1472 (9th Cir. 1991). When exercising its discretion to deny leave to amend, a court must be guided by the underlying purpose of Fed.R.Civ.P. 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities. See United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981).
Under the FLSA, employers must pay employees the federal minimum wage who in any workweek are engaged in commerce or in the production of goods for commerce, or are employed in an enterprise engaged in commerce or in the production of goods for commerce, according to the statutory schedule of the minimum hourly wage. See 29 U.S.C. § 206(a) (2012).
Historically, before 1966, the FLSA did not generally apply to employees in restaurants and hotels. As part of a legislative compromise struck in extending the coverage of the FLSA to these industries, Congress enacted a “tip credit” provision, to accommodate in part the long-standing practice in these industries whereby workers received most or even all of their income from customer tips. See Pub. L. No. 89-601, §§ 101(a), 201(a), 80 Stat. 830, 833 (1966).
From introduction of the tip credit provisions in 1966 through 1996, Congress set the amounts for the minimum employer cash wage and tip credit as a percentage of the minimum wage, ranging from 40% to 60%. The 1996 FLSA amendments changed the tip credit provisions to set the employer’s statutory minimum cash wage obligation to a dollar amount ($2.13 per hour), rather than a percentage of the minimum wage. See Pub. L. No. 104-188, § 2105, 110 Stat. 1755, 1928-29. The maximum tip credit thereafter became the difference between $2.13 and the federal minimum wage. Id. Thus, the tip credit provision of the FLSA, § 203(m), allows employers to pay tipped employees $2.13 per hour if the employees’ tips suffice to fulfill his or her minimum wage for the workweek. 29 U.S.C. § 203(m). Specifically, § 203(m) states:
In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee’s ...