FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALEC MARSH,

Plaintiff-Appellant,

v.

J. ALEXANDER’S LLC,

Defendant-Appellee.

No. 15-15791

D.C. No.

2:14-cv-01038-SMM

CRYSTAL SHEEHAN,

Plaintiff-Appellant,

v.

ROMULUS INCORPORATED,

DBA International House of

Pancakes,

Defendant-Appellee.

No. 15-15794

D.C. No.

2:14-cv-00464-SMM
2 MARSH V. J. ALEXANDER’S

SILVIA ALARCON,

Plaintiff-Appellant,

v.

ARRIBA ENTERPRISES

INCORPORATED, DBA Arriba

Mexican Grill,

Defendant-Appellee.

No. 15-16561

D.C. No.

2:14-cv-00465-SMM

SAROSHA HOGAN; NICHOLAS

JACKSON; SKYLAR VAZQUEZ;

THOMAS ARMSTRONG; PHILIP

TODD; MARIA HURKMANS,

Plaintiffs-Appellants,

v.

AMERICAN MULTI-CINEMA,

INC., DBA AMC Theatres

Esplanade 14,

Defendant-Appellee.

No. 15-16659

D.C. Nos.

2:14-cv-00051-SMM

2:14-cv-00766-SMM

2:14-cv-00768-SMM

2:14-cv-00769-SMM

2:14-cv-01243-SMM

2:14-cv-01244-SMM
MARSH V. J. ALEXANDER’S 3

NATHAN LLANOS, an individual,

Plaintiff-Appellant,

v.

P.F. CHANG’S CHINA BISTRO,

INC.,

Defendant-Appellee.

No. 16-15003

D.C. No.

2:14-cv-00261-SMM

KRISTEN ROMERO, an

individual,

Plaintiff-Appellant,

v.

P.F. CHANG’S CHINA BISTRO,

INC.,

Defendant-Appellee.

No. 16-15004

D.C. No.

2:14-cv-00262-SMM

ANDREW FIELDS, an individual,

Plaintiff-Appellant,

v.

P.F. CHANG’S CHINA BISTRO,

INC.,

Defendant-Appellee.

No. 16-15005

D.C. No.

2:14-cv-00263-SMM
4 MARSH V. J. ALEXANDER’S

ALTO WILLIAMS,

Plaintiff-Appellant,

v.

AMERICAN BLUE RIBBONS

HOLDINGS LLC,

Defendant-Appellee.

No. 16-15118

D.C. No.

2:14-cv-01467-SMM

STEPHANIE R. FAUSNACHT,

Plaintiff-Appellant,

v.

LION’S DEN MANAGEMENT,

LLC, DBA Denny’s,

Defendant-Appellee.

No. 16-16033

D.C. No.

2:15-cv-01561-SMM

OPINION

Appeal from the United States District Court

for the District of Arizona

Stephen M. McNamee, Senior District Judge, Presiding

Argued and Submitted April 20, 2017

San Francisco, California

Filed September 6, 2017
MARSH V. J. ALEXANDER’S 5

Before: Richard A. Paez and Sandra S. Ikuta, Circuit

Judges, and David A. Faber,* District Judge.

Opinion by Judge Ikuta;

Partial Concurrence and Partial Dissent by Judge Paez

SUMMARY**

Labor Law

The panel vacated the district court’s final orders and

judgments in favor of the defendants in actions brought under

the Fair Labor Standards Act by former servers and

bartenders who alleged that their employers improperly

claimed their tips as a credit toward the required minimum

wage.

Disagreeing with the Eighth Circuit, the panel held that

the Department of Labor’s interpretation, in its Field

Operations Handbook, of 29 C.F.R. § 531.56(e), a regulation

addressing application of the FLSA’s tip credit provision to

the situation in which an employee works for an employer in

two different jobs, did not merit controlling deference

because the DOL’s interpretation was inconsistent with the

dual jobs regulation and attempted to create de facto a new

regulation. The panel held that no provision with the force of

* The Honorable David A. Faber, United States District Judge for the

Southern District of West Virginia, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
6 MARSH V. J. ALEXANDER’S

law permitted the DOL to require employers to engage in

time tracking and accounting for minutes spent in diverse

tasks before claiming a tip credit.

The panel held that the plaintiffs could not state a claim

by alleging that discrete “related” tasks or duties, which were

performed intermittently over the course of the day and were

intermingled with their duties directed at generating tips,

comprised a dual job when aggregated together over the

course of a workweek. The plaintiffs also could not state a

claim by alleging the performance of “unrelated” duties that

were similarly dispersed and generally assigned.

The panel vacated the district court’s final orders and

judgments and remanded to allow the plaintiffs an

opportunity to propose new amended complaints in light of

the panel’s opinion.

Concurring and dissenting, Judge Paez wrote that he

would follow the Eighth Circuit and defer to the DOL’s

interpretation of the regulation, 29 C.F.R. § 531.56(e). Judge

Paez wrote that the DOL’s guidance was entitled to deference

because it interpreted the DOL’s own ambiguous regulation

and was neither plainly inconsistent with that regulation nor

erroneous. Judge Paez would vacate and remand for further

proceedings on whether the defendants violated the FLSA by

paying their employees well below minimum wage for

untipped work.

COUNSEL

Jahan C. Sagafi (argued), Outten & Golden LLP, San

Francisco, California; Clifford P. Bendau II,The Bendau Law
MARSH V. J. ALEXANDER’S 7

Firm, Phoenix, Arizona; Jamie G. Sypulski, Law Office of

Jamie Golden Sypulski, Chicago, Illinois; Douglas M.

Werman, Werman Salas P.C., Chicago, Illinois;forPlaintiffsAppellants.

Paul DeCamp (argued), Jackson Lewis P.C., Reston,

Virginia; Stephanie M. Cerasano, Jackson Lewis P.C.,

Phoenix, Arizona; for Defendant-Appellee P.F. Chang’s

China Bistro.

David A. Selden (argued), Julie A. Pace, and Heidi NunnGilman, The Cavanagh Law Firm, Phoenix, Arizona, for

Defendant-Appellee Romulus, Inc.

Robert W. Horton and Mary Leigh Pirtle, Bass Berry & Sims

PLC, Nashville, Tennessee; Eric M. Fraser, Osborn Maledon

P.A., Phoenix, Arizona; for Defendant-Appellee J.

Alexander’s LLC.

Karen L. Karr, Clark Hill PLC, Scottsdale, Arizona, for

Defendants-Appellees Arriba EnterprisesInc. and Lion’s Den

Management LLC.

Tracy A. Miller, Ogletree Deakins Nash Smoak & Stewart

P.C., Phoenix, Arizona, for Defendant-Appellant American

Multi-Cinema Inc.

Caroline Larsen and Alexandra J. Gill, Ogletree Deakins

Nash Smoak & Stewart P.C., Phoenix, Arizona, for

Defendant-Appellee American Blue Ribbon Holdings LLC.

Sarah K. Marcus (argued), Senior Attorney; Paul L. Frieden,

Counsel for Appellate Litigation; Jennifer S. Brand,

Associate Solicitor; M. Patricia Smith, Solicitor of Labor;
8 MARSH V. J. ALEXANDER’S

Office of the Solicitor, United States Department of Labor,

Washington, D.C., for Amicus Curiae Secretary of Labor.

OPINION

IKUTA, Circuit Judge:

The Fair Labor Standards Act of 1938 (FLSA) generally

requires employers to pay a cash wage of $7.25 per hour to

their employees. 29 U.S.C. § 206(a)(1)(c). But where an

“employee engage[s] in an occupation in which he

customarily and regularly receives more than $30 a month in

tips,” id. § 203(t), his employer may pay a reduced cash wage

and claim the employee’s tips as a credit towards the $7.25

per hour minimum, id. § 203(m). The plaintiffs in these

consolidated appeals are former servers and bartenders who

allege that their employers improperly claimed this credit,

thereby failing to pay the required minimum wage. In

support of their theory of the case, the employees rely on a

regulation, 29 C.F.R. § 531.56(e), as most recentlyinterpreted

by the Department of Labor (DOL).1See Department of

Labor Wage and Hour Division, Field Operations Handbook

§ 30d00(f) (2016). The district court held that the DOL’s

interpretation of the regulation is not entitled to deference and

concluded that the employees failed to state claims for

minimum wage violations. We largely agree with the district

court’s analysis of the deference question, but we vacate and

remand to allow the plaintiffs an opportunity to propose

amended pleadings in light of our holding.

1 We use “DOL” to refer both to the Department generally and to the

Secretary of Labor specifically.
MARSH V. J. ALEXANDER’S 9

I

From November 2012 through April 2013, Alec Marsh

worked as a server for J. Alexander’s, a restaurant in Phoenix,

Arizona.2In May 2014, he filed a one-count complaint

alleging that J. Alexander’s violated the FLSA’s minimum

wage provision by failing to pay him an appropriate wage. 

See 29 U.S.C. § 206(a)(1)(c).

To understand Marsh’s legal theory, one must first

understand the FLSA’s scheme for guaranteeing a minimum

wage to employees, like Marsh, who routinely earn tips. 

2 Because the specific circumstances of the plaintiffs’ workweeks are

materially identical, we recount in detail only the facts pertaining to the

plaintiff in the lead case, Alec Marsh, and we refer to the plaintiffs

collectively as “Marsh.” The additional plaintiffs are Crystal Sheehan

(No. 15-15794); Silvia Alarcon (No. 15-16561); Sarosha Hogan, Nicholas

Jackson, Skylar Vazquez, Thomas Armstrong, Philip Todd, and Maria

Hurkmans (No. 15-16659); NathanLlanos(No. 16-5003); KristenRomero

(No. 16-15004); Andrew Fields (No. 16-15005); Alto Williams (No. 16-

15118); and Stephanie Fausnacht (No. 16-16033). We refer to the

defendants collectively as “J. Alexander’s.” The additional defendant

establishments are International House of Pancakes (No. 15-15794);

Arriba Mexican Grill (No. 15-16561); AMC Theatres Esplanade 14 (No.

15-16659); P.F. Chang’s China Bistro (Nos. 16-15003/04/05); American

Blue RibbonHoldingsLLC(No. 16-15118); and Denny’s (No. 16-16033).

Six of these appeals arise from orders granting motions to dismiss,

two appeals are from judgments on the pleadings, and the final appeal

comes from an order granting summary judgment. For the complaints that

the district court dismissed pursuant to Rule 12(b)(6) or as to which the

district court granted judgment on the pleadings under Rule 12(c) of the

Federal Rules of Civil Procedure, we assume the truth of “well-pleaded,

nonconclusory factual allegation[s].” Ashcroft v. Iqbal, 556 U.S. 662, 680

(2009). For the appeal from summary judgment, we view the facts in the

light most favorable to the non-moving party, which here is the plaintiff. 

Nolan v. Heald Coll., 551 F.3d 1148, 1154 (9th Cir. 2009).
10 MARSH V. J. ALEXANDER’S

Although all employers must pay their employees a minimum

wage of at least $7.25 per hour, id., the FLSA creates a

special rule for how an employer can compensate a “[t]ipped

employee,” which is defined as “any employee engaged in an

occupation in which he customarily and regularly receives

more than $30 a month in tips,” id. § 203(t). The applicable

statute provides:

In determining the wage an employer is

required to pay a tipped employee, the amount

paid such employee by the employee’s

employer shall be an amount equal to–

(1) the cash wage paid such employee

which for purposes of such determination

shall be not less than the cash wage

required to be paid such an employee on

August 20, 1996; and

(2) an additional amount on account of the

tips received by such employee which

amount is equal to the difference between

the wage specified in paragraph (1) and

the wage in effect under section 206(a)(1)

of this title.

The additional amount on account of tips may

not exceed the value of the tips actually

received by an employee.
MARSH V. J. ALEXANDER’S 11

Id. § 203(m).3 The practical effect of this provision is that an

employer must pay a tipped employee a cash wage of $2.13,

and can make up the difference between $2.13 and the federal

minimum wage by taking a credit for the employee’s tips

(known as a “tip credit”).4 Cumbie v. Woody Woo, Inc.,

596 F.3d 577, 580 (9th Cir. 2010). If the $2.13 cash wage

plus the tips the employee actually received are insufficient

to meet the $7.25 per hour minimum wage, then the employer

must increase the cash wage to meet the minimum wage

requirement. Id. As a result, tipped employees always earn

at least the federal minimum wage.

The FLSA’s tip credit provision, 29 U.S.C. § 203(m), is

not the only pertinent part of this regulatory regime. Through

regulations interpreting § 203(t), the DOL has addressed the

application of the tip credit provision to the situation in which

an employee works for an employer in two different jobs. 

This “dual jobs” regulation provides:

Dual jobs. In some situations an employee is

employed in a dual job, as for example, where

a maintenance man in a hotel also serves as a

3 Additional language in § 203(m) that is not relevant here (1) permits

employers to include as wages certain costs for facilities furnished to

employees in some circumstances and (2) imposes certain obligations on

employers claiming the tip credit. See Cumbie v. Woody Woo, Inc.,

596 F.3d 577, 580 & n.8 (9th Cir. 2010).

4 At all relevant times, Arizona’s minimum wage law was more

stringent than the FLSA and set the maximum tip credit that an employer

could claim at $3.00, which is less than the $5.12 allowed under federal

law. See Ariz. Rev. Stat. § 23-363(C) (as added by Proposition 202 in

2006). This distinction between state and federal law is immaterial for

purposes of these cases.
12 MARSH V. J. ALEXANDER’S

waiter. In such a situation the employee, if he

customarily and regularly receives at least $30

a month in tips for his work as a waiter, is a

tipped employee only with respect to his

employment as a waiter. He is employed in

two occupations, and no tip credit can be

taken for his hours of employment in his

occupation of maintenance man. Such a

situation is distinguishable from that of a

waitress who spends part of her time cleaning

and setting tables, toasting bread, making

coffee and occasionally washing dishes or

glasses. It is likewise distinguishable from

the counterman who also prepares his own

short orders or who, as part of a group of

countermen, takes a turn as a short order cook

for the group. Such related duties in an

occupation that is a tipped occupation need

not by themselves be directed toward

producing tips.

29 C.F.R. § 531.56(e).

The dual jobs regulation is also not the regime’s end; the

DOL has promulgated internal agency guidance that places a

specific interpretive gloss on the regulation. The DOL’s most

recent interpretation, which the DOL made public in 2016, is

set out in its Wage and Hour Division’s Field Operations

Handbook (FOH). The FOH states:

(1) When an individual is employed in a

tipped occupation and a non-tipped

occupation, for example, as a server and

janitor (dual jobs), the tip credit is available
MARSH V. J. ALEXANDER’S 13

only for the hours spent in the tipped

occupation, provided such employee

customarily and regularly receives more than

$30.00 a month in tips. See 29 CFR

531.56(e).

(2) 29 CFR 531.56(e) permits the employer to

take a tip credit for time spent in duties related

to the tipped occupation of an employee, even

though such duties are not by themselves

directed toward producing tips, provided such

related duties are incidental to the regular

duties of the tipped employee and are

generally assigned to the tipped employee. 

For example, duties related to the tipped

occupation may include a server who does

preparatory or closing activities, rolls

silverware and fills salt and pepper shakers

while the restaurant is open, cleans and sets

tables, makes coffee, and occasionallywashes

dishes or glasses.

(3) However, where the facts indicate that

tipped employees spend a substantial amount

of time (i.e., in excess of 20 percent of the

hours worked in the tipped occupation in the

workweek) performing such related duties, no

tip credit may be taken for the time spent in

those duties. All related duties count toward

the 20 percent tolerance.

(4) Likewise, an employer may not take a tip

credit for the time that a tipped employee

spends on work that is not related to the
14 MARSH V. J. ALEXANDER’S

tipped occupation. For example, maintenance

work (e.g., cleaning bathrooms and washing

windows) are not related to the tipped

occupation of a server; such jobs are nontipped occupations. In this case, the employee

is effectively employed in dual jobs.

FOH § 30d00(f) (2016).5

Marsh alleges that as a J. Alexander’s employee, he

“customarily and regularly” received more than $30 a month

in tips.6 As part of his job as a server, Marsh had a range of

duties in addition to serving customers. For instance, Marsh

brewed tea during every opening shift and as needed, which

took about ten minutes to complete each time, for a total of

forty minutes over the course of any given workweek. He

also brewed coffee for each customer who ordered it, which

took about five minutes to complete each time, and added up

to approximately eighty minutes of any given workweek. 

Marsh also cut, arranged, and stocked lemons and limes

during every opening shift and throughout his shifts, each

session taking approximately five minutes, for a total of forty

minutes in any given workweek. Marsh cleaned the soft

5 According to DOL’s amicus brief in this case, the FOH § 30d00(f)

is its current official interpretation of the dual jobs regulation. This

guidance is currently available in Chapter 30 of the FOH posted on the

DOL’s website, www.dol.gov/whd/foh/foh_ch30.pdf. Marsh’s complaint

relies on an interpretation ofthe dual jobs regulation that is consistent with

DOL’s current interpretation. Therefore, we refer to FOH § 30d00(f)

when analyzing the merits of Marsh’s claim.

6 We rely on Marsh’s proffered amendments and proposed amended

complaint as the source of the facts recited here because these allegations

provide more detail.
MARSH V. J. ALEXANDER’S 15

drink dispensers and their nozzles, replaced soft drink syrups,

and stocked ice. Each task took about five minutes to

complete, and over the course of a workweek these tasks

respectively took twenty, ten, and forty minutes. 

J. Alexander’s also assigned Marsh cleaning duties, such as

wiping tables (five to twenty minutes each time, for a total of

one hour and forty minutes over the course of a week), taking

out trash (ten minutes each time, for a total of twentyminutes

over the course of a week), scrubbing walls when the

restaurant was slow (one hour over the course of the week),

sweeping floors (about ten minutes each time, for a total of

forty minutes over the course of a week), and cleaning

restrooms (ten minutes each time, for a total of thirty minutes

over the course of a week).7

J. Alexander’s took a tip credit for the entire time Marsh

spent at work, including the time he spent on duties that were

not directly connected with generating tips. Because these

“related duties” took up more than 20 percent of Marsh’s

working hours, Marsh’s first complaint relied on the DOL’s

interpretation of the dual jobs regulation, 29 C.F.R.

§ 531.56(e), to allege that J. Alexander’s improperly took a

tip credit for the time Marsh spent on the “related duties”

described in his complaint.

7 Although Marsh alleges in his proposed amended complaint

that some of these duties were performed before and after his shifts,

and therefore not related to customer interaction, Marsh conceded at

oral argument that all of his duties were intermingled throughout the time

he spent working. See Oral Argument at 40:45–42:06, Marsh v.

J. Alexander’s, — F.3d — (9th Cir. 2017) (No. 15-15791+),

available at http://www.ca9.uscourts.gov/media/view_video.php?

pk_vid=0000011413.
16 MARSH V. J. ALEXANDER’S

Marsh’s complaint was one of several filed in the district

court alleging the same theory of FLSA liability, so the cases

were consolidated before a single judge. A few months after

consolidation, Marsh moved for leave to file a proposed

amended complaint alleging in a second count that the

cleaning duties described in his complaint were “unrelated”

to his occupation and that J. Alexander’s was categorically

not allowed to take a tip credit for any of the time spent on

those duties. Therefore, consistent with the FOH § 30d00(f),

Marsh alleged that he should have been paid a cash wage of

$7.25 per hour for his time spent on the related and unrelated

duties that were not directed towards generating tips. 

Because J. Alexander’s had paid Marsh a cash wage of less

than $7.25 per hour for the time spent on those duties, Marsh

argued that he was entitled to compensation for the difference

between the full minimum wage and the cash wage he was

paid for the time spent on tasks that did not generate tips.

J. Alexander’s opposed Marsh’s motion to amend the

complaint and moved to dismiss the original complaint. The

district court ruled on the motions in March 2015 and made

two key holdings. Most important, the district court held that

Marsh’s complaint did not allege that he was working dual

jobs, as defined in the dual jobs regulation. It rejected

Marsh’s reliance on the DOL’s interpretation of the

regulation because the regulation was unambiguous, and the

DOL’s interpretations of the regulation did not merit

deference. Alternatively, the district court also held that “no

minimum wage violation occurs so long as the employer’s

total wage paid to an employee in any given workweek

divided by the total hours worked in the workweek equal or

exceeds the minimum wage rate.” Because the complaint

failed to allege that Marsh’s average hourly wage (including

tips) across any given workweek was below the federal
MARSH V. J. ALEXANDER’S 17

minimum wage, Marsh failed to state a claim. Given this

reasoning, the district court granted J. Alexander’s motion to

dismiss and denied as futile Marsh’s motion for leave to

amend.

This timely appeal followed.8 We have jurisdiction under

28 U.S.C. § 1291. We review each final order in these

appeals and the questions of statutory and regulatory

interpretation de novo. See Christopher v. SmithKline

Beecham Corp., 635 F.3d 383, 389 (9th Cir. 2011), aff’d,

567 U.S. 142 (2012); Nolan v. Heald Coll., 551 F.3d 1148,

1153 (9th Cir. 2009) (summary judgment); Honey v.

Distelrath, 195 F.3d 531, 533 (9th Cir. 1999) (judgment on

the pleadings); Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1527

(9th Cir. 1995) (motion to dismiss).

II

To resolve this appeal, we must determine whether we

owe deference to the DOL’s interpretation of the dual jobs

regulation, 29 C.F.R. § 531.56(e), and whether that regulation

supports Marsh’s theory of J. Alexander’s liability.

A

We first consider our framework for examining agency

interpretations of statutes and regulations. If a statute is clear,

then we “give effect to the unambiguously expressed intent

of Congress.” Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 842–43 (1984). But if a statute

is silent or ambiguous as to the question at issue, the agency

8 The other cases in this consolidated appeal followed similar paths

to this court.
18 MARSH V. J. ALEXANDER’S

charged with administering the statute may resolve the

ambiguity or fill the statutory gap through regulations,

“which are entitled to deference if they resolve the ambiguity

in a reasonable manner.” Coeur Alaska, Inc. v. Se. Alaska

Conservation Council, 557 U.S. 261, 277–78 (2009).

If the regulation itself is ambiguous, we consider the

agency’s interpretation of the regulation, even if the

“interpretation comes to us in the form of a legal brief.” Auer

v. Robbins, 519 U.S. 452, 462 (1997); see also Chase Bank

USA, N.A. v. McCoy, 562 U.S. 195, 208 (2011). While we

generally defer to an agency’s interpretations of its own

ambiguous regulations, we do not do so when the

interpretation is “plainly erroneous or inconsistent with the

regulation,” Auer, 519 U.S. at 461 (internal quotation marks

omitted), or when such deference would impermissibly

“permit the agency, under the guise of interpreting a

regulation, to create de facto a new regulation,” Christensen

v. Harris County, 529 U.S. 576, 588 (2000).

9 Further, we

must always ensure that the interpretation is not inconsistent

with a congressional directive; “[a] court need not accept an

agency’s interpretation of its own regulations if that

9 The dissent errs in stating that we may “decline to apply Auer

deference only where the agency’s interpretation is ‘plainly erroneous or

inconsistent’ with the regulation.” Dissent at 42 (emphasis in original). 

We may also withhold Auer deference when an agency’s interpretation is

inconsistent with its prior pronouncements or results in an unfair surprise

to regulated parties. See Christopher v. SmithKline Beecham Corp.,

567 U.S. 142, 155–56 (2012). The district court held that no deference

was owed to the DOL because of its inconsistent interpretation of the dual

jobs regulation over time, and J. Alexander’s contends that we may

withhold deference from the DOL’s interpretation due to both

inconsistency and unfair surprise. Because we resolve the deference

question on different grounds, we do not reach these arguments.
MARSH V. J. ALEXANDER’S 19

interpretation is . . . inconsistent with the statute under which

the regulations were promulgated.” Mines v. Sullivan,

981 F.2d 1068, 1070 (9th Cir. 1992) (citing United States v.

Larionoff, 431 U.S. 864, 872–73 (1977)); see also Cumbie,

596 F.3d at 582 & n.13 (declining to give Auer deference to

a DOLregulatory interpretation that was inconsistent with the

FLSA and the regulation’s text).

“[W]hen Auer deference is not warranted, an agency’s

interpretation of an ambiguous regulation should be evaluated

under the principle laid down in Skidmore v. Swift & Co.,

323 U.S. 134 (1944).” Indep. Training & Apprenticeship

Program v. Cal. Dep’t of Indus. Relations, 730 F.3d 1024,

1035 (9th Cir. 2013). Under this standard, we accord the

agency’s interpretation “a measure of deference proportional

to the thoroughness evident in its consideration, the validity

of its reasoning, its consistency with earlier and later

pronouncements, and all those factors which give it power to

persuade.” Id. at 1036 (quoting Christopher v. SmithKline

Beecham Corp., 567 U.S. 142, 159 (2012) (internal quotation

marks omitted)).

B

We now turn to the question whether the DOL’s

interpretation of the dual jobs regulation is consistent with the

regulation and statute. To answer this question, we consider

the statute, the regulation, and the DOL’s interpretations in

their historical contexts.

As originally enacted in 1938, the FLSA did not expressly

address the effect of an employee’s tips on the amount of

wages paid by the employer. In 1966, however, Congress

amended the FLSA to extend its coverage to workers
20 MARSH V. J. ALEXANDER’S

employed in the hotel and restaurant industries. Or. Rest. &

Lodging Ass’n v. Perez, 816 F.3d 1080, 1083 (9th Cir. 2016). 

Because the 1966 amendments brought many traditionally

tipped employees within the FLSA’s protection, Congress

was careful to design the amendments “to permit the

continuance of existing practices with respect to tips.” S.

Rep. No. 89-1487 (1966), as reprinted in 1966 U.S.C.C.A.N.

3002, 3014. Among other changes, the 1966 amendments

added § 203(m) and § 203(t), which respectively allowed an

employer to take a credit against the minimum wage for

employees who were already compensated by tips and

provided a definition of “tipped employee” as meaning “any

employee engaged in an occupation in which he customarily

and regularly receives” the requisite amount of tips.

10

See

Fair Labor Standards Amendments of 1966, Pub. L. No. 89-

601, § 101, 80 Stat. 830, 830.

The 1966 amendments also authorized the DOL “to

promulgate necessaryrules, regulations, or orders with regard

to the amendments made.” Id. § 602, 80 Stat. at 844. 

Pursuant to this grant of authority, the DOL promulgated

regulations in 1967 in order to clarify the FLSA’s tip credit

provisions, 29 U.S.C. §§ 203(m) and (t). See 32 Fed. Reg.

10 The version of § 203(t) enacted in 1966 remains in effect today. 

Although Congress amended § 203(m) into its current form in 1974, see

Or. Rest. &Lodging Ass’n, 816 F.3d at 1084, the change to that provision

is immaterial for purposes of this case. The dissent states that the 1974

amendments require the employer to prove “the amount of tip credit, if

any,” and faults the majority for not placing “the burden on the employer

to show it can use the tip credit.” Dissent at 51. But we are not called

upon to consider which party bears the burden of proving the correct

amount of tip credit; rather, we address the question whether the DOL’s

interpretation of the defined term “tipped employee” in § 203(t) merits

deference, which is a question of law for the courts.
MARSH V. J. ALEXANDER’S 21

13,575–13,581 (Sept. 28, 1967). These regulations include

the DOL’s systematic explanation of each of the key words

and phrases in the definition of “tipped employee” codified

at § 203(t).

As part of the DOL’s clarification of the statutory phrase

“more than $30 a month in tips,” the DOL promulgated the

“dual jobs” regulation, which remains in effect today and

contemplates that an employee can be “employed in a dual

job,” i.e., two different jobs.1129 C.F.R. § 531.56(e). This

regulation provides that if the employee is engaged in one

occupation in which “he customarily and regularly receives

at least $30 a month in tips,” and is also engaged in a second

occupation in which the employee does not receive the

required amount of tips, then the employer can take a tip

credit only for the first occupation. Id. The regulation gives

one example of a situation where an employee is employed in

a dual job: “where a maintenance man in a hotel also serves

as a waiter.” Id. It also gives two examples of situations

where an employee is not employed in dual jobs: (1) “a

waitress who spends part of her time cleaning and setting

tables, toasting bread, making coffee and occasionally

11 The DOL’s procedure for promulgating the dual jobs regulation is

questionable in at least one respect: The DOL added the regulation after

the notice and comment period and without reasoned explanation or

forewarning. See 32 Fed. Reg. 13,575 (Sept. 28, 1967). J. Alexander’s

argues that this procedural defect renders the regulation unworthy of

deference because “where a proper challenge is raised to the agency

procedures, and those procedures are defective, a court should not accord

Chevron deference to the agency interpretation.” Encino Motorcars, LLC

v. Navarro, 136 S. Ct. 2117, 2125 (2016). Because this objection comes

well after the statute of limitations period for procedural challenges to

agency actions, we decline to reach the issue. See Perez-Guzman v.

Lynch, 835 F.3d 1066, 1077–79 (9th Cir. 2016).
22 MARSH V. J. ALEXANDER’S

washing dishes or glasses”; and (2) a “counterman who also

prepares his own short orders or who, as part of a group of

countermen, takes a turn as a short order cook for the group.” 

Id.

Following the promulgation of the dual jobs regulation,

employers requested guidance from the DOL regarding how

to determine whether employees are engaged in a single

occupation in which they receive more than $30 a month in

tips, or instead have two occupations. This was a significant

concern to employers, because if they violated the minimum

wage rule they could be liable not only for “unpaid minimum

wages,” but also for “an additional equal amount as liquidated

damages.” 29 U.S.C. § 216(b).

The DOL first attempted to provide a workable standard

in a series of opinion letters issued between 1979 and 1985

(hereinafter, “Opinion Letters”). In its first letter on this

issue, the DOL responded to the question whether employees

who had been hired as waitresses, but were also required to

“report to work two hours before the doors are opened to the

public to prepare vegetables for the salad bar,” were engaged

in two different occupations. U.S. Dep’t of Labor, Wage &

Hour Div., Opinion Letter FLSA-895 (Aug. 8, 1979)

(hereinafter, “1979 Letter”). Interpreting the dual jobs

regulation, the DOL concluded that the “salad preparation

activities are essentially the activities performed by chefs,”

and therefore the employer had effectively employed the

workers in two occupations, one as waitresses and the other

as chefs. Id. Accordingly, the DOL concluded that the

employees were not “tipped employees” when engaged in the

chef job, and “no tip credit may be taken for the time spent in

preparing vegetables for the salad bar.” Id.
MARSH V. J. ALEXANDER’S 23

The DOLaddressed a similar question in an opinion letter

issued the following year. U.S. Dep’t of Labor, Wage &

Hour Div., Opinion Letter WH-502 (Mar. 28, 1980),

available at 1980 WL 141336 (hereinafter, “1980 Letter”). 

In that letter, the DOL answered the question whether

employees hired as waiters and waitresses, but who were also

required to “clean the salad bar, place the condiment crocks

in the cooler, clean and stock the waitress station, clean and

reset the tables . . . and vacuum the dining room carpet, after

the restaurant is closed,” were engaged in two different

occupations. Id. The DOL concluded that these employees

were engaged in a single tipped occupation because the afterhours duties were “assigned generally to the waitress/waiter

staff” and there was no “clear dividing line between the types

of duties performed by a tipped employee, such as between

maintenance duties and waitress duties.” Id. Therefore, it did

not matter that some of the employees’ duties were not

“directed toward producing tips.” Id. The DOL analogized

the situation presented to that described in the dual jobs

regulation, id., which explains that “a waitress who spends

part of her time cleaning and setting tables, toasting bread,

making coffee and occasionally washing dishes or glasses” is

not employed in two occupations, 29 C.F.R. § 531.56(e). 

Nevertheless, the DOL cautioned that a different rule might

apply where “specific employees [are] routinely assigned, for

example, maintenance-type work such as floor vacuuming.” 

1980 Letter.

In 1985, the DOL addressed the situation to which it had

alluded in the 1980 Letter. A restaurant employer asked

whether an employee who was hired as a waiter but was

assigned to arrive at the restaurant at least two hours before

opening to perform general preparatory duties was employed

in two different occupations. U.S. Dep’t of Labor, Wage &
24 MARSH V. J. ALEXANDER’S

Hour Div., Opinion Letter FLSA-854 (Dec. 20, 1985),

available at 1985 WL 1259240 (hereinafter, “1985 Letter”). 

The DOL concluded that the general preparatory duties

constituted a separate occupation, and “no tip credit may be

taken for the hours spent by an assigned waiter or waitress in

opening responsibilities.” Id. In reaching this conclusion, the

DOL cited as material that (1) “only one waiter or waitress is

assigned to perform all preparatory activities,” (2) these

responsibilities “extend to the entire restaurant rather than to

the specific area or customers which they serve,” and (3) “the

activities performed prior to the opening of the restaurant

consume a substantial portion of the waiter or waitress’[s]

workday.” Id.

While the Opinion Letters provided case-by-case

guidance as to when an employee is engaged in two separate

occupations, some general principles can be derived from this

guidance. Specifically, the DOL deemed an employee to be

engaged in two different occupations when there was a “clear

dividing line” between two different types of duties, such as

when one set of duties was performed in a distinct part of the

workday. See 1980 Letter (articulating the “clear dividing

line” standard); see also 1979 Letter (concluding that an

employee has dual jobs where the duties unrelated to tip

generation were temporally separated from tip-generating

duties). In addition, the DOL considered whether an

employer assigned a set of distinct duties to a single

employee and whether these duties occupied a significant
MARSH V. J. ALEXANDER’S 25

portion of the employee’s time.12See 1985 Letter; 1980

Letter.

In 1988, the DOL gave its field officers revised guidance

for determining when an employee was engaged in two

different occupations. This guidance, which the DOL

formalized in its FOH, introduced the concept that where

“tipped employees spend a substantial amount of time (in

excess of 20 percent) performing preparation work or

maintenance, no tip credit may be taken for the time spent in

such duties.” FOH § 30d00(e) (1988).

13 This was a

significant departure from the earlier guidance; instead of

determining whether an employee was engaged in two jobs

by looking for a “clear dividing line,” as it did in the Opinion

Letters, the DOL’s 1988 guidance required an employer to

sort the employees’ tasks into two different categories (tipgenerating tasks and related but not tip-generating tasks),

determine whether the related tasks take up more than

12 As the Opinion Letters demonstrate, the dissent errs in stating that

the DOL has “consistently limited the amount of time a tipped employee

can perform untipped work and still receive the tipped minimum wage.” 

Dissent at 46. The Opinion Letters properly focus on the regulatory

question whether the employee is employed in dual jobs; the amount of

time spent in a particular task is only one factor (if considered at all) in

making that determination. In the 1980 Letter, for example, the DOL

focused exclusively on whether “after-hours clean-up” was “assigned

generally,” with no consideration of the time spent performing those

duties.

13 Although the DOL has since updated the FOH, the 1988 FOH

guidance is reprinted in full in a publicly available amicus brief that the

DOL filed in an Eighth Circuit case. See Brief for the Secretary of Labor

as Amicus Curiae in Support of Plaintiffs-Appellees at 12–13, Fast v.

Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) (Nos. 10-1725/26),

2010 WL 3761133.
26 MARSH V. J. ALEXANDER’S

20 percent of the total time worked, and, if so, take a tip

credit only for the time spent on tip-generating tasks. In

effect, this required employers to take a time-tracking or

“time sheet” approach, i.e., evaluating employee work on a

duty-by-duty and minute-by-minute basis, to determine

whether an employer could take a tip credit.14

In 2011, the DOL doubled down on its time sheet

approach to the dual jobs regulation and presented the FOH

§ 30d00(e) (1988) as its official interpretation of the dual jobs

regulation in an amicus brief to the Eighth Circuit. See Brief

for the Secretary of Labor as Amicus Curiae in Support of

Plaintiffs-Appellees at 12–13, Fast v. Applebee’s Int’l, Inc.,

638 F.3d 872 (8th Cir. 2011) (Nos. 10-1725/26), 2010 WL

3761133. In its amicus brief, the DOL argued that the FOH

§ 30d00(e) interpreted the waitress example in the dual jobs

regulation, which uses the phrase “part of her time” and the

word “occasionally,” by “affix[ing] a specific limit to the

regulation’s tolerance for the ‘occasional’ performance of

such related duties, capping it at 20 percent of the tipped

employee’s time.” See id. at 9.

14 The DOL later acknowledged that this guidance had “resulted in

some confusion and inconsistent application” by various courts and

attempted to provide some clarification. See U.S. Dep’t of Labor, Wage

& Hour Div., Opinion Letter (Jan. 16, 2009). In a 2009 opinion letter, the

DOL indicated that an employee engaged in an occupation in which the

employee customarily and regularly receives the requisite amount of tips

can engage in any amount of duties related to that occupation, but not

directed at generating tips, “so long as they are performed

contemporaneously with direct customer-service duties and all other

requirements of the [FLSA] are met.” Id. Following a change in

presidential administration, the DOL withdrew this guidance. See U.S.

Dep’t of Labor, Wage & Hour Div., Opinion Letter (Mar. 2, 2009).
MARSH V. J. ALEXANDER’S 27

In 2012, the DOL took its FOH guidance a step further,

resulting in the guidance now set forth in the FOH § 30d00(f)

(2016), which the DOL presents as its current official

interpretation of the dual jobs regulation.15 This new version

of the FOH guidance retains the rule that an employer cannot

take a tip credit for time the employee spends performing

“related duties” if those duties exceed 20 percent of the hours

on the job. FOH § 30d00(f)(3). It also adds a new rule: An

employer cannot take a tip credit for time spent in duties that

are “not related” to generating tips. Id. § 30d00(f)(4). This

new requirement imposes additional time-tracking duties: 

The employer must sort the employee’s tasks into one of

three categories (tip-generating, related but not tipgenerating, or not related), and then apply the appropriate tip

credit eligibility rules (eligible, eligible only if less than

20 percent of the total time worked, and ineligible,

respectively).

As this history illustrates, the DOL’s interpretations of the

dual jobs regulation have evolved from requiring a

determination as to whether an employee is “engaged in” two

distinct jobs (as explained in the Opinion Letters) to focusing

on what (in everyday language) would be called a single job

that involves a range of intermingled duties that must be

performed throughout the course of the day.

15 In Probert v. Family Centered Services of Alaska, Inc., we held that

“it does not appear . . . that the FOH is a proper source of interpretive

guidance” for purposes of Chevron deference. 651 F.3d 1007, 1012 (9th

Cir. 2011). We need not decide whether Probert applies in the context of

Auer deference, however, because the DOL has adopted the FOH’s

interpretations in its amicus brief, and it is well settled that we may defer

to interpretations presented in such briefs. E.g., Christopher, 567 U.S. at

155.
28 MARSH V. J. ALEXANDER’S

C

We now ask whether the DOL’s interpretations in the

FOH § 30d00(f) merit controlling deference under Auer. 

Because the FOH § 30d00(f) is both inconsistent with the

regulation, Auer, 519 U.S. at 461, and attempts to “create de

facto a new regulation,” Christensen, 529 U.S. at 588, we

conclude that it does not merit deference.

As its focus on “dual jobs” indicates, the dual jobs

regulation interprets § 203(t)’s reference to employees

“engaged in an occupation” to mean employed in a “job,” not

performing an activity. See 29 C.F.R. § 531.56(e) (emphasis

added). When the regulation refers to minute-by-minute

tasks or activities, it uses the term “duties” rather than

“occupation.”16See id. (referring to “related duties in an

occupation”). This interpretation of “occupation” to mean

“job” is consistent with the statute’s most natural meaning. 

See Perrin v. United States, 444 U.S. 37, 42 (1979) (noting

the general rule that statutory terms “will be interpreted as

taking their ordinary, contemporary, common meaning”). 

Nothing in the FLSA’s “context, structure, history, [or]

purpose” suggests that Congress intended to use the term

“occupation” in § 203(t) to mean discrete duties performed

over the course of the day. Abramski v. United States, 134 S.

Ct. 2259, 2267 (2014) (internal quotation marks omitted). 

Indeed, the 1966 amendments at issue here governed how

16 DOL regulations consistently interpret the term “occupation” to

refer to a job, rather than to discrete tasks or duties. See 29 C.F.R.

§ 531.56(a) (referring to “[a]n employee employed full time or part time

in an occupation”); id. § 531.57 (contemplating that a tipped employee in

a qualifying occupation may take vacation or sick leave); id. (identifying

specific “occupations” in which one might be engaged as “waiters,

bellhops, taxicab drivers, barbers, or beauty operators”).
MARSH V. J. ALEXANDER’S 29

employers were required to pay employees in jobs that were

traditionally tipped, see Or. Rest. & Lodging Ass’n, 816 F.3d

at 1083, without differentiating between employee duties in

those jobs. Moreover, the FLSA consistently uses the word

“occupation” to refer to jobs in particular industries, rather

than to discrete tasks. See, e.g., 29 U.S.C. § 203(l) (referring

to employment in an occupation other than manufacturing

and mining), § 214(b)(2) (referring to “any occupation in

agriculture”). The best inference from the FLSA’s consistent

use of “occupation” as “job” is that § 203(t), like the other

FLSA provisions discussing occupations,requires a job-based

focus. See IBP, Inc. v. Alvarez, 546 U.S. 21, 34 (2005)

(“[I]dentical words used in different parts of the same statute

are generally presumed to have the same meaning.”). Given

the “common sense” understanding that § 203(t) focuses on

jobs rather than duties, Abramski, 134 S. Ct. at 2267, coupled

with the dual jobs regulation’s use of that understanding, we

reject Marsh’s argument that § 203(t)’s language “engaged in

an occupation” can be read to mean “engaged in an

activity.”

17

17 Marsh argues that because the FLSA is a remedial statute, it must

“be liberally construed to apply to the furthest reaches consistent with

Congressional direction.” Klem v. County of Santa Clara, 208 F.3d 1085,

1089 (9thCir. 2000) (quoting Biggs v. Wilson, 1 F.3d 1537, 1539 (9th Cir.

1993)). The Supreme Court has held, however, that this principle does not

apply where, as here, we interpret provisions of the FLSA’s definitions

section, § 203. Sandifer v. U.S. Steel Corp., 134 S. Ct. 870, 879 n.7

(2014) (citing Christopher, 567 U.S. at 164 n.21). As Sandifer made

clear, the principle that “‘exemptions’in the Fair Labor Standards Act ‘are

to be narrowly construed against the employers seeking to assert them’”

applies only to “exemptions from the Act [that] generally reside in § 213,

which is entitled ‘Exemptions’ and classifies certain kinds of workers as

uncovered by various provisions.” Id. Because the tip credit provisions

here are found in § 203, rather than § 213, and do not exempt any

employee from coverage under the minimum wage requirement, the
30 MARSH V. J. ALEXANDER’S

Consistent with its reading of “occupation” in § 203(t) to

mean “job,” the dual jobs regulation provides a common

sense approach to defining what constitutes a “job.” This

regulatory approach relies on the everyday understanding that

a job is comprised of a cluster of tasks typically associated

with that job. In the regulation’s example of a “dual job,” a

hotel employs an employee to work in two distinct jobs, one

as a maintenance man and one as a waiter. 29 C.F.R.

§ 531.56(e). These jobs are ordinarily understood to involve

different types of duties: While a maintenance man has a

range of duties associated with keeping buildings or

equipment in good repair, a waiter has a range of duties

associated with serving customers at their tables in a

restaurant. In common usage, these constitute distinct jobs. 

By contrast, the dual jobs regulation provides two examples

of jobs comprised of a relevant cluster of tasks: A waitress is

engaged in a single job so long as the range of duties she

performs is typical for a waitress job (e.g., some cleaning,

some food preparation), and a counterman is engaged in a

single job so long as his range of duties is typical for that job

(e.g., cooking some of his own orders, or taking a turn as a

chef) and his fellow countermen share in those duties. Id. As

these examples teach, if the employer has hired a person for

one job (such as waitress or counterman), but that job

includes a range of tasks not necessarily directed towards

producing tips, the person is still considered a tipped

employee engaged in a single job so long as the person

“customarily and regularly receives at least $30 a month in

tips.” Id.; cf. Schaefer v. Walker Bros. Enters., Inc., 829 F.3d

551, 555 (7th Cir. 2016) (“At some restaurants busboys

dissent’s attempt to characterize the definitions at issue here as

exemptions is contrary to Sandifer’s clear statement. See Dissent at

50–51.
MARSH V. J. ALEXANDER’S 31

remove dishes after diners have finished, while at others the

servers perform this chore. So it is not helpful to ask . . .

whether cooks or busboys or janitors do one or another task

at other restaurants.”).

Instead of providing further guidance on what constitutes

a distinct job, the FOH § 30d00(f) takes an entirely different

approach; it parses an employee’s tasks into three separate

categories (tip-generating, related to the generation of tips, or

unrelated to the generation of tips), and then disallows tip

credits on a minute-by-minute basis based on the type and

quantity of the tasks performed. Because the dual jobs

regulation is concerned with when an employee has two jobs,

not with differentiating between tasks within a job, the FOH’s

approach is inapposite and inconsistent with the dual jobs

regulation.

Most fundamentally, the FOH ignores the regulation’s

requirement to identify distinct jobs. Under the FOH

§ 30d00(f)(4), an employee is per se engaged in two jobs if

the employee has spent any time at all on tasks not related to

the tipped occupation. Under the FOH § 30d00(f)(2) and (3),

an employee is per se engaged in two jobs if a time-tracking

analysis shows that the employee has spent some minutes

over the course of the day engaged in non-tipped tasks that

are related to tipped tasks, and these minutes in the aggregate

account for 20 percent or more of the hours worked over the

course of a workweek. But as the regulation’s examples

indicate, an employee is not engaged in two distinct jobs

merely because the employee performs different tasks over

the course of the day; rather, the regulation requires an

assessment whether a cluster of different tasks constitutes a

particular job, as that job is ordinarily understood. Moreover,

the FOH’s minute-by-minute and task-by-task approach is
32 MARSH V. J. ALEXANDER’S

contrary to the statute, which considers only whether an

employee is engaged in a single job that generates the

requisite amount of tips. 29 U.S.C. § 203(t). Indeed,

requiring an employer to analyze every minute of its

employee’s workday to assess tip credit eligibility would

frustrate Congress’s goal “to permit the continuance of

existing practices with respect to tips.” S. Rep. No. 89-1487,

supra page 20, at 3014.

Not only is the FOH § 30d00(f) inconsistent with the

regulation’s approach to defining the word “job,” it also

produces outcomes that are contrary to the dual jobs

regulation’s examples of tipped employees engaged in a

single occupation. For instance, under the FOH § 30d00(f)’s

approach, an employer would be required to track the time a

counterman spends working as a chef preparing short orders,

which is not a tip-generating task, and determine whether the

cooking duty took up more than 20 percent of the

counterman’s time.18 But the regulation requires no such

inquiry; as long as the task of preparing short orders is

generally assigned to all countermen, the counterman is

engaged in only his single tipped occupation. See 29 C.F.R.

§ 531.56(e). The FOH § 30d00(f) methodology could result

in an outcome whereby the counterman would be treated as

having two jobs, even though the regulation says he has only

one.

18 The regulation deems the preparation ofshort orders to be “related”

to the counterman’s job, 29 C.F.R. § 531.56(e), so in this hypothetical the

employer would not have to determine whether preparation ofshort orders

constitutes “unrelated” duties. But see 1979 Letter (advising that salad

preparation is a chef duty not related to the job of waitress).
MARSH V. J. ALEXANDER’S 33

In short, to the extent the FOH § 30d00(f) approach

provides an interpretation of the dual jobs regulation at all, it

provides one that is inconsistent with both the regulation’s

approach to determining whether an employee has two

distinct jobs and with the statute’s direction that any person

engaged in a job that generates the requisite amount of tips is

a “tipped employee.” In effect, the FOH § 30d00(f) creates

an alternative regulatory approach with new substantive rules

that regulate how employees spend their time. This is “de

facto a new regulation” masquerading as an interpretation,

and we decline to defer to it.19 Christensen, 529 U.S. at 588.

Arguing against this conclusion, Marsh claims that the

dual jobs regulation is ambiguous because it uses the terms

“part of her time” and “occasionally” in the waitress

example.20 Because the DOL can interpret its ambiguous

regulation, Marsh contends that the FOH 30d00(f)’s

interpretation of those words merits Auer deference. In

making this argument, Marsh primarily relies on the Eighth

Circuit’s decision in Fast v. Applebee’s Int’l, Inc., which

19 Because the FOH § 30d00(f) is inconsistent with the regulation and

the statute, the FOH § 30d00(f) is also unpersuasive and not entitled to

deference under Skidmore. See Christopher, 567 U.S. at 159.

20 We are doubtful that the phrase “part of her time” and the word

“occasionally” in the dual jobs regulation’s waitress example make that

example ambiguous. The regulation merely describes the cluster of

activities that are typically part of a waitress job, and leaves to a case-bycase determination the question whether an employee with a slightly

different mix of activities would still be a waitress or would have two

different jobs.
34 MARSH V. J. ALEXANDER’S

deferred to the DOL’s interpretation in the FOH.21638 F.3d

872, 879 (8th Cir. 2011).

In Fast, the Eighth Circuit first determined that the dual

jobs regulation was ambiguous because “[b]y using the terms

‘part of [the] time’ and ‘occasionally,’ the regulation clearly

places a temporal limit on the amount of related duties an

employee can perform and still be considered to be engaged

in the tip-producing occupation,” yet the regulation does not

define the term “occasionally.” Id. at 879 (second alteration

in original). The Eighth Circuit noted that other courts relied

on temporal limits to determine whether an employee was

engaged in dual jobs, citing Myers v. Copper Cellar Corp.,

192 F.3d 546, 549–50 (6th Cir. 1999), which held “that

servers who spent entire shifts working as ‘salad preparers’

were employed in dual jobs.” Fast, 638 F.3d at 880. By

contrast, “where the related duties are performed

intermittently and as part of the primary occupation, the

duties are subject to the tip credit.” Id. (citing Pellon v. Bus.

Representation Int’l, Inc., 528 F. Supp. 2d 1306, 1313 (S.D.

Fla. 2007), aff’d, 291 Fed. App’x 310 (11th Cir. 2008)). The

Eighth Circuit concluded that the DOL’s interpretation was

reasonable because “[t]he 20 percent threshold used by the

DOL in its Handbook is not inconsistent with § 531.56(e) and

is a reasonable interpretation of the terms ‘part of [the] time’

and ‘occasionally’ used in that regulation.” Id. (second

alteration in original). The Eighth Circuit did not explain

why using 20 percent (rather than some other percent of the

workweek) was reasonable, other than to reference DOL

21 The Eighth Circuit deferred to an earlier DOL interpretation

codified at the FOH § 30d00(e) (1988), but the differences between that

interpretation and the one presented here are immaterial to our analysis.
MARSH V. J. ALEXANDER’S 35

regulations in other contexts that had imposed a 20 percent

temporal limitation. See id.

We disagree with the Eighth Circuit’s Auer analysis on

several grounds. Most important, the Eighth Circuit failed to

consider the regulatory scheme as a whole, and it therefore

missed the threshold question whether it is reasonable to

determine that an employee is engaged in a second “job” by

time-tracking an employee’s discrete tasks, categorizing

them, and accounting for minutes spent in various activities. 

The Eighth Circuit focused on a few words in the regulation

(“part of her time” and “occasionally”), id. at 880, that in

context merely explain that a waitress who engages in a range

of typical tasks over the course of the day is not in a dual job. 

The Eighth Circuit ignored the regulation’s second example

of an employee not engaged in a dual job, i.e., the

counterman, which does not include any language imposing

a temporal limitation on the amount of time that could be

spent engaging in related activities.2229 C.F.R. § 531.56(e). 

Because the Eighth Circuit narrowly focused on a few words

out of context, it failed to grapple with the crucial question

whether the FOH’s time sheet approach is a reasonable

22 The dissent contends that the language “takes a turn” in the

counterman example expresses a temporal limitation. Dissent at 45. We

disagree. Nothing in the regulation’s text would prohibit four countermen

from taking turns as the short order cook for equal periods during a shift,

such that each counterman spends 25 percent of the shift performing the

duty. That arrangement, which the regulation’s text allows, is

incompatible with the DOL’s arbitrary 20 percent threshold. If the

counterman example no longer reflects contemporary practice, as the

dissent suggests, see id. at 45 n.3, the solution is to amend the regulation

or the statute, not to craft a new rule under the guise of interpreting the

current unambiguous language.
36 MARSH V. J. ALEXANDER’S

interpretation of “job” (in the regulation) or “occupation” (in

the statute).

Moreover, the very cases that the Eighth Circuit cited to

support its ruling, Myers and Pellon, suggest that the FOH’s

approach is unreasonable. These cases hold, consistent with

the dual jobs regulation and the Opinion Letters, that in order

for an employee to be engaged in two different occupations

there must be a clear dividing line between two different

types of duties, such as when one set of duties is performed

in a distinct part of the workday. Compare Myers, 192 F.3d

at 549–50 (holding that a waitress’s shift as a salad preparer

was a dual job), with 1979 Letter (similar). As Fast

summarized the rule from Pellon, “where the related duties

are performed intermittently and as part of the primary

occupation, the duties are subject to the tip credit.” Fast,

638 F.3d at 880. Such intermittent duties are not a second

“job” as that word is reasonably understood. Yet under the

FOH, such intermittently performed duties may be treated as

a second job for which the employer may not take a tip credit.

Finally, we disagree with Fast’s conclusion (and the

DOL’s argument) that the DOL’s prescription of a specific

temporal limit on certain duties (i.e., 20 percent of the total

time worked) is a reasonable method for determining when an

employee has a second job. The Eighth Circuit upheld this

arbitrary temporal limitation in part because it is consistent

with temporal limitations in other parts of the FLSA’s

regulatory regime. See id. at 881. But this fact is irrelevant

because each example of a temporal cap that the DOL and

Fast cite was either legislatively enacted or promulgated

through notice and comment rulemaking. See 29 U.S.C.

§ 213(c)(6); 29 C.F.R. §§ 552.6(b), 786.1, 786.100, 786.150,

786.200; Fast, 638 F.3d at 881. By allowing the DOL to
MARSH V. J. ALEXANDER’S 37

impose a substantive 20 percent cap on the performance of

certain duties under the guise of interpreting the word

“occasionally,” the Eighth Circuit contravened the rule that

agencies not be allowed to create new substantive regulations

through interpretation. See Christensen, 529 U.S. at 588. 

Although the regulations that the DOL cites may be

permissible constructions of the FLSA provisions they

implement, that tells us nothing about whether the FOH

§ 30d00(f) is consistent with the text of the dual jobs

regulation and § 203(t).23

In short, the Eighth Circuit did not properly consider 

whether the FOH was consistent with the regulation, Auer,

519 U.S. at 461, whether deference would allow the agency

to “create de facto a new regulation,” Christensen, 529 U.S.

at 588, or whether the interpretation would be consistent with

§ 203(t). Accordingly, we reject Marsh’s argument that we

should adopt Fast’s approach.24

23 For the same reason, we reject the dissent’s argument that the FOH

§ 30d00(f) is not inconsistent with the dual jobs regulation because other

regulations require employers to track an employee’s time. See Dissent

at 49 (citing 29 C.F.R. § 516.28(a)). The proper question is whether the

FOH § 30d00(f) is consistent with the regulation it purports to interpret,

not whether it bears some similarity to other aspects of the FLSA’s

statutory and regulatory scheme.

24 Marsh argues that the Seventh Circuit, like the Eighth, has deferred

to the DOL’s interpretation of the dual jobs regulation. We disagree. In

Driver v. AppleIllinois, LLC, the Seventh Circuit considered whether to

grant a petition to appeal a denial of class certification. 739 F.3d 1073,

1074 (7th Cir. 2014). When discussing the case’s background, Driver

mentioned the DOL’s interpretation of the dual jobs regulation in order to

provide context to the class definition in issue. See id. at 1075. Driver

was not presented with, and did not decide, the question whether Auer

compels deference to the DOL’s interpretation. More recently, the
38 MARSH V. J. ALEXANDER’S

After exhausting his legal arguments, Marsh urges us to

consider that the FOH’s approach to the dual jobs inquiry

simply “makes sense.” He contends that an employer should

not be able to hire an employee for a job that is traditionally

tipped, but then require the employee to engage in tasks

associated with a job that is traditionally not tipped. 

According to Marsh, the dual jobs regulation and Opinion

Letters do not adequately address this problem, and so the

DOL must be free to step in with a solution. Our task,

however, is not to pass on the wisdom of the FOH’s

approach, but to determine whether the DOL can enforce this

approach in the guise of interpreting a regulation. We hold

only that, at present, no provision with the force of law

permits the DOL to require employers to engage in time

tracking and accounting for minutes spent in diverse tasks

before claiming a tip credit. Our decision today does not

prevent the DOL from attempting to promulgate this

approach through rulemaking, nor prevent Congress from

requiring such an approach through legislation.

III

Our refusal to defer to the FOH § 30d00(f) does not mean

that other guidance from the DOL might not warrant

Seventh Circuit held that the evidence before it did not establish a

violation of the FLSA even under the FOH, and therefore did not reach the

question whether the FOH merited deference. See Schaefer, 829 F.3d at

554–55.

Because we reject Fast as unpersuasive, we also find unpersuasive

those district court cases that have followed Fast’s approach without

serious consideration or analysis of Fast’s errors. See, e.g., McLamb v.

High 5 Hospitality, 197 F. Supp. 3d 656, 662–63 (D. Del. 2016); Flood v.

Carlson Rest. Inc., 94 F. Supp. 3d 572, 582–83 (S.D.N.Y. 2015).
MARSH V. J. ALEXANDER’S 39

deference. The DOL’s prior Opinion Letters, for example,

consider whether there is a “clear dividing line” between two

different types of duties, see 1980 Letter, whether one set of

duties is performed in a distinct part of the workday, see 1979

Letter, or whether duties that do not produce tips are

generally assigned, see 1985 Letter. We need not decide here

whether the Opinion Letters merit deference, however,

because Marsh conceded at oral argument that his “related”

and “unrelated” duties were all intermingled with the

performance of duties directed at generating tips. See supra

at 15, note 7. But because Marsh’s concession is in tension

with certain allegations in the proposed amended complaint,

e.g., that some of his cleaning tasks (such as wiping down

tables for 20 minutes after each closing shift) were temporally

separated from serving customers, the proper course here is

to remand to the district court to permit Marsh the

opportunityto propose an amended complaint that focuses his

allegations in light of our holding today.

25 Cf. Mark H. v.

Lemahieu, 513 F.3d 922, 939 (9th Cir. 2008) (clarifying the

law and then remanding for an opportunity to propose an

amended complaint in light of the clarification). On remand,

if Marsh alleges facts that state a claim by reference to DOL

guidance other than the FOH § 30d00(f), such as the Opinion

Letters, the district court may consider in the first instance

25 This disposition is the same for all plaintiffs in these consolidated

appeals. In Crystal Sheehan’s appeal, the defendant asks us to affirm on

the alternative ground that the statute of limitations bars Sheehan’s claim. 

We decline this invitation, as we believe that this argument would benefit

from further development in the district court, including possible

discovery on the issue of the willfulness of any alleged FLSA violation. 

See 29 U.S.C. § 255(a); Fed. R. Civ. P. 56(d). We leave to the district

court’s sound discretion how to proceed with the resolution of this

question on remand.
40 MARSH V. J. ALEXANDER’S

whether deference is owed to such guidance, and whether the

facts alleged state a claim.

In sum, Marsh cannot state a claim under § 206(a) by

alleging that discrete “related” tasks or duties, which were

performed intermittently over the course of the day and were

intermingled with his duties directed at generating tips,

comprise a dual job when aggregated together over the course

of a workweek. Performance of dispersed, related, and

generally assigned duties is consistent with the waitress and

counterman examples in the dual jobs regulation, which are

examples of employment in a single tipped occupation. 

29 C.F.R. § 531.56(e). Marsh also cannot state a claim by

alleging the performance of “unrelated” duties that were

similarly dispersed and generally assigned; that, too, is

inconsistent with the concept of a dual job. We do not reach

or decide whether allegations that an employee performed

general maintenance work for an extended period before or

after customer interaction began or ended rises to the level of

a dual job.26

26 We reject J. Alexander’s argument that we can affirm on the district

court’s alternative determination that Marsh failed to state a minimum

wage claim under 29 U.S.C. § 206(a) because he failed to allege that he

earned less than minimum wage in any given workweek. This argument

relies on United States v. Klinghoffer Brothers Realty Corp., in which an

employer required its employees to work extra hours without pay. 

285 F.2d 487, 490 (2d Cir. 1960). The Second Circuit held that this

practice did not violate the FLSA’s minimum wage requirements so long

as the employees received the minimum wage for each hour worked when

the total weekly pay was divided by the total number of hours worked. 

Id.; see also Adair v. City of Kirkland, 185 F.3d 1055, 1063 (9th Cir.

1999) (holding that a district court did not err in applying a similar

approach). In order to avoid FLSAliability under Klinghoffer’s approach,

an employer must pay its employees more than the minimum wage. 

Because an employer relying on a tip credit to comply with the FLSA
MARSH V. J. ALEXANDER’S 41

Although we agree with the district court that the FOH

§ 30d00(f) does not warrant Auer deference, we vacate the

final orders and judgments in these cases and remand to allow

the plaintiffs opportunities to propose new amended

complaints in light of this opinion.27

VACATED AND REMANDED.

PAEZ, Circuit Judge, concurring and dissenting:

Contrary to the majority, I would defer to the Department

of Labor’s (“DOL”) interpretation of 29 C.F.R. § 531.56(e),

the tipped minimum wage regulation at issue in this case.1

never pays more than minimum wage to an employee, see 29 U.S.C.

§ 203(m) (allowing an employer to take a tip credit only for the amount

of tips necessary to ensure that the employee receives the minimum

wage), Klinghoffer is not applicable here. Therefore, Marsh’s complaint

and proposed amended complaint alleged that J. Alexander’s paid Marsh

less than minimum wage over the course of a workweek because he had

two jobs within the meaning of § 531.56(e) and was not paid the minimum

wage for the second job.

27 The parties will bear their own costs on appeal. See Fed. R. App.

P. 39(a)(4).

1

I agree with the majority that the dispositions below should be

vacated and remanded, but I would remand for further proceedings on the

merits of the plaintiffs’ claims as alleged. On several other minor points,

I also agree with the majority. I agree that Probert’s suggestion that the

Field Operations Handbook (“FOH”) was not “a proper source of

interpretative guidance” does not govern our Auer deference analysis. 

Opin. at 27 n.15. Probert v. Family Centered Servs. of Alaska., Inc.,

651 F.3d 1007, 1012 9th Cir. 2011). I also agree that the wage averaging

scheme described in United States v. Klinghoffer Bros. Realty Corp.,
42 MARSH V. J. ALEXANDER’S

Employees paid the tipped minimum wage for untipped work

are underpaid.2 Recognizing this problem, the DOL issued

guidance clarifying that under § 531.56(e), employers must

pay their tipped employees the full minimum wage when

such employees spend a substantial amount of time

performing untipped work. Because the DOL’s guidance

interpreted its own ambiguous regulation, and is neither

plainly inconsistent with that regulation nor erroneous, it is

entitled to Auer deference. For the reasons discussed below,

I would follow the Eighth Circuit’s persuasive opinion in

Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011),

and defer to the DOL’s important, necessary, and sound

guidance. Accordingly, I respectfully dissent from this part

of the majority’s opinion.

I.

An agency’s interpretation of its own ambiguous

regulation is ordinarily entitled to deference, because an

agency’s own regulation “reflect[s] the considerable

experience and expertise the [agency] ha[s] acquired over

time with respect to the complexities of the [statute].” 

Gonzales v. Oregon, 546 U.S. 243, 256 (2006). We will

decline to apply Auer deference only where the agency’s

interpretation is “plainly erroneous or inconsistent” with the

regulation. Auer v. Robbins, 519 U.S. 452, 461 (1997)

285 F.2d 487, 490 (2d Cir. 1960) is not applicable here. Opin. at 40–41

n.26. I therefore concur in these aspects of the majority’s opinion.

2

See William Whittaker, Cong. Research Serv., RL33348, The Tip

Credit Provisions of the Fair Labor Standards Act 2–3 (2006) (explaining

that waiters and other service employees were not covered by the FLSA

until 1966, at which point Congress introduced the tipped minimum wage

so that such employees would receive the minimum wage).
MARSH V. J. ALEXANDER’S 43

(internal quotation marks and citation omitted) (describing

the standard as “deferential”). Where an agency’s

interpretation is plainlyerroneous or inconsistent, we will still

defer to it, but only “proportional to the thoroughness evident

in its consideration, the validity of its reasoning, its

consistency with earlier and later pronouncements, and all

those factors which give it power to persuade.” Christopher

v. SmithKline Beecham Corp., 567 U.S. 142, 159 (2012)

(internal quotation marks and citations omitted).

I part ways with the majority at each step of the Auer

deference analysis. First, § 531.56(e) is ambiguous, as it

employs undefined terms like “occasionally,” and provides

two examples which, at first pass, appear to conflict. Second,

the DOL’s interpretation of this ambiguous regulation has

been consistent over time. The DOL has consistently stated

that the amount of time a tipped employee can spend on

untipped work is limited. The DOL’s guidance setting that

limit at 20% of an employee’s time is also consistent with

other Fair Labor Standards Act (“FLSA”) provisions. In

contrast, as I understand its reasons for vacating and

remanding, the majority would require Marsh to show a

“clear dividing line” between, or distinct hours for, different

jobs, a requirement which is inconsistent with DOLguidance,

and would read out key regulatory provisions. The majority

also errs as the regulations embrace time tracking with

respect to each occupation. Third, underlying these errors,

the majority fails to apply the narrow construction principle

and mistakenly places the burden of proof on the employee.
44 MARSH V. J. ALEXANDER’S

II.

A.

Section 531.56(e) provides:

In some situations an employee is employed

in a dual job, as for example, where a

maintenance man in a hotel also serves as a

waiter. In such a situation . . . no tip credit can

be taken for his hours of employment in his

occupation of maintenance man. Such a

situation is distinguishable from that of a

waitress who spends part of her time cleaning

and setting tables, toasting bread, making

coffee and occasionally washing dishes or

glasses. It is likewise distinguishable from

the counterman who also prepares his own

short orders or who . . . takes a turn as a short

order cook for the group. . . .

29 C.F.R. § 531.56(e) (emphasis added).

Section 531.56(e) is ambiguous. First, § 531.56(e) uses

ambiguous terms, including “occasional[]” and “part of [the]

time,” without defining them. The majority does not provide

any definition of the terms nor does it explain why or how

these terms are unambiguous. Opin. at 33 n.20. The Eighth

Circuit in Fast, by contrast, does explain that the use of the

term “occasionally” is ambiguous because it does not explain

for how much time an employer can assign untipped work,

and still treat that work as “occasional.” 638 F.3d at 879. I

would join the Eighth Circuit’s persuasive holding that the

regulation is ambiguous.
MARSH V. J. ALEXANDER’S 45

Second, § 531.56(e) is ambiguous because it includes two

examples which, at first glance, seem to conflict. While the

regulation explains that a waitress cannot be paid the tipped

minimum wage for more than “part [] time [or] occasional[ ]”

work “cleaning and setting tables, toasting bread, making

coffee and . . . washing dishes or glasses,” the majority reads

the regulation to allow a counterman to be paid the tipped

minimum wage for any amount of time spent on work

“prepar[ing] short orders.” Opin. at 32; 29 C.F.R.

§ 531.56(e). The majority’s reading ignores crucial text in

§ 531.56(e) which does place a temporal limit on a

counterman’s work as a short order cook. For example, the

regulation allows a counterman to be paid the tipped

minimum wage when he “takes a turn as a short order cook

for the group,” which indicates a limit on the amount of time

he can work as a short order cook and still be paid the tipped

minimum wage. 29 C.F.R. § 531.56(e).3In any case, any

confusion regarding how to harmonize the two examples only

3

 The counterman example may be confusing as a result of when the

regulation was promulgated—1967. Fast, 638 F.3d at 878. It may have

been the case that in 1967 customers tipped countermen to cook short

orders in their presence. DOL’s December 2016 Fact Sheet makes clear

that countermen are tipped employees only when they “serve customers.” 

U.S. Department of Labor, Wage and Hour Division Fact Sheet # 15:

Tipped Employees Under the Fair Labor Standards Act (FLSA) (rev. Dec.

2 0 1 6 ) , a v a i l a b l e a t

https://www.dol.gov/whd/regs/compliance/whdfs15.htm. (last visited

August 22, 2017).

The majority’s example of a four counterman group spending 25% of

their time cooking short orders explains precisely why the regulation is

ambiguous and guidance was due. Opin. at 35 n.22. A four counterman

group would cause each counterman to perform more than occasional

untipped work, while a five counterman group would only occasionally,

or 20% of the time, cook orders.
46 MARSH V. J. ALEXANDER’S

demonstrates that the regulation is ambiguous. Because the

regulation is ambiguous, the next step of the Auer analysis is

to determine whether the DOL’s interpretation is “plainly

erroneous or inconsistent.” 519 U.S. at 461.

B.

The DOL’s interpretation is far from “plainly erroneous

or inconsistent” and is instead, consistent with nearly four

decades of interpretive guidance and with the statute and the

regulation itself. Id. The DOL’s guidance at issue, in its

Field Operations Handbook (“FOH”), provides that where

“tipped employees spend a substantial amount of time (i.e., in

excess of 20 percent of the hours worked in the tipped

occupation in the workweek) performing []related [untipped]

duties, no tip credit may be taken for the time spent in those

duties.” FOH § 30d00(f) (2016).

First, § 531.56(e) and the DOL’s interpretive guidance

have consistently limited the amount of time a tipped

employee can perform untipped work and still receive the

tipped minimum wage. We have held that a consistent view

over twenty-five years is a an “extended period of time”

meriting “[s]pecial deference.” Bassiri v. Xerox Corp.,

463 F.3d 927, 933 (9th Cir. 2006) (internal citations and

quotation marks omitted). Section 531.56(e) was

promulgated in 1967, and itself places temporal limits on

untipped work by using the phrases “occasional[],” “part of

[the] time,” and “takes a turn.” Since 1979, the DOL has

issued opinion letters, fact sheets, amicus briefs, and the FOH

which have consistently placed temporal limits on untipped

work. See Brief for the Secretary of Labor as Amicus Curiae

in Support of Plaintiffs-Appellants, Marsh v. J. Alexander’s

LLC, Nos. 15-15791+ (9th Cir. July 13, 2016) (“DOLAmicus
MARSH V. J. ALEXANDER’S 47

Brief”), at 8–10. As the Eighth Circuit explained in Fast, the

FOH drew from prior opinion letters, including the 1980

letter describing a waitress working after hours cleaning, and

the 1985 letter describing a waiter performing preparatory

work for 30% to 40% of her time, when it set a 20% threshold

on the amount of time a tipped employee could perform

untipped work. 638 F.3d at 878. Over thirty-eight years, the

DOL has consistently interpreted § 531.56(e) to involve a

temporal limit, and this interpretation is also consistent with

the regulation itself.4

Second, the 20% threshold is also consistent with other

DOL provisions containing temporal limitations. Congress

and the DOL have defined occasional in many other FLSA

provisions to mean 20%. See 29 U.S.C. § 213(c)(6)(G);

29 C.F.R. § 552.5; 29 C.F.R. § 552.6(b); 29 C.F.R. § 786.150;

4 The majority points to the 1980 Opinion Letter as an example in

which the DOL did not consider the time spent performing those duties. 

I disagree, as the 1980 Letter embraced time limits when it explained that

“routine[]” untipped work would not be permissible. 1980 OpinionLetter.

The majority also suggests that the FOH is inconsistent with

§ 531.56(e) because it treats duties related and unrelated to tipped work

differently. Opin. at 27. But the regulation itself distinguishes between

related and unrelated work, for example in allowing a waitress to be paid

the tipped minimum wage for limited time setting tables and making

coffee, but disallowing a waiter to be paid the tipped minimum wage for

any time spent as a janitor. Moreover, the DOL’s guidance has also

consistently distinguished between related and unrelated duties. See, e.g.,

U.S. Dep’t Labor, Wage & Hour Div., Opinion Letter FLSA-895 (Aug. 8,

1979) (“1979 Opinion Letter”) (disallowing a waitress to be paid the

tipped minimum wage for time spent preparing vegetables for the salad

bar); U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter Fair Labor

Standards Act, WH-502, 1980 WL 141336 (“1980 Opinion Letter”)

(allowing a waiter to be paid the tipped minimum wage for restocking the

waiter station, but not for maintenance work).
48 MARSH V. J. ALEXANDER’S

29 C.F.R. § 786.1; 29 C.F.R. § 786.100; 29 C.F.R. § 786.200. 

The DOL explained in its amicus brief in this case that it

derived the 20% threshold from these provisions. DOL

Amicus Brief, at 19, n.6; see also Fast, 638 F.3d at 881

(deferring to the FOH in part because the 20% threshold drew

from numerous other FLSA provisions). The 20% threshold

is consistent across the FLSA statutory scheme and

implementing regulations.

The majority’s holding that the DOL’s interpretation was

inconsistent errs in several regards. First, I read the majority

to require Marsh to allege a “clear dividing line” between

time spent on tipped and untipped work (for example,

untipped work performed before or after the restaurant is

open to customers) on remand, but this requirement is

inconsistent with § 531.56(e) and the DOL’s interpretive

guidance. Opin. at 39. The 1980 Opinion Letter explains that

“where there is a clear dividing line between the types of

duties performed by a tipped employee, . . . no tip credit may

be taken for the time spent . . . performing maintenance

duties.” 1980 Opinion Letter. In other words, the phrase

“clear dividing line” in the opinion letter referred to a

division between “types of duties” rather than a division on

the basis of hours, and moreover, the letter actually approved

of limited “after-hours” duties related to tipped work. 1980

Letter. And the 1979 Letter upon which the majority relies,

concluded that waitresses must be paid the full minimum

wage because the work performed was similar to a chef’s

work, not because it was performed during a distinct part of

the day. 1979 Letter; Opin. at 39. The majority’s

requirement is therefore misplaced and inconsistent with the

DOL’s guidance.
MARSH V. J. ALEXANDER’S 49

Second, the majority asserts that the FOH is inconsistent

because it requires employers to analyze duties or tasks rather

than jobs or occupations. Opin. at 28. The regulation

provides that “[a]n employee who receives tips . . . is a

‘tipped employee’ . . . when, in the occupation in which he is

engaged, the amounts he receives as tips [exceed the requisite

amount].” 29 C.F.R. § 531.56(a). I agree with the Eighth

Circuit that the phrase “engaged in” requires the DOL to

interpret precisely when an employee is performing tipped

work, including by looking at when the employee performs

untipped duties like those of a janitor. See Fast, 638 F.3d at

879–80. Moreover, § 531.56(e) itself discusses both duties

and occupations. See 29 C.F.R. § 531.56(e) (referring both to

“two occupations” and “related duties in an occupation”).

Third, the majority erroneously asserts that the FOH’s

interpretation is inconsistent with the statute and regulations

because it requires keeping track of the employee’s time,

while Congress intended “to permit the continuance of

existing practices with respect to tips.” Opin. at 31–32; S.

Rep. No 89-1487 (1966) reprinted in 1966 U.S.C.C.A.N.

3002, 3014. To the contrary, the FOH requires employers to

track an employee’s time in a manner that is consistent with

other DOL guidance regarding the tipped minimum wage. 

FOH § 30d00(f) (2016). For example, 29 C.F.R. § 516.28(a)

requires employers to maintain records of each hour an

employee receives tips and each hour she does not. Any FOH

time tracking requirement is consistent with the DOL’s tipped

minimum wage guidance.5

5 The majority asserts that we should look only to the regulation to

determine consistency. Opin. at 37 n23. But the majority contradicts

itself, as it also correctly asserted that we look to prior interpretations and

pronouncements to determine consistency under Auer. Opin. at 18 n.9.
50 MARSH V. J. ALEXANDER’S

C.

Finally, underlying these errors, the majority fails to

apply the narrow-construction principle to the tipped

minimum wage. Opin. at 29–30 n.17. In my view, the tipped

minimum wage is an exemption in the FLSA that should be

construed narrowly against employers. The “FLSA is to be

construed liberally in favor of employees [and] exemptions

are narrowly construed against employers.” Haro v. City of

Los Angeles, 745 F.3d 1249, 1256 (9th Cir. 2014) (citation

omitted). The majority points to two recent Supreme Court

cases which held that the narrow-construction principle did

not apply to two provisions in the FLSA definitions section,

the section which also contains the tipped minimum wage. 

Opin. at 29–30 n.17; See Sandifer v. U.S. Steel Corp., 134 S.

Ct. 870, 879 n.7 (2014) (holding the narrow-construction

principle inapplicable to a definitions provision regarding

doffing clothing because narrowly construed exemptions

“generally reside in § 213, which is entitled ‘Exemptions’ and

classifies certain kinds of workers as uncovered by various

provisions”) (emphasis added); see also id. (Sotomayor, J.,

declining to join footnote 7); SmithKline, 567 U.S. at 164

n.21 (holding the narrow-construction principle inapplicable

to the “sale” definition because it was “a general definition

that applies throughout the FLSA”). The tipped minimum

wage is distinct from these definitional FLSA provisions,

however. Unlike “sale,” the provision at issue in SmithKline,

the tipped minimum wage is not a definition which applies

throughout the FLSA. 567 U.S. at 164 n.21. Likewise, the

tipped minimum wage more closely resembles the

exemptions in § 213 which have “generally” been the subject

of the narrow construction principle. See 29 U.S.C. § 213

(excluding from the minimum wage classes of employees

including executives and professionals, outside salesmen,
MARSH V. J. ALEXANDER’S 51

amusement park employees, fishers, and farmers); Sandifer,

134 S.Ct. at 879 n.7. Further, we have held that the related

tip pool requirements should be narrowly construed, see

Oregon Rest. &Lodging Ass’n v. Perez, 816 F.3d 1080, 1090

(9th Cir. 2016), and, post-Sandifer and SmithKline, that a

provision defining employees “engaged in fire protection”

should be narrowly construed, see Haro, 745 F.3d at 1256. 

I would, accordingly, consider the tipped minimum wage an

exemption, although it arises in the definitions section of

FLSA, and give it a narrow construction.

Relatedly, the majority fails to place the burden on the

employer to show it can use the tip credit. DOL Amicus

Brief, at 25. Congress made clear that it intended for

employers to prove the requirements of the tip credit. S. Rep.

No. 93-690, at 43 (1974) ( “[T]he original intent of Congress

[was] to place on the employer the burden of proving . . . the

amount of tip credit, if any, which such employer is entitled

to claim.”); see Barcellona v. Tiffany English Pub, Inc.,

597 F.2d 464, 467 (5th Cir.1979) (recognizing that employers

bear the burden); see also Perez v. Lorraine Enters., Inc.,

769 F.3d 23, 27 (1st Cir. 2014) (same); Myers v. Copper

Cellar Corp., 192 F.3d 546, 549 n. 4 (6th Cir. 1999) (same). 

The majority’s improper allocation of the burden and failure

to apply the narrow-construction principle underlie and

potentially explain its errors.

III.

Because the DOL’s guidance interpreted an ambiguous

regulation, and did so in a manner that was not “plainly

erroneous or inconsistent,” it is entitled to Auer deference. I

would, accordingly vacate the district court’s orders granting

the motions to dismiss, judgments on the pleading, and the
52 MARSH V. J. ALEXANDER’S

order granting summary judgment, and remand for further

proceedings on the key issue of whether the defendants

violated the FLSA by paying its employees well below

minimum wage for untipped work.