F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

A L E C M A

R S H , Plaintiff-Appellant
,

v

.

J

. A L E X A N D E R ’ S L L C, Defendant-Appellee. No. 15-15791

D.C. No. 2:14-cv-01038-SMM

C R Y S T A L S H E E H

A N , Plaintiff-Appellant
,

v

.

R O M U L U S I N C O R P O R A T E D , DB A I nternational House of Pancakes, Defendant-Appellee. No. 15-15794

D.C. No. 2:14-cv-00464-SMMM A R S H V

. J

. A L E X A N D E R ’ S 2

S I L V I A A L A R C O N , Plaintiff-Appellant
,

v

.

A R R I B A E N T E R

P R I S E S I N C O R P O R A T E D , DB A Arriba Mex ican Grill,

Defendant-Appellee. No. 15-16561

D.C. No. 2:14-cv-00465-SMM

S A R O S H A H O G

A N ; N I C H O L

A S J A C K S O N ; S K

Y L A R V A Z Q U E Z ; T H O M A S A R M S T R O N G ; P H I L I P T O D D ; M A

R I A H U R K M A N S , Plaintiffs-Appellants
,

v

.

A M E R I C A N M U L T I -C I

N E M A , I N C ., DB A 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-SMMM A R S H V

. J

. A L E X A N D E R ’ S 3

N A T H A N L L A N O S , an individual, Plaintiff-Appellant
,

v

.

P.F

. C H A

N G ’ S C H I

N A B I S T R O , I N C ., Defendant-Appellee. No. 16-15003

D.C. No. 2:14-cv-00261-SMM

K R I S T E N R O M E R

O , an individual, Plaintiff-Appellant
,

v

.

P.F

. C H A

N G ’ S C H I

N A B I S T R O , I N C ., Defendant-Appellee. No. 16-15004

D.C. No. 2:14-cv-00262-SMM

A N D R E W F I E L D S , an individual, Plaintiff-Appellant
,

v

.

P.F

. C H A

N G ’ S C H I

N A B I S T R O , I N C ., Defendant-Appellee. No. 16-15005

D.C. No. 2:14-cv-00263-SMMM A R S H V

. J

. A L E X A N D E R ’ S 4

A L T O W I L L I A M S ,

Plaintiff-Appellant
,

v

.

A M E R I C A N B L U E R I B B O N S H O L D I N G S L L C, Defendant-Appellee. No. 16-15118

D.C. No. 2:14-cv-01467-SMM

S T E P H A N I E R. F A

U S N A C H T , Plaintiff-Appellant
,

v

.

L I O N ’ S D E

N M A N A G E M E N T , L L C, DB A Denny ’s,

Defendant-Appellee. No. 16-16033

D.C. No. 2:15-cv-01561-SMM

OPI NI ON

A ppeal from the United States District Court for the District of Ariz o na Stephen M. McNamee, Senior District J udg e, Presiding

Arg ued and Submitted April 20, 2017 San F rancisco, California

F iled September 6, 2017M A R S H V

. J

. A L E X A N D E R ’ S 5

B efore: Richard A. Paez

and Sandra S. I kuta, Circuit J udg es, and David A. F a

ber, * District J u d g e

. Opinion by

J udg e I k uta; Partial Concurrence and Partial Dissent by J udg e Paez

SUMMARY * *

Labor Law

The p a nel vacated the d istr i c t court’s final orders a nd judg ments in favor o f the defendants in actions broug h t under the F a ir L abor Standards A ct by former ser v er s a nd bartenders who alleg ed that their employ e rs improperly claimed their tips as a credit toward the required minim u m wag e.

D isag reeing with the Eig hth Circuit, the panel held that the D epartment o f L abo r ’ s i nterpretation, in its F ield Operations Handbook, of 29 C.F .R. § 531.56(e), a reg ulation addressing application of the F L SA’s tip c r e d i t provision to the situation in which an employ ee works for an employ er in
two different jobs, d id n ot meri t controlling deference because the DOL ’s interpretation was inconsistent with the dual jobs reg ulation a

n d attempte d to c reate de facto a new reg ulation. The panel held that no provision w ith the force o f

* T h e H o n o rab le Dav id A

. Fab er, U n i ted States District J u d g e f o r th e So u th ern District o f

W est Virg in ia, sittin g b y d esig n atio n

.

** T h is su m m ary co n stitu

t es n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.M A R S H V

. J

. A L E X A N D E R ’ S 6

law per m i t t e d the DOL to r equire e mploy ers to eng ag e in time tracking and acc ounting for minutes spent in diverse tasks before claiming

a tip credit.

The p anel held that the plaintiffs could not state a c l a i m by alleg ing that discrete “ related” tasks or duties, w hich were performed intermittently over the c ourse of the day a nd were interming led with their duties directed at g enerating tips, comprised a dual job w hen a g g re g a t e d tog ether over the

course of a workweek. The plaintiffs also could not state a claim by alleg ing the performance of “unrelated” duties that were similarly

dispersed and g enerally

assig ned.

The p a nel vacated the d istrict court’s final orders a nd judg ments and remanded to allow th e plaintiffs an opportunity to propose new a mended complaints in lig ht o f the panel’s opinion.

Concurring and dissenting
, J udg e Paez wrote that he

w o u ld f ollow the Eig hth Circuit and defer to the DOL ’ s interpretation o f the reg ulation, 29 C.F .R. § 531.56(e). J udg e Paez wrote that the DOL ’s g uidance w as entitled to deference because it interpreted the DOL ’s own ambigu o u s reg ulation and w as neither plainly

inconsistent with that reg ulation nor erroneous. J udg e Paez w ould vacate and remand for further proceeding s on whether the defendants v iolated the F L SA b y pay ing t heir employ ees well below minimum wag e for untipped work.

COUNSEL

J aha n C. Sag afi (arg

ued), Outten & Golden L L P, San F rancisco, California; Clifford P. B endau I I
, The B endau L awM A R S H V

. J

. A L E X A N D E R ’ S 7

F irm, Phoenix
, Ariz ona; J amie G. Sy pulski
, L a w O ffice o f J amie G olden Sy

pulski, Chicag o, I llinois; Doug las M. W e r man, W erman Salas P.C., Chicag o, I llinois ; f o r P l a i n tiffsAppellants.

Paul DeCamp (arg

u ed), J ackso n L ewis P.C., Reston, Virg inia; Stephanie M. Cerasano, J a ckson L e wis P.C., Phoenix
, A r iz ona; for Defendant-Appellee P.F

. Chang ’s China B istro.

David A. Selden ( a r gu e d), J ulie A. Pace, and Heidi NunnGilman, The Cavanag h L aw F irm, Phoenix
, Ariz ona, for Defendant-Appellee Romulus, I n c.

Robert W

. Horton and Mary L e ig h Pirtle, B ass B erry & Sims PL C, Nashville, Tennessee; Eric M. F raser, Osborn Maledon P.A., Phoenix
, Ariz o n a ; for Defendant-Appellee J

. Alex a nder’s L L C.

Karen L

. Karr, Clark Hill PL C, Scottsdale, Ariz o n a , for Defendants-Appellees A rriba Enterpri s e s I nc. and L ion’s Den Manag ement L L C.

Tracy A. Miller, Og letree De akins Nash Smoak & Stewart P.C., Phoenix
, Ariz o n a, for Defendant-Appellant American Multi-Cinema I nc.

Caroline L a

rsen and A lex andra J

. G i ll, Og letree Deakins Nash Smoak & Stewart P .C., Phoenix
, Ariz o na, for Defendant-Appellee American B lue Ribbon Holding s L L C.

Sarah K. Marcus (arg

ued), Senior Attorney ; Paul L

. F rieden, Counsel fo r Appellate L itig a tion; J ennifer S. B rand, A ssociate Solicitor; M. Patricia Smith, Solicitor o f L ab o r ;M A R S H V

. J

. A L E X A N D E R ’ S 8

Office of the Solicitor, United State s D e partment of L abor, W a shing ton, D.C., for Amicus Curiae Secretary of L a bor.

OP INION

I KUTA, Circuit J udg e:

The F air L abor Standards Act of 1938 (F L SA) g enerally requires employ ers to pay a cash wag e of $7.25 p er hour to their employ ees. 29 U.S.C. § 206(a)( 1 ) ( c )

. B ut where an “employ ee eng ag e[ s] in an occupation in w h i c h he customarily and r eg ularly receives more than $30 a month in tips,” id. § 203(t), his employ er may pay a reduced cash w ag e

an d c laim the employ ee’s tips as a credit towards the $7.25
per hour minimum, id. § 203(m). T he p l a intiffs in these consolidated appeals are former servers and bart e nders w ho alleg e that their employ e rs improperly claimed this c r e dit, thereby f a i l i n g to pay the required minimum wag e. I n support of their theory of the c ase, the employ ee s r e l y o n a reg ulation, 29 C.F .R. § 5 31.56(e), as most recently interpr eted by the De p a r t m ent o f L abor (DOL ). 1 See D epartment o f L abor W ag e and Hour Division, F ield Operations Handbook § 30d00(f) (2016). The district court he l d that the DOL ’s interpretation of the reg ulation is not entitled to deference a nd concluded that the employ ees f ai l ed to state claims for minimum wag e violations. W e larg e ly ag ree with the district court’s analy sis of the deference question, but we v acate a nd remand to allow the p l a i n tiffs an opportunity to propose amended pleading s in lig ht of our holding

.

1 W e u se “ DOL ” to ref

er b o th to th e D ep artm en t g en erally an d to th e Secretary o f

L ab o r sp ecif

ically

.M A R S H V

. J

. A L E X A N D E R ’ S 9

I

F rom November 2012 throug h April 2013, Alec Marsh worked as a server for J

. Alex ander’s, a restaurant in Phoenix
, Ariz ona. 2 I n May 2014, he filed a o ne-count compla i n t

a l l e g ing that J

. Alex ander’s violated the F L SA’s minimum
wag e provision b y failing t o p ay him a n appropriate wag e

. See 29 U.S.C. § 206(a)(1)(c).

To u n d erstand Marsh’s leg al theory
, one must first understand the F L SA’s scheme for g uaranteeing a minimum
wag e to employ ees, like Marsh, who routinely earn tips.

2 B ecau se th e sp ecif

ic circu m stan ces o f th e p lain tif f s ’ w o rk w eek s are

m aterially id en tical, w e reco u n t in d e t a i l o n ly th e f acts p ertain in g to th e p lain tif f in th e lead case, A lec Marsh
, an d w e r e fer to th e plain tif f s

co llectiv ely as “ Marsh .” T h e ad d itio n al p l ain t if f s are Cry stal Sh eeh an (No

. 1 5

- 1 5 7 9 4); Silv ia A l arco n (No

. 1 5

- 1 6 5 6 1 ); S aro sh a Ho g an , N ich olas J ack so n , Sk

y lar Va z q u ez, T h o m as A rm stro n g , P h ilip T o d d
, an d Maria Hu rk m an s (No

. 1 5

- 1 6 6 5 9 ); Nath an L l a n o s ( N o

. 1 6

- 5 0 0 3 ) ; Kristen Ro m ero (No

. 1 6

- 1 5 00 4 ); A

n d rew Field s (No

. 1 6

- 1 5 0 0 5 ); A lto W illiam s (No

. 16

- 1 5 1 1 8 ); an d Step h an ie Fau sn ach t (No

. 1 6 -1 6 0 3 3 ). W e ref er to th e d ef en d an t s c o llectiv ely as “ J

. A lex an d er’ s.” T h e ad d i tio n al d ef en d an t estab lish m en ts are In tern atio n al Ho u se o f P an cak es (No

. 1 5

- 15 7 9 4 ); A rrib a Mex ican Grill (No

. 1 5

- 1 6 5 6 1 ); A MC T h eatres Esp lan ad e 1 4 (No

. 1 5

- 1 6 65 9 ); P .F. Ch an g ’ s Ch in a B istro (No s. 1 6

- 1 5 0 0 3 /0 4 /0 5 ); A m erican B lu e Rib b o n Ho ld in g s L L C ( N o

. 1 6

- 1 5 1 1 8 ); an d Den n y ’ s (No

. 16

- 1 6 0 3 3 ).

Si x o f th ese ap p eals arise f ro m o rd ers g ran tin g m o tio n s to d ism iss,
tw o ap p eals are f

ro m j u d g m en ts on th e p lead i n g s, an d th e f i n al ap p eal

co m es f ro m an o rd er g ran tin g su

m m ary j u d g m en t. Fo r th e co m p lain ts th at th e d istrict co u rt d ism issed p u rsu an t to Ru le 12 (b )(6 ) o r a s to w h ich th e d istrict co u

rt g ran ted j u d g m en t on th e p lead in g s u n d er Ru le 1 2 (c) o f th e Fed eral Ru les of Civ il P ro ced u re, w e assu m e th e tru th o f “ w ell- p lead ed
, n o n co n clu s o ry f

actu al alleg atio n [s].” Ash cro ft v. Iq b a l
, 5 5 6 U.S. 6 6 2
, 6 8 0 (2 0 0 9). Fo r th e ap p eal f

ro m su m m ary j u d g m en t, w e v iew th e f acts in th e lig h t m o st f

av o rab le to th e n o n

- m ov in g p arty , w h ich h ere is th e p lain t if

f

. No la n v. Hea ld

Co ll ., 5 5 1 F.3 d 1 1 4 8 , 1 1 5 4 (9 th Cir. 2 0 0 9 ).M A R S H V

. J

. A L E X A N D E R ’ S 10

Althoug h all employ ers must pay their e mploy e es a minimum
wag e of at least $7.25 per hour, id
., the F L S A c re a tes a special rule f

or how an employ er can compensate a “[ t] ipped employ e e,” which is defined as “any employ ee eng ag ed in an occupation in which h e c u s t o m arily and reg ularly receives more than $30 a month in tips,” id. § 203(t). The applicable statute provides:

I n d eterm i n i n g the wag e an employ er is required to pay a tipped employ ee, the amount pai d s uch employ ee by the employ ee’s employ er shall be an amount equal to–

(1) the cash w a g e paid such employ ee which for purposes of such determination shall be n ot less than the cash wag e required to be p aid such an e mploy e e on Aug ust 20, 1996; and

(2) an additional a mount on account of the tips r e c e i ved by such employ ee which
amount is equal to the difference b etween the wag e specified in pa r a g raph (1) a nd the wag e in effect under section 206(a)(1) of this title.

The additional a mount on a ccount of tips may not ex ceed the value of the ti p s actually received by

an employ ee.M A R S H V

. J

. A L E X A N D E R ’ S 11

Id

. § 203(m). 3 The practical effect of this provision is that an employ e r must pay a tipped employ ee a cash wag e of $2.13, and can make up the difference between $2.13 and the federal minimum wag e by taking a credit for the employ ee’s tips (known as a “tip credit” ). 4 Cumbie v. W oody W oo, Inc.
, 596 F .3d 577, 580 (9th Cir. 2010). I f the $2.13 c as h w ag e plus the tips th e employ ee actually received are insufficient
to meet the $ 7.25 per hour minimum wag e, then the employ er must increase the cash wag e to meet the minimum w ag e requirement. Id. As a result, t i p ped employ ees alway s earn at least the federal minimum wag e.

The F L SA’s t i p credit provision, 29 U.S.C. § 203(m), is
not the only pertinent part o f this reg u latory r eg ime. Throug h
reg ulations interpreting § 203(t), the DOL has addressed the application of the tip credit provision to the situation in which

an employ ee w orks for a n employ er i n t wo d ifferent jobs. This “dual jobs” reg

ulation provides:

Dual jobs. I n some situations an employ ee is employ ed in a dual job, as for ex ample, where

a maintenance man in a hotel also serves as a

3 A d ditio n al lan g u ag e in § 2 03 (m ) t h at is n o t relev an t h ere (1 ) p erm its

em p l o y ers to in clu de as w ag es certain co s ts f o r f acilities f u rn ish ed to

em p l o y ees i n so m e circu m s tan ces an d (2 ) im p o s es certain o b l ig atio n s on

em p l o y ers claim in g th e t i p c r e d i t. S ee Cu mb ie v. W

o o d y W o o , In c. , 5 9 6 F.3 d 5 7 7 , 5 80 & n .8 (9 th Cir. 2 01 0 ).

4 A t all relev an t t im es, A rizo n a’ s m in im u m w a g e law w as m ore strin g en t th an th e FL SA an d set th e m ax im u m tip cred it th at an em

p lo y er

co u ld claim at $ 3 .0 0
, w

h ich is less th an th e $ 5

. 1 2 allo w ed u n d er f ed eral law

. See A riz. R ev

. Stat. § 2 3

- 3 6 3 (C) (as ad d ed b y P ro p o sitio n 2 0 2 in 2 0 0 6 ). T h is d i stin c t i o n b etw een state an d f ed eral law is im

m aterial f or p u rp o s es o f

th ese cases.M A R S H V

. J

. A L E X A N D E R ’ S 12

waiter. I n such a situation the e mploy ee, if he customarily and reg ularly receives at least $30

a m o n t h in tips for his work as a waiter, is a tipped employ ee only w i t h respect to his
emp l oy ment as a waiter. He is employ ed in
t w o occupations, a

nd no tip credit can be taken f o r his h ours of employ ment in his

occup a t ion of maintenance man. Such a situation is disting uishable from that of a waitress who spends part of her time cleaning and setting tables, t oasting b read, making coffee and o c c asionally washing dis h es o r g lasses. I t is l ikewise disting uishable f rom the counterm a n who also prepares his own short orders or who
, a s part of a g roup o f countermen, takes a turn as a short order c ook f o r the g roup. Such r e lated duties i n a n occupation that is a tipped occu p a tion need
not by themselves be di r e cted toward producing tips.

29 C.F .R. § 531.56(e).

The dual jobs reg u lation is also not the reg ime’s end; the DOL has p romulg ated internal ag ency g uidance that places a specific interpretive g loss on the reg ulation. The DOL ’s most recent interpretation, which the DOL made public in 2016, is
set out in i t s W ag e and Hour D ivision’s F ield Operations Handbook (F O H). The F OH states:

(1) W h en an individual is employ ed in a t i p p e d o c c u p a t i o n a n d a n o n

- t i p p e d occupation, for ex ample, a s a server a nd janitor (dual jobs), the tip cre d i t is availableM A R S H V

. J

. A L E X A N D E R ’ S 13

only for the hours spent in the tipped

o c c u p a t i o n , p r o v i d e d s u c h e m p l o ye e customarily

and r eg u larly r eceives more than $30.00 a m o n th in tips. See 29 CF R 531.56(e).

(2) 29 CF R 531.56(e) permits the employ er to take a tip credit f

or time spent in duties r elated
to the tipped o ccupation of an e mploy ee, even thoug h such duties are not b y th em s e lves directed toward producing tips, provided such related duties a

r e incidental to the reg ular duties of the tipped employ ee and a re g enerally assig ned to the tipped employ ee. F or ex ample
, duties related to the tipped

oc cu p a tion may include a server who does
p r e p a r atory or closing a c tivities, ro l l s silverware a

nd fills salt and pepper sha k e rs while the restaurant is open, cl e a ns and sets tables, makes coffee, and occasionally washes dishes or g lasses.

(3) Howev e r , w here the facts indicate that tipped employ ees spend a substantial amount of t i m e ( i.e. , in ex cess o f 20 percent of the hours worked in the tipped occupatio n in the workweek) performing such related duties, no tip credit may be taken for the t i m e spent in
t h o s e duties. All related duties count towar d the 20 percent tolerance.

(4) L ikewise, an employ er may n o t t ake a tip credit for the time that a tipp e d e m ploy ee spends on work that is n o t r e lated to theM A R S H V

. J

. A L E X A N D E R ’ S 14

tipped occupation. F or ex ample, maintenance work ( e.g. , cleaning bathrooms a nd w a s hing

w i n dows) are not related to the tippe d occupation of a server; such jobs are nontipped occupations. I n this case, the employ ee is effectively

employ ed in dual jobs.

F OH § 30d00(f) (2016). 5

Marsh al leg es that a s a J

. Alex ander’s employ ee, he “customarily and reg ularly ” received more than $ 3 0 a month in tips. 6 As part of his job as a server, Marsh h ad a rang e o f duties in addition to serving c u stomers. F or instance, Marsh brewed tea during every opening shift and as needed, which took ab o u t ten minutes to complete each time, for a total o f forty minutes over the course o f any g iven workweek. He also brewed coffee for each customer who ordered it, which took about five minutes to complete each time, and added up to approx imately eig hty minutes of any g iven w o rk we ek. M a r s h also cut, arrang ed, and stocked lemons a nd limes during e very opening shift and through o u t his shifts, e ach session taking approx imately five minutes, for a total o f forty minutes in any g iven w o r kweek. Marsh c leaned the soft

5 A cco rd in g to DOL ’ s am icu s b rief in th is case, th e FOH § 3 0 d0 0 (f ) is its cu rren t o f

f icial in terp retatio n o f t

h e d u al j o b s re g u latio n

. T h is g u id an ce is cu rren tly av ailab l e in Ch ap ter 3 0 o f t h e F OH p o sted o n th e DOL ’ s w eb site, w

w w .d o l.g o v /w

h d /f o h /f o h

_ ch 3 0 .p d f

. Marsh ’ s co m

p lain t relies o n an in t erp retatio n o f th e d u al j o b s reg u latio n th at is co n s isten t w i th DOL ’ s cu rren t i n terp retatio n

. T h eref ore, w e r e fe r t o FOH § 3 0 d0 0 (f )

w h en an aly zin g th e m erits o f

Marsh ’ s claim

.

6 We rely o n Marsh ’ s p ro f f ered am en d m en ts an d p ro p o sed am en ded

co m plain t as th e so u rce o f th e f acts recited h ere b ecau se th ese alleg atio n s p ro v id e m ore d etail.M A R S H V

. J

. A L E X A N D E R ’ S 15

drink dispensers and their noz z les, r eplaced soft drink sy rups, and stocked ice. E ach task took about five minutes to complete, and ove r t h e c ourse of a workweek these tasks

r e s p ec t i v e l y t o o k t wenty , ten, and forty mi n u t e s

. J

. A lex ander’s also assign ed Marsh cleaning duties, such a s wiping tables (five to twenty minutes each time, for a total o f

one hour a

nd forty minutes over the course of a week), taking
out trash (ten minutes each time, for a total o f twenty minutes

over the course o f a week), scrubbing walls when the
restaurant was slow ( one hour over the course of the week), sweeping floors (about ten minutes each time, f or a total o f f o r t y minutes over the course of a week), and cleani n g restrooms ( ten minutes each time, f or a total of thirty minutes over the course of a week). 7

J . Alex ander’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 g e nerating tips. Be c a u se these “related duties” took up more than 20 p e rcent o f Marsh’s working hours, Marsh’s first complaint relied on the DOL ’s interpretation of the dual jobs reg u lation, 29 C.F .R. § 531.56(e), to alleg e that J

. A l e x a n d er’s improperly took a tip c redit for the time Marsh s p e n t on the “related duties” described in his complaint.

7 A lth o u g h M arsh alleg es i n h is p ro p o sed am en d ed co m p lain t th at so m e of th ese d u

ties w e r e p erf

o rm ed bef

ore an d af

ter h is sh if

ts,

an d th eref

o re n o t related to cu sto m er in teractio n , Marsh co n ced ed at

o ral arg u m en t th at all o f h is d u ties w ere in term in g led t h ro u g h o u t th e tim e h e sp en t w o rk i n g

. S

ee Oral A rg u m en t a t 4 0 :4 5

– 4 2 :0 6
, M a rsh v. J. Alexa n d

er’s
, — F.3 d — (9 t

h Cir. 20 1 7 ) (No

. 1 5

- 1 5 7 9 1 +),

a v a i l a b l e a t h t t p : / / w

w w

. c a 9

. u s c o u r t s

. g o v / m e d i a / v i e w_ v i d e o

. p h p ? p k

_ v id =0 00 0 0 11 4 1 3

.M A R S H V

. J

. A L E X A N D E R ’ S 16

Marsh’s complaint was one o f several filed in the district
court alleg ing the same theory of F L SA liability
, so the cases

were consolidated before a sing le judg e. A f ew months a fter consolidation, Marsh m o v ed for leave to file a proposed amended c omplaint alleg ing in a se c o nd count that the cleaning duties descri b e d i n his complaint were “unrelated”
to his o ccupation a n d t h at J

. A lex ander’s was categ orically
not allow e d t o take a tip credit for any o f the time spent on those duties. Therefore, consistent with the F OH § 30d00(f), Marsh alleg ed that he should have been paid a cash wag e o f $7.25 per h our for his time spent on the related and unrelated duties that were not directed towards g enerating tip s

. B ecause J

. Alex ander’s had p aid M arsh a cash wag e o f less than $7.25 p er hour for the time spent on those duties, Marsh
arg ued that h e was entitled to compensation for the difference between the full minimum w a ge a n d the cash wag e he was paid for the time spent on tasks that did not g enerate tips.

J

. Alex ander’s opposed Marsh’s motion to amend the complaint and moved to d ismiss the orig inal complaint. The district c ourt ruled on the motions i n M a r c h 2015 and made
two k ey holding s. Most important, the district court held that Marsh’s complaint did not alleg e that he w a s w o r king d ual jobs, as defined in the dual jobs r egulation. I t rejected Marsh’s r eliance o n the DOL ’s interpretation of the
reg ulation because the reg ulation w as unambig uous, and the DOL ’s interpretation s of the reg ulation did not merit deference. Alternatively
, the district court also held that “ no minimum wag e violation occurs so long a s the employ er’s total wag e paid to an employ ee i n any g iven workweek divided b y the total hours w o r k ed in the workweek equal o r

ex c e eds the minimum wag e rate. ” B ecause the complaint failed to alleg e that Marsh’s averag e hourly wag e (including tips) across any g iven workwee k w a s below the federalM A R S H V

. J

. A L E X A N D E R ’ S 17

minimum wag e, Marsh failed to state a cla i m

. Given this reasoning
, the district c ourt g ranted J

. A lex ander’s motion to dismiss and d enied as futile Marsh’s motion for leave to amend.

This timely appeal followed. 8 W e h ave jurisdiction under 28 U.S.C. § 1291. W e r eview each final order in these appeals and the questions of statutory and reg ulatory interpretation de novo. See Ch ristopher v. S mithKline Beecham Corp

. , 6 35 F .3d 383, 389 ( 9th Cir. 2011), aff’d
, 567 U.S. 142 (2012); Nolan v. H e ald Coll.
, 551 F .3d 1148, 1153 (9th Cir. 2 009) (summary ju dg ment); Honey v

. Distelrath
, 195 F .3d 531, 533 (9th Cir. 1999) ( j u dg ment on t h e pleading s); Allwaste, Inc. v. Hecht
, 65 F .3d 1 5 23, 15 2 7 (9th Cir. 1995) (motion to dismiss).

I I

To resolve t his appeal, we must d etermine whether we

owe deference to the DOL ’s interpretat i o n of the dual jobs
reg ulation, 29 C.F .R. § 531.56(e), and whether that reg ulation supports Marsh’s theory

of J . Alex ander’s liability

.

A

W e first consider o ur framework for e x amining ag ency interpretations of statutes and reg ulations. I f a statute is clear, then we “g ive effect to the un a m b ig uously ex pressed intent of Cong re ss.” Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 842–43 (1984). B ut if a statute is silent or ambig uous as to the question at issue, the ag ency

8 T h e o th er cases in th i s c o ns o lid ated ap p eal f o llo w ed sim i lar p ath s to th is co u rt.M A R S H V

. J

. A L E X A N D E R ’ S 18

charg ed with administering th e s t atute may resolve the ambig uity or fill the statutory g ap throug h r eg ulations, “which are entitled to deference if they resolve the ambig uity i n a reasonable manner.” Coeur Alaska, Inc. v. Se. Al a s k a Conservation Council , 557 U.S. 261, 277–78 (2009).

I f the reg ulation itself is ambig uous, we consider the
ag ency ’s interpretation o f the reg ulation, even if the “interpretation comes to us in the form of a leg a l brief.” Auer

v. Robbins
, 519 U.S. 452, 4 62 (1997); see also Chase Bank US A

, N

. A

. v. McCoy
, 562 U.S. 1 95, 2 08 (2011). W h ile we g enerally d efer to a

n ag ency ’s i n t erpretations o f its o wn ambig uous re gu l a t i o ns, we do not do so when the interpretation is “plainly e r r o n eous or inconsistent with the
reg ulation,” Auer , 519 U.S. at 461 (internal quotation marks omitted), or w hen such deference would impermissibly “permit the ag ency , under the g uise o f i n t erpreting a reg ulation, to create de facto a new reg ulation,” Christensen

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

. 9 F urther, we must alway s e nsure that the interpretation is not inconsistent with a cong ressional directive; “[ a] court need not accept an ag ency ’s inter

p r e tation of its o wn reg ulations if that

9 T h e d issen t errs in statin g th at w e m ay “ d eclin e to ap p ly Au er d ef eren ce o n ly w

h ere t h e ag en cy ’ s in terp retatio n is ‘ p lain ly erro n eo u s or in co n sisten t ’ w ith th e reg u latio n .” D issen t at 4 2 (em p h asis in o rig in al). W e m ay also w ith h o ld Au er d ef eren ce w h en an ag en cy ’ s in t erp retatio n is in co n sisten t w ith its p rio r p ro n o u n cem en ts or resu lts in an u n f air su rp rise
to reg u lated p arties. S

ee Ch risto

p h er v. S

mith Klin e Beech a m Co rp

. , 5 6 7 U.S. 14 2
, 1 5 5

– 5 6 (2 0 12 ). T h e d istrict co u rt h eld th at n o d ef eren ce

w as o w ed t o th e DOL b ecau se o f its in co n sisten t in terp retatio n of th e d u al j o b s reg u latio n o v er tim e, an d J

. A lex an d er’s c o n t en d s th at w e m ay

w ith h o ld d ef

eren ce f ro m th e D OL ’s in terp retatio n d u e to bo th in co n sisten cy an d u n f

ai r s u r p r ise. B ecau se w e reso lv e th e d ef eren ce q u estio n o n d i f f eren t g ro u n d s, w e d o n ot reach th ese arg u m en ts.M A R S H V

. J

. A L E X A N D E R ’ S 19

interpretation is

. . . inconsistent with the statute under which the reg ulations were promulg ated.” M i n es v. Sullivan
, 981 F .2d 1068, 1070 (9th Cir. 1992) ( c iting U nited States v

. Larionoff
, 431 U.S. 8 64
, 8 72–73 (1977)); see a lso Cumbie
, 596 F .3d at 582 & n .13 ( declining to g ive Auer deference to

a DOL reg ulatory interpretation that was inconsistent with the F L SA and the reg

u lation’s tex t).

“[ W ] h e n A uer deference is not warranted, an ag e ncy ’s interpretation of an ambig uous reg u lation should be eval u a t e d under the principle laid down i n S ki d more v. Swift & Co.
, 323 U .S

. 134 (1944).” Indep. Training & Apprenticeship Program v. Cal. Dep’t of I ndus. R e lations
, 730 F .3d 1024, 1035 (9th Cir. 2013). U nder this s t an d a rd, we accord the
ag ency ’s interpretation “a measure of deference p r o portional
to the thoroug hness evident i n i ts consideration, the validity of its reasoning
, its consistency w ith earlier a nd later pronouncements, and all those factors which g ive it power to persuade.” Id. at 1036 (quoting Christ o p h e r v. S mithKline Beecham Corp
., 567 U.S. 142, 159 (2012) (internal quotation marks omitted)).

B

W e now turn to th e question w hether the DOL ’s interpretation of the dual jobs r eg ulation is consistent with the
reg ulation and statute. To answer this question, we consider the statute, the reg ulation, and the DOL ’s interpret a t i o ns in their historical contex ts.

As orig inally enacted in 1938, the F L SA did n ot ex pressly

a d d ress the effect o f a

n employ ee’s tips on the amo u n t o f

wa ges paid by the employ er. I n 1966, however, Cong ress amended the FL S A t o ex tend its coverag e to workersM A R S H V

. J

. A L E X A N D E R ’ S 20

employ e d in the hotel and restaurant industries. O r. Rest. & Lodging Ass’n v. Perez
, 816 F .3d 1080, 1083 (9th Cir. 2016). B ecause the 1966 amendments broug ht many tr a d i t ionally tipped employ ees withi n t h e F L SA’s protection, Cong ress

was c areful to desig n the a mendments “ to p erm i t the continuance of ex isting p ractices with respect to ti p s

. ” S. Rep. No. 89-1487 (1966), as reprinted in 1966 U.S.C.C.A.N. 3002, 30 1 4. Among other c hang es, the 1966 amendments added § 203(m) and § 203(t), which respectively allowed an employ e r to take a credit ag ainst the m i n i mum wag e for employ e es who wer e already compensated by tips a nd provided a d efinition of “tipped employ e e” as meaning “any employ e e eng ag ed in a

n o ccupation in which he customarily and reg u larly receives” the r equisite amount o f t i p s

. 1 0 See F air L abor Standards Amendments of 1966, Pub. L . No. 89- 601, § 101, 80 Stat. 830, 830.

The 1966 amendments als o authoriz ed the DOL “to promulg a te n ecessary rules, reg ulations, or orders with reg ard
to the a me n d m en t s m a de.” Id

. § 6 02, 80 Stat. at 844. Pursuant to this g rant of a u thority
, the DOL promulg ated
reg ulations in 1967 in order to c l a r i f y the F L SA’s tip credit provisions, 29 U.S.C. §§ 2 03(m) and ( t ). See 32 F ed. Reg

.

10 T h e v ersio n o f § 2 0 3(t) en acted in 1 9 6 6 r e m ain s in ef f ect to d ay

. A lth o u g h Co n g ress am en ded § 2 0 3 (m ) in to its cu rren t f orm in 1 9 74
, see Or. Rest. & Lo dg in g Ass’n
, 8 1 6 F.3 d at 10 8 4
, th e ch an g e to th at p ro v isio n is im m aterial f o r p u rp o ses o f th i s case. T h e di s s e n t s tates th at th e 1 9 7 4

am en d m en ts req u ire th e em p lo y e r to p ro v e “ th e am o u n t o f tip cred it, if

an y ,” an d f

au lts th e m aj o rity f

o r n o t placin g “ t

h e b u rd en o n th e em

p lo y er to sh o w it can u se th e tip cred it.” Di s s e n t a t 5 1. B u t w e are n o t called

u p o n to co n s id er w

h ich p arty b ears t he b u r d en o f p ro v in g th e co rrect

am o u n t o f tip cred it; rath er, w e ad d ress th e q u estio n w h eth er th e D OL ’ s in terp retatio n o f th e d ef

in ed term “ tip p ed em

p lo y ee” i n § 2 0 3 (t) m erits d ef eren ce, w h ich is a q u estio n o f law f or th e co u rts.M A R S H V

. J

. A L E X A N D E R ’ S 21

1 3 ,575–13,581 (Sept. 2 8, 1967). These reg ulations includ e the DOL ’s sy stematic ex planation of each of the key words and phrases in the definition o f “tipped employ ee” codified at § 203(t).

As part of the DOL ’s clarification of the statutory phrase “mo r e t h an $30 a month in tips,” the D OL promulg ated the “dual jobs” reg ulation, whi c h r emains in effect today a nd contempla t e s that an employ e e can be “ employ ed in a d ual job,” i.e., two different jobs. 1 1 2 9 C. F .R. § 5 31.56(e). This
reg ulation provides that if the employ ee is eng ag ed in o ne occupation in which “he customarily and reg ula r l y receives
at least $30 a month in tips,” and is also eng ag ed in a second occupatio n i n which the employ ee does not receive the required amount of tips, then the em ploy er c an take a tip credit o nly for the first occupation. Id. T he reg ulation g ives

one ex ample of a situation where an employ ee is employ ed in

a dual job: “where a maintenance man in a h otel a lso serves

as a waiter.” Id

. I t also g ives two ex a mples o f situations where an employ ee is not employ e d in dual jobs: (1) “a waitress who spends p art of h er time cle a n i n g and setting tables, toasti n g bread, making coffee and o ccasionally

11 T h e DOL ’ s p ro ced u re f o r p ro m u lg atin g th e d u al j o b s reg u latio n is
q u estio n ab le in at least o n e resp ect: T h e DOL ad d ed th e reg u latio n af ter t h e n o tice an d co m

m en t p erio d an d w i th o u t reaso n ed ex p lan atio n o r f o rew arn i n g

. S

ee 3 2 Fed

. Reg

. 1 3 ,5 75 (Sep t. 2 8
, 1 9 6 7 ). J

. Al ex an d er’ s arg u es t h at th is pro ced u ral d ef

ect ren d ers th e reg u latio n u n w o rth y of d ef eren ce b ecau se “ w

h ere a p ro p er ch allen g e is raised to t h e ag en cy p ro ced u res, an d th o se p ro ced u res are d ef ectiv e, a co u rt sh o u ld n o t acco rd Ch evro n d ef

eren ce t o th e ag en cy in terp retatio n .” En cin o Mo to rca r s, LLC

v. Na va rro , 1 36 S. Ct. 2 11 7
, 2 1 2 5 (2 0 1 6 ). B ecau se th is o b j ectio n co m es

w e l l a f ter th e statu t e of lim itatio n s p erio d f o r p ro ced u ral ch allen g es to ag en cy actio n s , w e d eclin e to reach th e i ssu e. S ee Perez-Gu zma n v. Lyn ch , 8 3 5 F.3 d 1 0 6 6 , 1 0 7 7– 7 9 (9 th Cir. 2 0 16 ).M A R S H V

. J

. A L E X A N D E R ’ S 22

washing dishes or g lasses”; and (2) a “counterman who also
prepares h is own short orders or w h o , as part o f a g roup o f countermen, takes a turn as a short order cook for the g roup.” Id

.

F ollowing the promulg ation of th e d ual jobs reg ulation, employ e rs requested g

u idance from the DOL

reg arding how
to determine whether emp l o y e e s a re eng a g ed in a sing le occupation in w hich they rec e i v e m o r e than $30 a month in tips, or instead have two occupations. This was a sig nificant

concern to e mploy ers, b ecause if they violated the minimum
wag e rule they could be liable not only for “unpaid minimum
wag es,” but also for “an additional equal amount as liquidated damag es.” 29 U.S.C. § 216(b).

The DOL first attempted to provide a workable standard in a series of opinion letters issued between 19 7 9 a nd 1985 (hereinaft e r , “ Opinion L etters”). I n its first letter on this issue, the DOL responded to the q uestion whether employ ees who had b een hired a s waitresses, but w ere also required to “report to work two h ours b efore the d oors are opened to the public to prepare veg etables f or the salad bar,” were eng ag ed in two different occupations. U .S. De p ’t o f L abor, W ag e & Hour Div., Opinion L etter F L SA-895 (Aug

. 8, 1 979) (hereinafter, “1979 L etter”). I nterpreting the dual jobs
reg ulation, the DOL c oncluded that the “salad preparation activities are essentially the activities performed b y chefs,” and therefore the employ er had e f f e c t ively employ e d the workers in t w o o c cupations, one a s waitresses and the other

as chefs. Id

. A ccording ly
, the DOL concl u d e d t hat the employ e es were not “tipped employ ees” when eng ag ed in the chef job, a

nd “no tip credit may be taken for the time spent in preparing veg etables for the salad bar.” I d

.M A R S H V

. J

. A L E X A N D E R ’ S 23

The DOL addressed a similar question in an opinion letter issued the fo l l o w i n g y ear. U.S. Dep’t of L abor, W ag e & Hour Div., Opinion L etter W H- 5 02 (Mar. 28, 1980), available at 1980 W L 14 1336 (hereinafter, “1980 L etter”). I n that letter, the DOL answered the question whether employ e es h ired as waiters and waitresses, but who w ere also required to “clean the salad b ar, place the condiment crocks in the cooler, clean and stock the wai t r e s s station, clean a nd
reset the tables

. . . a

n d vacuum the dining room carpet, a fter the restaurant is closed,” were eng ag ed in two different occupations. Id. The DOL concluded that these employ ees

were eng ag ed in a sing le tipped occupation because the afterhours duties were “a s s ig ned g enerally to the waitress/waiter staff” and there was no “clear dividing line between the ty pes of duties performed by a tipped em p l oy ee, such a s b etween maintenance duties and waitress duties.” Id

. Therefore, it did
not matter that some of the emplo y ees’ duties w ere not “directed toward producing tips.” I d. T h e D O L analog iz ed the situation presented to that describ e d i n the d ual jobs
reg ulation, id
., which ex plains that “a waitress who spends part of her time cleaning and setting ta b les, toasting bread, making coffee and occasionally washing dishes or g lasses” is
not emp l o y e d in two occupations, 29 C.F .R. § 531.56(e). Nevertheless, the DOL cauti o n e d that a different rule mig ht apply where “specific employ ees [ a r e] routinely assig ned, for

ex a mple, maintenance-ty

pe work such as floor vacuuming

. ” 1980 L etter.

I n 1985, the DOL a ddressed the situation to which it h ad alluded in the 1 980 L etter. A restaurant employ e r asked whe t h e r an employ ee who was hired as a waiter but was assig ned t o a r r i ve at the restaurant at least two hours before opening to p erform g eneral preparatory duties was employ ed in two different occupat i o n s

. U .S. Dep’t of L abor, W ag e &M A R S H V

. J

. A L E X A N D E R ’ S 24

Hour Div., Opinion L etter F L SA-854 (Dec. 20, 1 9 8 5 ), available at

1985 W L 1259240 (hereinafter, “1985 L etter”). The DOL conclude d that the g eneral preparatory duties

co n stituted a separate occupation, and “ no tip credit may be taken for the hours spent by an assig ned waiter o r waitress in opening responsibilities.” I d. I n reaching this conclusion, the DOL cited a s material that ( 1) “only one waiter or waitress is assig ned to perform all preparatory activities,” ( 2) these responsibilities “ex tend to the entire restaurant rather than to the specific area or customers w hich they serve,” and (3) “the activit i e s p e rformed prior to the opening of the restaurant

consume a substantial portion of the waiter or waitress’[ s] workday .” Id.

W h ile the Opinion L etters provided case-by -case g uidance as to when an employ ee is eng ag ed in two separate occupations, some g eneral p rinciples can be derived from this
g uidance. Specifically
, the DOL deemed an employ e e to be
eng ag ed in two different occupations when there was a “ clear dividing line” between two different ty pes of duties, such a s when one set of duties was performed in a distinct part of the workday

. See 1980 L etter (articu l a t ing the “clear dividing line” standard); see also 1979 L etter (con c l u d ing that an

e m p l oy ee has dual jobs where the duties unrelated to t i p ge n e ration were temporally separated from tip-g e nerating duties). I n a ddition, the DOL c onsi dered whether an employ e r assig n ed a set of distinct duties to a s i ng le employ e e a n d whether these duties occupied a sig nificantM A R S H V

. J

. A L E X A N D E R ’ S 25

p o r t i on of the employ ee’s time. 1 2 See 1985 L e tter; 198 0 L etter.

I n 1988, the DOL g ave its field officers r evised g uidance for determining when an employ ee was e ng ag ed i n two different occupations. T h i s g uidance, which the DOL for m a l i z e d in its F OH, introduced the concept that where “tippe d employ ees spend a substantial amount o f time ( in

ex c e s s o f 20 percent) performing preparation work o r maintenance, no tip credit may be taken for the time spent in such duties.” F OH § 30d00(e) (1988 )

. 1 3 This was a sig nificant departure f

rom the earlier g uidance; instead o f determining w h e t h er an e mploy ee was eng ag ed in two jobs by looking for a “ clear dividing line,” as it did in the Opinion L etters, the D OL ’s 1988 g ui d a n ce required an employ er to sort the e mplo y e e s ’ tasks into two different categ ories ( tipg enerating tasks and r elated but not tip-g e nerating tasks), determine w hether the related tasks take up m o r e than

12 A s th e Op in io n L etters d em o n strate, t h e d issen t errs in statin g th at th e DOL h as “ co n sisten tly lim ited th e am o u n t o f tim e a tip p ed em p lo y ee

can p erf o rm u n tip p ed w o rk an d still receiv e th e tip p ed m in im u m w ag e.” Dissen t at 4 6

. T h e Op in io n Le t t e r s pro p erly f o cu s o n th e reg u lato ry q u estio n w

h eth er th e em

plo y ee is em

p lo y ed in d u al j o b s; th e am o u n t of tim e s p en t in a p articu lar task is o n ly o n e f acto r (if co n sid ered at all) in

m ak in g th at d eterm in atio n

. In t h e 1 9 8 0 L et t e r , f

o r ex am p le, th e DOL fo c u sed ex clu siv ely o n w h eth er “ af

ter- h o u rs clean

- u

p ” w as “ assig n e d g en erally ,” w ith n o co n sid erat i o n o f th e tim e sp en t p erf orm in g th ose d u ties.

13 Al t h o u g h th e D OL h as sin ce u p d ated th e FOH, th e 1 9 8 8 FOH g u id an ce is rep rin ted in f u ll in a p u

b licly av ailab l e am icu s b rief th at th e DOL f iled in an Eig h th Circu it case. S ee B rief f or th e Secretary o f L ab or

a s A m i cu s Cu

riae i n S u

pp o rt o f P l ain tif

f s- A p p ellees at 1 2

– 1 3
, F

a s t v

. Ap p leb ee’s In t’l, I

n c

. , 6 3 8 F.3 d 8 72 (8 th C ir. 20 1 1 ) (No s. 1 0

- 1 7 2 5 /2 6 ), 2 0 1 0 W L 3 7 6 1 1 3 3

.M A R S H V

. J

. A L E X A N D E R ’ S 26

20 percent of the total time w orked, a n d
, if so, take a tip credit only f

or the time spent o n t i p

- ge nerating tasks. I n

e f f e ct, this required employ ers to take a time-tracking o r “time sheet” approach, i.e., e valuating employ ee work o n a duty -by -duty and minute-by -minute b asis, to determine whether an employ

er could take a tip credit. 1 4

I n 2011, the DOL doubled down on its time sheet approach to the d

ual jobs r eg u lation and presente d the F O H § 30d00(e) (1988) a s its o f ficial interpretation of the dual jobs
reg ulation in an amicus brief to the Eig hth Circuit. See B rief for the Secretary of L abor as A m icus Curiae in Support o f Plaintiffs-Appellees a t 12–13, Fast v. Applebee’s Int’l

, Inc.
, 638 F .3d 872 (8th Cir. 2011) ( Nos. 1 0 -1725/26), 2010 W L 3761133. I n its amicus b rief, the D OL arg u ed that the F O H § 30d00(e) interpreted the waitress ex a mple in the dual jobs

r e gulation, which uses the phrase “ p art of her time” and t h e word “occasionally ,” by “affix [ ing ] a specifi c l i mit to the
reg ulation’s tolerance for the ‘occasio n al’ performance o f such r elated duties, capping it at 20 p ercent of the tipped employ e e’s time.” See id . at 9.

14 T h e D O L later ack

n o w led g ed th at th is g u id an ce h ad “ resu lted in

so m e co n f

u sio n an d in co n sisten t ap p l icatio n ” b y v ario u s co u rts an d
attem p ted to p ro v id e so m e clarif icatio n

. S ee U.S. Dep ’ t o f L ab o r, W ag e & Ho u r Div
., Op i n io n L etter (J an

. 1 6
, 2 0 09 ). In a 2 0 0 9 o p in io n letter, th e DOL in dicated th at an em p lo y ee en g ag ed in an o ccu p atio n in w

h i ch th e

em p l o y ee cu sto m arily an d reg u l arly receiv es th e req u isite am o u n t of t i p s

can en g ag e in an y am o u n t o f du ties related t o th at o ccu p a t i o n , b u t n o t d irected at g en eratin g tip s, “ so lo n g as th ey are perf o rm ed

co n tem p o ran eo u sly w ith d i rect cu sto m er- s erv i ce d u ties an d all o th er req u irem en ts o f th e [FL SA ] a re m et.” Id

. Fo llo w in g a ch an g e in
p resid en tial ad m i n i s tratio n , th e DOL w ith drew th is g u id an ce. S ee U .S. Dep ’ t o f L ab o r, W ag e & Ho u r Div ., Op in io n L etter (Mar. 2 , 2 0 0 9 ).M A R S H V

. J

. A L E X A N D E R ’ S 27

I n 2012, the DOL took its F OH gu i d a nce a step further, resulting in the g uidance now set forth in the F O H § 30d00(f) (2016), which the DOL presents a s its curre nt official interpretation of the d

ual jobs r eg u lation. 1 5 This new v ersion of the F OH g u idance retains the rule that an employ er cannot take a tip credit for tim e the employ ee spends p erforming “related duties” if those duties ex ceed 20 percent of the hours

on the job. F OH § 30d00(f)(3). I t also adds a new rule: An employ e r cannot take a tip credit for time spent in duties that

are “not related” to g enerating tips. Id

. § 30 d 00(f)(4). This

new requirement imposes additional time-tracking duties: The e mp l o y er must sort the employ ee’s tasks into one o f three categ ories (tip-g enerating
, related but not tipg enerating
, or not related), and then a p ply the appropriate tip credit elig ibility rules (elig ible, e l i g ible only if less than 20 percent of the total time worked, and inelig ible, respectively

).

As this history illustrates, the DOL ’s interpretations o f the du al jobs reg ulation have evolved from requiring a determination as to whether an employ ee is “eng ag ed in” two distinct jobs (as ex plained in the Opinion L etters) to focusing on what (in every

day lang uag e) would be called a sing le job that involves a rang e of interming led dutie s t h at must be performed throug

hout the course of the day

.

15 In Pro b ert v. Fa mily Cen tered S ervices o f Ala ska

, In c. , w e h eld th at

“ i t d o es n o t ap p ear

. . . t

h at t h e FOH i s a p ro p er so u rce o f i n t e r p r etiv e g u id an ce” f

o r pu rp o ses o f Ch evro n d ef eren ce. 6 5 1 F.3 d 1 0 0 7
, 1 0 1 2 (9 th Cir. 2 0 1 1). We n eed n o t d ecid e w h eth er Pro b ert ap p lies in t h e co n tex t of Au er d ef eren ce, h o w ev e r , b ecau se th e DOL h as ad o p ted th e FOH’ s in terp retatio n s in its am icu s b rief
, an d i t is w ell settled th at w e m ay d ef er to in terp retatio n s p resen ted in su ch b rief s. E.g

. , Ch risto

p her
, 56 7 U.S. at 1 5 5

.M A R S H V

. J

. A L E X A N D E R ’ S 28

C

W e now ask whether t h e D O L ’s interpretations in the FO H § 30d00(f) merit controlling deference under Au e r

. B ecause the F OH § 30d00(f) is b oth inconsistent with t he
reg ulation, Auer
, 519 U.S. at 461, and attempts to “create de facto a new r eg ulation,” Christensen
, 529 U.S. at 588, we conclude that it does not merit deference.

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

re gu l ation interprets § 203(t)’s reference to employ ees “eng ag ed in an occupation” to mean employ ed in a “job,” not performing a

n activity

. S

ee 29 C.F .R. § 531.56(e) (emphasis added). W hen the reg u lation refers to minute-by -minute tasks o r activities, it uses the term “ duti e s ” r a t her than “occupation.” 1 6 See id

. ( re f erring to “related duties in an occupation”). This interpretation of “oc c u pation” to mean “job” is consistent with the statute’s most natural m e aning

. See Perrin v. United States
, 444 U.S. 37, 4 2 ( 1 9 7 9 ) (noting the g eneral rule that statutory terms “will be i n t er preted a s taking t h eir ordinary
, contemporary , common meaning ”). Nothing in the F L SA’s “contex t, structure, histo r y , [ or] purpose” sug g ests that Cong ress intended to u se the term “occupation” in § 203(t) to mean d i s c rete duties performed

over the course of the day

. Abramski v. United States
, 134 S. Ct. 2259, 2267 (2014) ( internal q uotation mar k s o m itted). I ndeed, the 1 966 amendments at issue here g overne d h o w

16 DOL reg u latio n s co ns i s t e n tly in t erp ret th e term “ o ccu p atio n ” to ref er to a j o b
, rath er th an to discrete task s o r d u ties. S ee 2 9 C .F.R. § 5 3 1 .5 6 (a) (ref

errin g to “ [a]n em

p lo y ee em

p lo y ed f u ll tim e o r p art tim e in an occu p atio n ”); i d

. § 5 3 1 .5 7 (co n tem platin g th at a tip p ed em

p lo y ee in

a qu alif y in g occu p atio n m ay t ak e v acatio n o r sick leav e); id

. (id en tif y in g sp ecif ic “ o ccu p atio n s” in w

h ich o n e m ig h t b e en g ag ed as “ w aiters, b ellh o p s, tax icab d riv ers, b arb ers, o r b eau ty o p erato rs”).M A R S H V

. J

. A L E X A N D E R ’ S 29

employ e rs were required to p ay employ e es in jobs that were traditionally tipped, see Or. R est. & Lodging Ass’n
, 816 F .3d
at 1083, without differentiatin g b etween employ ee duties in
t h o se jobs. Moreover, the F L SA c onsistently uses the w o r d “oc cupation” to refer to jobs in particular industries, rather than to discrete tasks. S

ee, e.g. , 29 U.S.C. § 203(l) (referring
to employ

ment in an occupation o ther t h a n manufacturing and mining ), § 214(b)(2) (r e fe rring to “any occupation in
ag riculture”). T he best inference from the F L SA’s consistent

use of “occupation” as “job” is that § 203(t), like the o t h e r F L SA p rovisions discussing o c c u p a t i o n s , r e q u i r e s a job-based focus. See IBP, In c

. v

. A lvarez
, 546 U.S. 21, 34 (2005) (“[ I ]dentical words used in different parts of the same statute

are g enerally

presumed to h ave the same meaning .”). Given the “common sense” understanding that § 203(t) focuses on jobs rather than duties, Abramski
, 1 34 S. Ct. at 2267, coupled with the dual jobs reg ulation’s use of that understanding
, we reject Marsh’s arg ument that § 203(t)’s lang uag e “eng a g ed in

an o c c u p a tion” c a

n be read to mean “eng ag ed in an activity

. ” 1 7

17 Marsh arg u es th at b ecau se th e FL SA is a rem ed ial statu te, it m u st

“ be lib erally co n stru ed t o a p ply to th e f u rth est reach es co n sisten t w i th Co n g ressio n al directio n .” Klem v. Co u n t y of S a n ta Cla ra , 20 8 F.3 d 1 0 8 5
, 1 0 8 9 (9 th Cir. 2 0 0 0 ) (q u o tin g Big g s v. W ilso n , 1 F.3 d 1 5 3 7
, 1 5 3 9 (9 th Cir. 1 9 9 3 )). T h e Su

p rem e Co u rt h as h eld
, h ow ev er, th at th is p rin cip l e d o es n o t ap p ly w h ere, as h ere, w e in terp ret p r ov isio n s o f th e FL SA ’ s d ef in itio n s sectio n , § 2 0 3. S

a n d ifer v. U.S

. Steel C

o rp

. , 1 3 4 S

. Ct. 8 7 0
, 8 7 9 n .7 ( 2 0 1 4 ) (citin g Ch risto

ph er , 5 6 7 U .S. at 1 6 4 n .2 1 ). A s S a n d ife r m a d e clear, th e p rin cip le th at “ ‘ ex em p tio n s’ in th e Fair L ab o r Stan d ard s A ct ‘ are to b e n arro w ly co n stru ed ag ain st th e em p lo y ers seek in g to ass e r t th em ’ ” ap p lies o n ly to “ ex em

ptio n s f ro m t h e A ct [th at] g en erally resid e in § 2 1 3
, w h ich is en titled ‘ Ex em

p t io n s ’ an d classif

ies certain k in d s of w o rk ers as

u n co v ered b y

v ario u s p ro v isio n s.” Id . B ecau se th e tip cred it p ro v isio n s h ere are f

o u n d in § 2 0 3
, rath er th an § 2 1 3, an d d o n o t ex em pt an y

e m p l o y ee f ro m co v erag e u n d er th e m in im u m w ag e req u irem en t, th eM A R S H V

. J

. A L E X A N D E R ’ S 30

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

mean “job,” the dual jobs r eg ulation p r ovides a common

sense approach to defining what c o nstitutes a “job.” This
reg ulatory approach relies on the every day understanding that

a job is c omprised of a cluste r o f tasks ty pically associated with that job. I n the r eg ulation’s ex ample of a “dual j o b
, ” a hotel employ s an employ ee to work in two distinct jobs, o ne

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

. F. R. § 531.56(e). T hese jobs a re o rdinarily understood to involve different ty

pes of duties: W h i l e a maintenance man has a rang e o f duties associated w i th keeping building s o r equipment in g ood r epair, a waiter has a rang e of duties associated with serving customers at their tables in a restaurant. I n common u sag e , these constitute distinct jobs. B y c ontrast, the dual jobs reg ulation provides two ex amples of jobs c omprised o f a r elevant cluster of tasks: A waitress is
eng ag ed in a sing le job so long as the ra n g e of duties she performs is ty

pical for a waitress job (e.g
., some cleaning
, some food preparation), and a c ounterma n is eng ag ed in a sing le job so long as his rang e of duties is ty pical for that job (e.g
., cooking some of his own orders
, o r t a k ing a turn as a chef) a nd his f ellow countermen share in those duties. I d

. A s these ex a mples teach, if th e employ er has hired a person for

one job (such as waitress or c o u n t erman), but that job includes a rang e of tasks not nec e s sarily directed towards producing tips, the pe r s o n is still c onsidered a tipped employ e e eng ag ed in a sing le job so long as the person “customarily an d r e gu l arly receives at least $30 a month in tips.” Id. ; cf. Schaefer v

. W alker Bros. Enters., Inc.
, 829 F .3d 551, 5 55 (7th Ci r

. 2 0 1 6) ( “At some restaurants busboy s

d issen t’ s attem

p t to ch aracterize th e d ef in itio n s at issu e h ere as

ex em p tio n s is co n tr a r y t o S

a n difer ’ s clear statem en t. See Dissen t at 5 0

– 5 1

.M A R S H V

. J

. A L E X A N D E R ’ S 31

remove dishes after diners have finished, while at others the

servers perform this chore. S o i t is not helpful to ask

. . . whether cooks or b u sboy s or jan i t o rs d o one o r another task at other restaurants.”).

I nstead of providing further g uidance on what constitutes

a distinct job, the F OH § 30d00(f) takes an entirely different approach; it par s e s an employ ee’s tasks into three separate categ ories (tip-g enerating
, related to the g eneration of tips, o r unrelated to the g eneration of t i p s )
, and then disallows tip credits on a minute-by -minute b a sis based on the ty pe a nd quantit y o f the tasks performed. B ecause the d ual jobs
reg ulation is concerned with when an employ ee has two jobs,
not with differentiating between tasks within a job, the F OH’s approach is inapposite and inconsistent with the dual jobs
reg ulation.

M o s t fundamentally
, the F OH ig nores the reg ulation’s

r e q uirement to identify distinct jobs. Under the F O H § 30d00(f)(4), an employ e e is per se en ga ge d i n two jobs if the employ e e has spent any time at all on tasks not r elated to the tipped occupation. Under the F OH § 30d00(f)(2) and (3), an employ ee is per se eng ag ed in two jobs if a time-tracking analy sis sho w s t h a t the employ ee has spent some minutes

over the course of the d a y eng ag ed in n on-tipped tasks that

are r elated to tipped tasks, a n d these minutes in the ag g reg ate account for 20 percent or more of the h ours w orked over the

course of a workweek. B ut as th e reg ulation’s ex amples indicate, an employ ee is not e n g a g ed in two dist i n c t jobs merely because the e mploy ee performs different tasks over the course of the day ; rather, the reg ulation requ i r e s an assessment whether a clu s t er of different tasks constitutes a particular job, as that job is ordinarily u nderstood. Moreover, the F OH ’ s m inute-by -minute and task-by -task approach isM A R S H V

. J

. A L E X A N D E R ’ S 32

contrary to the statute, which considers o n l y whether an employ e e is eng ag ed in a sing le job t h a t g enerates the requisite amount of tips. 29 U.S.C. § 203(t). I ndeed,

re quiring an employ er to analy z e every minute of its employ e e’s workday to as s e s s tip credit elig ibility would frustrate Cong ress’s g oal “to pe r m i t the continuance o f

ex isting practices with respect to tips.” S. Rep. No. 89-1487, supra pag e 20, at 3014.

Not only is the F OH § 30d00(f) inconsistent with the
reg ulation’s approach to defin i n g the word “job,” it also produces outcomes that are contrary to t h e dual jobs
reg ul ation’s ex amples of tipped employ ees eng ag e d in a sing le occupation. F or instance, under the F OH § 3 0d00(f)’s approach, a

n employ er would be required to track the time a counterman spends working a s a chef p reparing short orders, which is not a tip-g enerating task, and determine whether the cook i n g duty took up more than 20 percent of the counterman’s time. 1 8 B ut the reg ulation requires no such inquiry ; as long as the task of preparing short orders is
ge n erally a ssig ned to all countermen, the counterman i s eng ag ed in only his sing le tipped occupation. See 29 C.F .R. § 531.56(e). The F OH § 30d00(f) methodolog y could result in an outcome whereby the counterman would be treated a s having two jobs, even thoug h the reg ulation say s he has only

one.

18 T h e reg u latio n d eem s th e p rep aratio n o f sh o rt o rd ers to b e “ related ” to th e co u n term an ’ s j o b
, 2 9 C.F.R. § 53 1 .5 6 (e), s o in th is h y po th etical th e

em p l o y er w o u ld n o t h av e t o d eterm in e w h eth er p rep aratio n o f sh o rt ord ers

co n stitu tes “ u n related ” d u ties. Bu t see 1 9 7 9 L etter (ad v isin g th at salad
p rep aratio n

is a ch ef d u ty n o t related to th e j o b o f

w aitress).M A R S H V

. J

. A L E X A N D E R ’ S 33

I n short, to the e x tent the F OH § 30d00(f) approach provides a

n interpretation of the dual jobs reg ulation at all, it provide s o n e that is inconsistent with both the reg ulation’s approach to determining whether an employ ee has two dis t i n c t jobs a

nd with the statute’s d irection that a ny person eng ag ed in a job that g e nerates the requisite amount of tips is

a “tipped employ ee.” I n effect, the F OH § 30d00(f) creates

an alternative r eg ulatory approach w ith new substantive rules that reg ulate how employ ees spend their time. Th i s is “de facto a new reg ulation” masquerading as an inter p r e t a tion, and we decline to defer to it. 1 9 Christensen
, 5 29 U.S. a t 588.

Arg u i ng a g ainst this conclusion, Marsh claims that the d u al jobs reg ulation is ambig u ous because it uses the ter m s “part o f her time” a

nd “occasionally

” in the waitress

ex a mple. 2 0 B ecause the DOL can i n t e r p r et its ambig uous reg ulat ion, Marsh contends that the F OH 3 0d00(f)’s interpretation of those w ords merits A u er deference. I n making this arg ument, Marsh primarily r e l ies on the Eig hth Circuit’s decision in F

ast v. Applebee’

s Int’l
, Inc.
, which

19 B ecau se th e FOH § 3 0 d 0 0 (f ) is in co n s isten t w ith th e reg u latio n an d th e statu te, th e FOH § 3 0d 0 0 (f ) is also u n

p e r s u a s i v e an d n o t en titled to d ef eren ce u n d er S

kid mo re

. S ee Ch risto

p h er , 5 6 7 U.S. at 1 59

.

20 W e are d o u

b tf u l th a t t h e p h

rase “ part o f h er tim e” an d th e w o rd

“ occasio n ally ” in th e d u al j ob s reg u latio n ’ s w aitress ex am p le m ak e th at

ex am p le am b ig u o u s. T h e reg u latio n m erely d escrib es th e clu ster of activ ities th at are ty

p ically p art o f a w aitress j ob
, an d leav es to a case- b y

c a s e d e t erm in atio n th e q u estio n w h eth er an em

p lo y ee w ith a slig h tly d if f eren t m ix of activ ities w o u ld still b e a w aitress o r w o u ld h av e tw o d if f eren t j o bs.M A R S H V

. J

. A L E X A N D E R ’ S 34

deferred to the DOL ’s interpretation in the F OH. 2 1 638 F .3d 872, 879 (8th Cir. 2011).

I n Fast
, the Eig hth Circuit first determined that the d u al jobs reg ulation was ambig u ous b e c ause “[ b] y using the terms ‘part of [ the] time’ and ‘occasionally ,’ the reg ulation clearly places a temporal limit o n the amount of related du t i es an employ e e can perform and still be considered to be eng ag ed in the tip-producing occupation,” y et the reg ulation does not define the term “occasionally .” Id

. at 879 (second alteration in orig inal). The Eig hth Circuit n oted that other courts relied

on temp o r a l limits to determine whether an employ ee was eng ag ed in dual jobs, citing Myers v

. Copper Cellar Corp
., 192 F .3d 5 4 6
, 5 4 9

– 5 0 (6th Cir. 1999), which h eld “that

servers w ho spent entire shifts w orking as ‘ salad preparers’

were e mploy ed in dual jobs.” F a s t , 638 F .3d at 880. B y contrast, “ where th e related duties are performed intermittently and as part of the pri m a r y occupation, the duties are subject to the tip credit.” I d

. (citing Pellon v. Bus. Representation Int’l, Inc ., 528 F . Supp. 2d 1306, 1313 (S.D. F la. 2007), aff’d
, 291 F e d

. App’x 3 10 (11th Cir. 2008)). The Eig hth Circuit concluded that the DO L ’s interpretation was reasonable because “[ t] he 20 p ercen t threshold used by the DOL in its Handbook is not inconsistent with § 531.56(e) a nd is a reasonable interpretation of the terms ‘part of [ the] time’ and ‘occasionally ’ used in that reg ulation.” Id

. (second alterat i o n in orig inal). The Eig hth Circuit did not e x plain why using 20 pe rcent (rather than some other percent of the workweek) was reasonable, o ther than t o r eference DOL

21 T h e Eig h th Circu it def erred to an earl i e r D O L i n terp retatio n

co d if ied at th e FOH § 3 0 d0 0 (e) (1 9 8 8 ), b u t th e d if f eren ces b etw een th at in terp retatio n

an d th e o n e p resen t ed h ere are im m aterial to o u r an aly sis.M A R S H V

. J

. A L E X A N D E R ’ S 35

reg ulations in other contex ts that had imposed a 20 percent temporal limitation. See id

.

W e d isag ree with the E ig h th Circuit’s Auer analy si s on several g rounds. Most important, the Eig hth Circuit failed to consider the r eg ulator y scheme a s a whole, and it therefore missed the threshold quest i o n whether it is reasonable to determine that an e mploy ee is eng ag ed in a second “ j ob” b y time-tracking an employ ee’s d iscrete tasks, categ oriz ing them, and accounting for minutes spent in various activities. The Eig hth Circuit focused on a few words in the reg ulation (“part of her time” an d “occasionally ”), id

. at 880, that in
contex t merely ex plain that a waitress who eng ag es in a r ang e of ty pical tasks over the c ourse of the day is not in a d ual job. The Eig hth Circuit ig nored the reg ulation’s second ex ample of an employ ee not eng ag ed in a dua l j ob, i.e., the counterman, w hich does not includ e a ny lang uag e imposing

a temporal limitation on the amount o f time that could be spent eng ag ing in r elated a ctivities. 2 2 29 C.F .R. § 531.56(e). B ecause the Eig hth Circuit narrowly focused on a few words
out of contex t, it failed to g r apple with the crucial question whether the F OH’s time sheet approach is a reasonable

22 T h e d issen t co n ten ds t h at th e l a n g u ag e “ tak es a tu rn ” in th e

co u n term an ex am

p le ex p resses a tem

p o ral lim itatio n

. Dissen t at 4 5

. W e d isag ree. No th in g in th e reg u latio n ’ s tex t w o u ld p ro h ib it f o u r co u n term en f ro m tak in g tu rn s as th e sh o rt o rd er co o k f o r eq u al p erio d s d u rin g a sh if t,

su ch th at each co u n term an sp en d s 2 5 percen t o f th e sh if t p erf o rm in g th e d u ty

. T h at arran g em en t, w h ich th e reg u latio n ’ s tex t allo w s, is in co m p atib l e w ith th e DOL ’ s arb itrary 20 p ercen t th resh o l d. If th e

co u n term an ex am

p le n o lo n g er ref

lects c o n t em

p o rary p ractice, as th e d issen t su g g ests, see id

. at 4 5 n .3
, th e so lu tio n is to am en d th e reg u latio n

o r th e statu te, n o t to craf

t a n ew ru l e u n d e r th e g u ise o f in t erp retin g th e

cu rren t u n am

b ig u o u s lan g u ag e.M A R S H V

. J

. A L E X A N D E R ’ S 36

interpretation of “job” (in the r eg ulation) or “occupation” ( in the statute).

Moreover, the very case s t hat the Eig hth Circuit c ited to support its ruling
, Myers and Pellon , sug g est that the F OH’s approach is unreasonable. These cases hold, consistent with the d ual jobs reg ulation and the Opinion L etters, that in order for an employ e e to be eng ag ed in two different occ u p ations there must be a clear dividi n g l i n e between two different ty pes of d u ties, such as when on e s e t o f 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

w a s a dual job), with 1979 L etter (similar). As Fast summariz e d the rule from Pellon
, “where the r e lated duties

are performed intermit t e n t l y a nd as p art of the primary occupation, th e d u t i es are subject to the tip c redit.” Fast
, 638 F .3d at 8 8 0. Such intermittent duties are n o t a second “job” as that word is reasonably understood. Y et u n der the F OH, such intermittently performed duties may be treated a s

a second job for which the employ e r may not take a tip credit.

F inally
, we disag r ee w ith Fast ’s conclusion ( and the DOL ’s arg ument) that the DOL ’ s prescriptio n o f a specific temporal limit on c e rt ai n d uties (i.e., 20 percent of the total time worked) is a reasonable method for d etermining when an employ e e h as a second job. The Eig hth Circuit upheld this arbitrary temporal limitation in p art because it is c o n s istent wi t h temporal limitations in other parts of the F L SA’s reg ulatory reg ime. S

e e i d

. at 8 81. B ut this fact is irrelevant because each ex ample of a temporal cap tha t t h e DOL a nd Fast c ite was either leg islatively e nacted or prom u l ga ted throug h noti c e a n d 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 ; F

a s t , 6 38 F .3d at 881. B y a llowing the DOL toM A R S H V

. J

. A L E X A N D E R ’ S 37

impose a substantive 2 0 p e r cent c ap on the performance o f certain duties under the g uise of interpreting the word “occasi onally ,” the Eig hth Circuit contravened the rule that
ag encies not be allowed to create new substantive reg ulations
t h roug h interpretation. See Christensen
, 529 U.S. at 5 8 8

. Althoug h the reg ulations that the DOL cite s may be permissible c onstructions of the F L SA provisions the y implement, that tells u s n o thing about whether the F O H § 30d00(f) is consistent with the tex t of the d u al j o b s reg ulation and § 203(t). 2 3

I n short, the Eig hth Circuit did not properly consid e r whether the F OH was consistent w i t h t h e reg ulation, A u er , 519 U.S. at 461, whether deference would allow the ag ency to “create de facto a n ew reg ulation,” Christensen
, 529 U.S.
at 588, or whether the interpretation would be consistent with § 203(t). According ly
, we reject Marsh’s a rg ument that we should adopt Fast ’s approach. 2 4

23 F or th e sam e reaso n , w e rej ect th e d issen t’ s arg u m en t th at t

h e FOH § 3 0 d 0 0(f ) i s n ot in co n sisten t w ith th e d u al j o bs reg u latio n b ecau se o t her reg u latio n s req u ire em

p lo y ers to track an em

p lo y e e ’ s tim e. See Dissen t at 4 9 (citin g 2 9 C.F.R. § 5 1 6 .2 8 (a)). T h e p ro p er q u estio n is w h eth er th e FOH § 3 0 d 0 0 (f

) is co n sisten t w ith th e reg u latio n it p u rp o rts to in terp ret,

n o t w h et h e r it b ears so m e s im ilarity to o th er asp ects o f th e FL SA ’ s statu to ry an d reg u lato ry

sch em e.

24 Marsh arg u es th at th e Sev en th C ircu it, l ik e th e Eig h th
, h as d ef erred
to th e DOL ’ s in terp retatio n o f th e d u al j o b s reg u latio n

. W e disag ree. In Driver v. Ap

p leIllin ois, LLC
, th e Sev e nt h Circu it co n sid ered w h eth er to g ran t a petitio n to ap p eal a d e n i a l o f c l ass certif icatio n

. 7 3 9 F.3 d 1 0 7 3
, 1 0 7 4 (7 th C i r

. 2 01 4 ). W h en d i scu ssin g th e case’ s b ack g ro u n d
, Driver

m en tio n ed th e D OL ’ s i n terp retatio n o f t h e d u al j ob s reg u latio n in o rd er to p ro v id e co n tex t t o t h e c l ass d ef in i tio n in issu e. S

ee id

. at 1 0 7 5

. Driver

w as n ot p resen ted w i t h
, an d d id n o t d ecid e, th e q u estio n w h eth er Au er

c o m p e l s d ef eren ce to th e DOL ’ s in terp retatio n

. Mo re recen tly
, th eM A R S H V

. J

. A L E X A N D E R ’ S 38

After e x h a usting his leg al a r g uments, Marsh urg es us to consider that the F OH ’ s a pproach to the dual jobs inquiry simply “ makes sense.” He contends that an employ er should not be able to hire an employ ee for a job that is traditionally
t ipped, b ut then require the employ ee to eng ag e in ta s k s associated w ith a job that is tr a d i t i onally not tipped. Acc o r d i n g to Marsh, the dual jobs reg ulation and Opinion L etters do not adequately address this problem, an d s o the D O L must be free to step in with a solution. O u r t a s k
, ho wever, is n ot to pass on the wisdom of the F OH’s approach, but to determine whether the D OL can enforce this approach in the g uise o f i n t erpreting a reg ulation. We hold only that, at p resent, n o provis i o n w ith the force of law permits the DOL to require e mploy ers to eng ag e in time tracking and accounting for minutes spent i n diverse tasks before c laiming a tip c redit. Our d ecisio n t o d a y does not prevent the DOL from attempting to promulg ate this approach throug h rulemaking
, nor prevent C ong ress from requiring such an approach throug h leg islation.

I I I

Our refusal to defer to the F OH § 3 0 d00(f) does not mean that other gu i d a n ce from the D OL mig ht n o t warrant

Sev en th Circu it h eld th at th e ev id en ce b ef o re it d id n o t estab l ish a

v io latio n o f th e FL SA ev en u n der th e FOH, an d th eref

o re d id n o t reach th e q u estio n w h eth er th e F OH m erited d ef eren ce. See S

ch a efer
, 8 2 9 F.3 d at 5 5 4

– 5 5

.

B ecau se w e rej ect Fa s t as u n p ersu asiv e, w e also f

in d u n p ersu asiv e th o se d i strict co u rt cases th at h av e fo llo w ed Fa st ’ s ap p ro ach w ith o u t

s e r i o u s co n sid eratio n o r an aly sis of Fa st ’ s erro rs. S ee, e.g

. , McLa mb v. Hig h 5 Ho sp ita lity
, 1 9 7 F

. Su p p

. 3 d 6 5 6
, 6 6 2

– 6 3 (D. Del. 2 0 1 6); Flo od v. Ca rlso n Rest. In c. , 9 4 F. Su p p . 3 d 5 7 2 , 5 82

– 8 3 (S.D.N.Y. 2 0 1 5 ).M A R S H V

. J

. A L E X A N D E R ’ S 39

deference. The DOL ’s prior O pinion L etters, for ex ample, consider whether there is a “clear dividing line” between two different ty

pes of duties, see 1980 L etter, whether one set o f duties is performed in a distinct part of the workday
, see 1979 L etter, o r whether duties that do n ot produce tips a re g enerally assig ned, see 1985 L etter. W e need not decide here

w h e ther the Opinion L etters merit deference, h owever , because Marsh conceded at oral arg ument that his “ related” and “unrelated” duties were all interming led with the performance o f duties d irected at g enerating tips. See s u p r a at 15, n ote 7. B ut because Marsh’s concession is in tension with certain alleg ations in the p roposed amended complaint,
e.g ., that some of his c leaning tasks (such a s w i p ing down tables for 20 minutes after each closing shift) were temporally separated from serving customers, the proper c ourse he r e is
to remand to the district court to p e r mit Marsh the opportunity to propose a

n amended complaint that focuses his alleg ation s i n lig ht of our holding today

. 2 5 Cf. Mark H. v

. Lemahieu
, 513 F .3d 922, 939 (9th Cir. 2008 ) ( c l arify ing the law and then remanding for an opportunity to pr opose an amended complaint in lig ht of the clarification). On remand, if Marsh alleg es facts that state a claim by reference to DOL
g uidance o ther than the F OH § 30d00(f), such as the Opinion L etters, the d istr i c t c ourt may consider in the first instance

25 T h is d isp ositio n

is th e sam e f

o r all p l ain tif

f s in th ese co n so lid ated
ap p eals. In

Cry stal Sh eeh an ’ s ap p eal, th e d ef en d an t ask s u s to af

f irm on th e altern ativ e g ro u n d th at th e statu te o f l im itatio n s b ars Sh eeh an ’ s claim

. W e d eclin e th is i n v i tatio n , as w e b eliev e th at th is arg u m en t w o u l d b en ef i t f ro m f u rth er d e v e l o p m en t in th e d istrict co u rt, in clu d in g p o ssib le d isco v ery on th e issu e o f th e w illf u ln ess o f an y alleg ed FL S A v io latio n

. S e e 2 9 U.S.C. § 2 5 5(a); Fed

. R. Civ

. P. 5 6 (d ). W e leav e to th e d ist r i c t

co u rt’ s s o u n d d iscretio n h o w t o p r o ceed w ith th e reso lu t io n o f th is
q u estio n o n rem an d

.M A R S H V

. J

. A L E X A N D E R ’ S 40

whether deference is owed to such g uidance, and whether the facts alleg ed state a claim.

I n s um, Marsh cannot state a claim under § 206(a) b y

a l leg ing that discrete “ related” tasks or duties, which we r e performed intermittently over the c ourse of the day and were interming led w ith his d uti es d irected at g enerating tips, comprise a dual job when ag g reg ated tog ether over the course of a workweek. Performance of d i s p e r sed, related, a nd
g enerally assig ned duties is consistent with the waitres s a n d
counterman ex amples in the dual jobs reg ulation
, which a re

ex a mples of employ

ment in a sing le tipped oc cu p a tion. 29 C.F .R. § 531.56(e). Marsh also cannot sta t e a c laim b y alleg ing the performance of “unrelated” duties that were similarly dispersed and g enerally assig ned; that, too, is inconsistent with the concept of a dual job. W e do not reach

or decide whether alleg ations tha t an employ ee performed
g eneral maintenance work for an ex ten d e d period before o r after customer interaction beg an or ended rises to the level o f a dual job. 2 6

26 W e rej ect J. A lex an d er’ s arg u m en t th at w e can af f irm on th e d istrict

co u rt’ s altern ativ e d eterm in atio n th at Marsh f ailed to state a m in im

u m

w ag e claim u n der 2 9 U.S.C. § 20 6 ( a ) b ecau se h e f ailed to alleg e th at h e

earn ed less th an

m in im u m w ag e in an y g iv en w o rk

w eek

. T h i s arg u m en t relies o n Un ited S ta tes v. Klin g h o ffer Bro th ers Rea lty Co rp

. , in w h ich an

e m p l o y e r req u ired its em

p lo y ees to w o rk ex tra h o u rs w ith o u t p ay

. 2 8 5 F.2 d 48 7
, 49 0 (2 d Cir. 1 9 6 0 ). T h e Seco n d Circu it h eld th at th is
p ractice d i d n o t v io late th e FL SA ’ s m in im u m w ag e req u irem en ts so lo n g

as th e em p lo y ees receiv ed th e m in im u m w ag e f

o r each h ou r w ork ed w

h en th e to tal w eek ly pay w as d i v id ed b y th e to tal n u m b e r o f h o u rs w o rk ed

. Id

. ; see a l

so Ad a ir v. C ity o f Kirkla n d
, 1 85 F .3 d 1 0 5 5
, 1 06 3 (9 t h Cir. 1 9 9 9 ) (h o ld in g th at a d istrict co u rt d id n o t err in ap p ly in g a sim i lar
ap p ro ach ). In o rd er to av o id FL SA liab i lity u n der Klin g h offer ’ s ap p ro ach
, an em p l o y er m u st p ay its em

p l o y e e s m o re th an th e m in i m u m w ag e. B ecau se an em

p lo y er rely in g o n a tip cred it to co m p ly w ith t h e F L SAM A R S H V

. J

. A L E X A N D E R ’ S 41

Althoug h we ag ree with the di strict court that the F O H § 30d00(f) does not w arrant Auer deference, we vacate the final orders and judg ments in these cases and remand to allow the plaintiffs opportunities to p ropose new amended complaints in lig ht of this opinion. 2 7

VACATED AND REMANDED.

PAEZ , Circuit J udg e, concurring and dissenting :
Contrary to the majority
, I would d e f er to the Department of L abor’s (“DOL ”) interpretation o f 29 C.F .R. § 531.56(e), the tipped minimum wage r egu lation at issue in this case. 1

n ev er pay s m o r e th an m in im u m w ag e to an em

p lo y ee, see 2 9 U.S.C. § 2 0 3 (m ) (allo w in g an em p lo y er to tak e a t ip cred it o n ly f o r th e a m o un t

o f tip s n ecessary to en su re t h at th e em

p lo y ee receiv es t h e m in im u m

w ag e), Klin g h o

ffer i s n o t ap p licab l e h ere. T h eref o re, Marsh ’ s co m

p lain t

an d p ro p osed am en d ed co m p l ain t alleg ed th at J

. A lex an d er’ s p aid Marsh less th an m i n im

u m w ag e o v e r th e co u rse o f a w o rk w eek b ecau se h e h ad
tw o j o b s w ith in t

h e m ean in g o f § 5 3 1 .5 6 (e) an d w as n o t p aid th e m in im u m

w ag e f o r th e seco n d j o b

.

27 T h e p arties w ill b ear th eir o w n co sts o n ap p eal. S

ee Fed . R. A p p

. P . 3 9 (a)(4 ).

1 I ag ree w ith th e m aj o rity t h a t th e disp o s itio n s b elo w sh o u ld b e

v acated an d rem an d ed
, b u t I w o u ld rem an d f

o r f u rth er p ro ceed in g s o n th e

m erits o f th e p lain tif

f s’ claim s as alleg ed

. On sev eral o th er m in o r p oin ts, I also ag ree w ith th e m aj o rity

. I ag ree th at Pro bert ’ s su g g estio n th at th e Fiel d O p e ratio n s Han d b o ok (“ FOH”) w as n o t “ a pro p er so u rce of in terp retativ e g u id an ce” d o es n o t g o v ern o u r Au er d ef eren ce an aly sis. Op in

. at 2 7 n .1 5

. Pro b ert v. Fa mily Cen tered S ervs. o f Ala s ka

., In c. , 6 5 1 F.3 d 1 0 0 7
, 1 0 1 2 9 th C ir. 2 01 1 ). I also ag ree th at th e w ag e av erag in g sch em e d escrib ed in Un ited Sta tes v. Klin g h offer Bro s. Rea lty Co rp

. ,M A R S H V

. J

. A L E X A N D E R ’ S 42

Employ ees paid the tipped minimum w ag e for untipped work

are underpaid. 2 Recog niz ing thi s problem, the DOL issued
g uidance clarify

ing that u nder § 531.56(e), employ ers m u st pay their tipped employ ee s t h e full minimum wag e when such employ e es spend a substantial amount o f time performing u ntipped work. B ecause the DOL ’ s gu idance int e r preted its own ambig uous reg ulation, and is neither plainly inconsistent with that r eg u lat ion nor erroneous, it is entitled to Auer deference. F or the reasons discussed below, I would follow the Eig hth Cir c u it’s persuasive opinion in Fast v. Applebee’s Int’l, Inc.
, 638 F .3d 8 72 ( 8th C i r. 2011),

a nd defer to the DOL ’s important, necessary , and sou n d
g uidance. According ly
, I respectfu lly dissent from this part of the majority ’s opinion.

I.

An ag ency ’s interpretat i on of its own ambig uous reg ulation is ordinarily entitled to de f e r ence, b e cause an ag ency ’s own reg ulatio n “reflect[ s] the considerable

ex p erience and ex pertise the [ag ency ] ha [ s] acquired over time with respect to the complex ities of the [ st a t u t e ]

. ” Gonzales v. Oregon
, 546 U.S. 243, 2 56 (2006). W e will decline to a p p l y Auer deference only where the ag e ncy ’s interpretation is “plainly erroneous or inconsistent” with the
reg ulation. Auer v. R obbins
, 519 U.S. 452
, 4 61 (1997)

2 8 5 F.2 d 4 8 7, 4 9 0 (2 d Cir. 1 9 6 0 ) is n o t ap p licab le h ere. Op in . at 4 0

– 4 1

n .2 6 . I th eref

o re co n cu r in th ese asp ects o f th e m aj o rity ’ s o p in io n

.

2 S ee W i lliam W h ittak er, Co n g

. Research S e r v ., RL 3 3 3 4 8
, T h e T ip Cred it P ro v isio n s o f th e Fair L ab o r Stan d ard s A ct 2

– 3 (2 0 0 6 ) (ex plain in g th at w aiters an d o th er serv ice em p l o y ees w ere n o t co v ered b y t h e FL SA

u n til 1 9 66
, at w

h ich p oin t Co n g ress in tro d u ced t h e tip p ed m in im

u m w ag e

so th at su ch em

p lo y ees w o u ld receiv e th e m in im u m w ag e).M A R S H V

. J

. A L E X A N D E R ’ S 43

(internal q

uotation marks and c itatio n o m itted) ( describing the standard as “deferential”). W here an ag e ncy ’s interpretation is plainly erroneous or inconsistent, we will s t ill defer to it, b u t only “proportional to the thoroug hness e vident in its consideration, the validity of its reasoning
, i ts consistency with earlier and later pronouncements, a n d all those factors w hich g ive it power to persuade.” Christopher

v. Smith K

line Beecham Corp.
, 567 U.S. 142, 159 (2012) (internal quotation marks and citations omitted).

I part way s with the majority at each step of t h e Auer defe r e n c e analy sis. F irst, § 531.56(e) is ambig uous, as it employ s undefined terms like “oc c as ionally ,” a nd provides
two ex a mples which, at first p ass, appear to conflict. Second, the DOL ’s interpretation o f this a m b ig uous reg u lation has been consistent o ver time. The DOL has consistently stated that the amount of time a tipped e m p l o y e e can spend on untipped w ork is limited. The DOL ’s g ui d a nce setting that limit a t 20% of an employ ee’s time is a l s o c o nsistent with other F air L abor Standards Act (“F L SA”) provisi o n s

. I n contras t , as I understand its reasons for vacating a nd remanding
, the majority woul d r equire Marsh to show a “clear dividing

line” between, or distinct hours for, different jobs, a requirement which is inconsistent with DOL g uidance, and would read out key

reg ulatory p r ovisions. The majority also errs a s the reg ul a t i o n s embrace time tracking with respect to each occupation. Third, underly ing these e rrors, the majority fails to apply the narrow construction p r i nciple and mistakenly

places the burden of proof on the employ ee.M A R S H V

. J

. A L E X A N D E R ’ S 44

II.

A.

Section 531.56(e) provides:

I n some situation s an employ ee is employ ed in a d u a l job, as for ex ample, where a maintenance man in a hotel al so serves as a waiter. I n such a situation

. . . no tip credit can b e t aken for h is hours of e mploy ment in his occupati o n of maintenance man. Such a situation is disting uishable from that of a waitress who spends part of her time cleaning and setting tables, toasting b read, making cof f e e and occasionally washing dishes o r g lasses. I t is likewise di sting uishable f rom the counterman who also p r epares his own short o rders or who

. . . takes a turn as a short order cook for the g

roup. . . .

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

S e ction 531.56(e) is ambig uous. F irst, § 531.56(e) us e s ambig uous terms, including “occasional[ ] ” and “part o f [ the] time,” without defining them. The majority does not provide
any definition of the terms nor does it ex plain why or h ow these terms are unambig

uous. Opin. at 33 n.20. T he Eig hth Circuit in Fast
, by contrast, does e x p l a i n that the use o f the
term “occasionally

” is ambig u ous because it does not e x plain for how much time an employ er can assig n untipp e d wo r k,

a n d still treat that work as “occasional.” 638 F .3d at 8 7 9

. I

w ould join the Eig hth Circuit’s persuasive holding that the
reg ulation is ambig uous.M A R S H V

. J

. A L E X A N D E R ’ S 45

Second, § 531.56(e) is a mbig uous b ecause it includes two

ex a mples which, at first g lance, seem to conflict. W hile the
reg ulation ex plains that a waitress cannot b e paid the tipped minimum wag e f

or more than “part [ ] time [ or] occasional[ ] ” work “ cleaning and setti n g t a bles, toasting bread, making coffee a nd

. . . washing dishes o r g lasses,” the majority reads the reg ulation to allow a counterman to be paid the t ipped minimum w ag e f

o r a n y amount o f time spent on work “prepar[ ing ] short orders.” Opin. at 32; 29 C.F .R. § 531.56(e). The majority ’s rea d i n g i g nores crucial tex t in § 531.56(e) which does place a temporal limit on a counterman’s w ork a s a short order cook. F or e x ample, the
reg ulation allows a counterman to be p aid the tipped minimum wag e w hen h e “ta k e s a t u rn as a short order cook for the g roup,” which indicates a limit on the amount of time he can work as a short order cook and still b e paid the tipped minimum wag e. 29 C.F .R. § 531.56(e). 3 I n any c ase, any confusion reg arding how to harmoniz e the two e x amples only

3 T h e co u n term an ex am

p le m ay b e co n f

u sin g as a resu lt o f

w h en th e reg u latio n

w as p ro m

u lg ated —1 9 67

. Fa st , 6 3 8 F.3 d at 8 7 8. It m ay h av e b een t h e c a s e th at in 1 9 67 cu sto m ers tip p ed co u n term en to co o k sh o rt

o rd ers in th eir p resen ce. DOL ’ s Decem b er 2 0 1 6 Fact Sh eet m ak es clear th at co u n term en are tip p ed em p lo y ees on ly w

h en th ey “ serv e cu sto m ers.” U. S

. D e p artm en t o f L ab o r, W ag e an d Ho u r Div isio n Fact Sh eet # 15 : T ip p ed Em

plo y ees Un der th e Fair L ab o r Stan d ard s A ct (FL SA ) (rev

. Dec. 2 0 1 6 )
, a v a i l a b l e a t h ttp s://w w w .d o l.g o v /w

h d /reg s/ co m

p lian ce/w h d f s1 5 .h tm

. (last v isited A u g u s t 2 2 , 2 0 1 7 ).

T h e m aj o rity ’ s ex am

p le o f a f ou r co u n term an g ro u

p sp en d in g 25 % of th eir tim e co o k in g s h o r t o rd ers ex p l ain s p recisely w h y th e reg u latio n is

am b i g u o u s an d g u id an ce w as d u e. Op in . at 3 5 n .2 2 . A f o u r co u n term an g ro u p w o u l d cau se each co u n term an to p erf o rm m o re th an o ccasio n al

u n tip ped w o rk
, w

h il e a f iv e co u n t erm an g ro u

p w o u ld o n l y o ccasio n ally
, o r 2 0 % o f th e tim e, co o k

o rd ers.M A R S H V

. J

. A L E X A N D E R ’ S 46

demonstrates that the r eg ulation is a m b i gu ous. B ecause the
reg ulation is a mbig u ous, the nex t step of the Auer analy sis is
to determine w hether t he DOL ’s interpretation is “plainly erroneous or inconsistent.” 519 U.S. at 461.

B.

The DOL ’s interpretation is far from “plai n l y erroneous

or inconsistent” and is instead, cons i s t e n t with nearly four decades o f interpretive g uidance and w ith the statute and the
reg ulation itself. Id. Th e D OL ’ s g uidance at issue, in its Fi eld Operations Handbook (“F OH”), provides that whe r e “tipped employ ees spend a substantial amount o f time ( i.e. , in

ex c e ss of 20 p e r c ent 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.” F O H § 30d00(f) (2016).

F irst, § 531.56(e) and the DOL ’s interpretive gu idance have consi s t e ntly limited the amount of time a tipped employ e e can perform untipped work and still receive the tipped minimum wag e. We have h eld that a consistent view

over twenty

- f

ive y ears is a an “ex tended period of t ime” meriting “[ s] pecial d eference.” Bassiri v. Xerox Corp.
, 463 F .3d 927, 933 ( 9th Cir. 2 006) ( internal c i t a t i o ns a nd quotation ma r k s omitted). Section 531.56(e) was promulg a ted in 1967, and itself p laces tempora l l imits on untipped work b y using the p hrases “occasional[ ]
, ” “part o f [ the] time,” and “ takes a tu r n

. ” Since 1979, the DOL has issued opinion letters, f

act sheets, amicus briefs, and the F O H which have c onsistently pla ce d temporal limits on untipped work. See B rief for the Secretary of L abor as Amicus Curiae in Support o f Plaintiffs-Appellants, Marsh v. J. A lexander’s LLC
, Nos. 15-15791+ ( 9th Cir. J uly 13, 2016) ( “DOL AmicusM A R S H V

. J

. A L E X A N D E R ’ S 47

B rief”), at 8

– 10. As the Eig hth Circuit ex plained in F ast , the F OH drew f

ro m p rior opinion letters, including the 1980 letter describing a w aitress working a fter hours cleaning
, a nd the 1985 letter describing a waiter performing prepara t ory work f or 30% to 40% of her time, when it set a 20% threshold

on the amount of time a tipped employ ee cou l d p e r form untipped w ork. 638 F .3d at 878. Over thirty -eig ht y ears, the DOL has consistently interp r e t e d § 5 31.56(e) to involve a temporal limit, and this interpretation is also consistent with the regulation itself. 4

Second, t he 20% threshold is also c onsistent with other DOL provisions containing tempor a l l imitations. Cong ress and the DOL have defined occasional in many other F L SA provisions to mean 2 0 %

. 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 T h e m aj o rity p o i n t s to th e 1 9 8 0 Op in io n L etter as an ex am p le in

w h ic h t h e DOL d id n o t co n sid er t h e tim e sp en t perf

o rm in g th o se du ties. I d isag ree, as t

h e 1 9 8 0 L etter em

b raced tim e lim its w

h en it ex plain ed th at

“ ro u tin e[]” u n tip p ed w o rk w o u ld n o t b e perm issib le. 1 9 8 0 Op in io n L etter.

T h e m aj o rity also su g g ests th at th e FOH is in co n sisten t w i th § 5 3 1 .5 6 (e) b ecau se it treats d u ties related a n d u n related to tip ped w ork d if f eren tly

. O p in

. at 2 7

. B u t th e r e g u l a t i o n itself d istin g u ish es b etw een related an d u n related w o rk
, f o r ex am p le in allo w in g a w aitress to b e paid th e tip ped m i n im

u m w ag e f

o r lim ited t i m e settin g tab les an d m ak in g

co f f ee, b u t d isallo w in g a w aiter to b e p aid th e tip p ed m in im u m w ag e f

or

an y tim e sp en t as a j an i to r. M o r e o v e r , th e DOL ’ s g u id an ce h as also

co n sisten tly d istin g u ish ed betw een related an d u n related d u ties. See, e.g

. , U.S. Dep ’ t L ab o r, W ag e & Ho u r Div
., Op in i o n L etter FL SA

- 8 9 5 (A u g

. 8
, 1 9 7 9 ) (“ 19 7 9 Op in io n L etter”) (d isallo w in g a w ait r e s s t o b e p aid th e tip p ed m i ni m

u m w ag e f

o r tim e sp en t p rep arin g v eg etab les f o r th e salad b ar); U .S. Dep ’ t o f L ab or, W ag e & Ho u r Div
., Op in io n L etter Fair L ab or Stan d ard s A c t , W H -5 0 2
, 1 9 80 W L 1 4 1 3 3 6 (“ 1 9 8 0 Op in io n L etter”) (allo w in g a w aiter to b e p aid th e tip p ed m in i m u m w ag e f

o r resto ck i n g th e

w aiter statio n , b u t n o t f

o r m ain ten an ce w ork ).M A R S H V

. J

. A L E X A N D E R ’ S 48

29 C.F .R. § 786.1; 29 C.F .R. § 786.100; 29 C.F .R. § 786.200. The DOL ex plained in its amicus brief in this case that i t derived the 20% t h reshold from these provisions. DOL A m i c us B rief, at 19, n.6; see also Fast
, 638 F .3d a t 8 8 1 (deferring to the F OH in p art because the 20% threshold drew from numerous other F L SA provisions). The 20% threshold is c ons i s t e nt across the F L SA statutory scheme a nd implementing reg ulations.

The majority ’s h olding that the DOL ’s interpretation was inconsistent errs in several reg ards. F irst, I read the majority
to require Marsh to alleg e a “clear dividing l i n e ” b etween time spent on tipped and untipped w ork (for ex a mp le, untipped work performed before or after the restaurant is
open to customers) o n r emand, but this requirement is inconsistent w ith § 531.56(e) and the DOL ’s interpretive
g uidance. Opin. at 39. The 1980 Opinion L etter ex plains that “where there is a c lear dividing line be t w e e n the types of duties performed by a tipped employ ee,

. . . no tip credit may be taken for the time spent

. . . performi n g m a intenance duties.” 1980 Opinion L e tter. I n ot h e r w ords, the phrase “clear d ividing line” in the opinion lett e r referred to a division between “ty

pes of d u t ies” rather than a division on the b asis of hours, and moreover, the letter actually approved of limited “ a f

t e r -hours” d

uties related to tipped w ork. 1980 L etter. And t h e 1979 L etter upon which the majority relies, concluded that waitresses m u s t b e paid the full minimum
wag e because the work performed w a s similar to a chef’s

w ork, n ot because it was p e r formed during a distinct part o f the d ay

. 197 9 L e tter; Opin. at 39. The majority ’s requirement is therefore misplaced a nd inconsistent with the DOL ’s g uidance.M A R S H V

. J

. A L E X A N D E R ’ S 49

Second, the majority asserts that the F OH is inconsistent because it r equires employ ers to analy z e duties or tasks rather than jobs or occup at i ons. Opin. at 2 8. The reg ulation provides that “[ a] n emp l o y ee who receives tips

. . . is a ‘tipped employ ee’

. . . when, in the o c c upation in which he is engaged, the a mounts he receives a s tips [ ex c eed the requisite

a m o unt] .” 2 9 C.F .R. § 531.56(a). I ag ree with the Ei gh t h Circui t that the phrase “eng ag ed in” requires the D OL to interpret p recisely w hen an employ ee is performing tipped work, includ i n g by looking at when the employ ee performs untipped duties like those of a janitor. S ee 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 e rrone o usly a sserts that the F OH’s interpretation is inconsistent with the statute and reg ulations because it requires keeping track of the employ ee’s time,

w hile Cong r ess intended “to permit the continuance o f

ex isting 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 F OH requires employ ers to track an e mploy ee’s time in a manner that is consistent with other DOL g u idance reg arding the tipped minimu m w a g e

. F OH § 3 0d00(f) (2016). F or ex ample, 29 C.F .R. § 516.28(a) requires employ ers to maintain records of e a ch hour an employ e e receives tips and each hour she does not. Any F O H time tracking requirement is c onsistent with the DOL ’s tipped minimum wag e g uidance. 5

5 T h e m aj o rity asserts th at w e sh o u l d l o ok o n ly to th e reg u latio n to d eterm in e co n sisten cy

. Op in

. at 3 7 n 23

. B u t th e m aj o rity co n trad icts itself
, as it also co rrectly asserted th at w e lo ok to p rio r in terp retatio n s an d
p ro n o u n cem en ts to d eterm i n e co n s isten cy u n der Au er . Op in . at 1 8 n .9

.M A R S H V

. J

. A L E X A N D E R ’ S 50

C.

F inally
, underly i n g these errors, the majority fails to apply the n arrow-construc tion principle to the tipped minimum wag e. Opin. at 29–30 n.17. I n my view, the tipped minimum wag e is an ex e mption in t h e F L SA that should be construed narrowly ag a inst e mploy ers. The “F L SA is to be construed liberally in favor o f employ ees [and] ex em ptions

are narrowly c onstrued ag ainst employ ers.” Haro v. City of Los A ngeles
, 745 F .3d 1 2 49, 1 256 (9th Cir. 2014) (citation omitted). The majority points to two recent Su p r e me Court

cases which held that the narrow-construction principle did not apply to two provisions in the F L SA definitions section, the section which also c o n t ains the tipped minimum wag e

. Opin. at 29–30 n.17; See Sandifer v. U.S. Steel Corp.
, 134 S. Ct. 870, 8 79 n.7 (2014) ( holdi ng the narrow-construction principle inapplicable to a definitions provisio n reg arding doffing clothing because narrowly c o n str u e d ex emptions

“ generally reside in § 213, which is entitled ‘Ex emptions’ a nd classifies certain kinds of workers as u n c o vered by v arious provisions”) (emphasis added); see a l s o id

. (Sotomay or, J
., declining to join footnote 7); Smith K l i n e , 5 67 U.S. at 164 n.21 (holding the narrow-construction principle inapplicable
to the “sale” defin i t ion because it was “ a g eneral definition that applies thro u gh out the F L SA”). The tipped minimum
wag e is distinct from these definitional F L SA p r o visions, however. Unlike “sale,” the p rovision at issue in SmithKline
, the tipped minimum wag e is not a definition whi c h applies throug hout the F L SA. 567 U.S

. a t 164 n.21. L ikewise, the
t i p ped minimum wag e more closely resembles t h e

ex e mptions in § 213 which have “g enerally ” been the subject of the narrow construction p rinciple. See 29 U.S.C. § 213 (ex cluding from the m inimum w ag e classes of employ ees including ex e cutives a

nd professionals, outside salesmen,M A R S H V

. J

. A L E X A N D E R ’ S 51

amusement park employ ees, fishers, and farmers); Sandifer
, 134 S.Ct. a t 879 n.7. F urther, we have held that t h e r elated tip p ool requirem ents should be n arrowly construed, see Oregon Rest. & Lodging Ass’n v. Perez
, 816 F .3d 1 080, 1090 (9th Cir. 2016), and, post- Sandifer and SmithKline
, that a provision defining employ e e s “eng ag ed in fire protection” should b e narrowly construed, see Haro
, 745 F .3d at 1256. I would, according ly , consider the tipped minimum wag e an

ex e mption, a l t h o u gh it arises in the definitions section o f F L SA, and g ive it a narrow construction.

Relatedly
, the majority fails to p lace the burden on the employ e r to s h o w i t can u se the tip credit. DOL Amicus B rief, at 25. Co n gr e s s made clear that it intended for employ e rs to p rove the requirements of the tip credit. S. Rep. No. 93-690, at 43 (1974) ( “ [ T] he orig inal intent of Cong ress [ was] to place on the employ er the burden of proving

. . . the

a m o unt of tip c redit, if any , which such employ er is entitled
to claim.”); see Barcellona v

. Tiffany English Pub, Inc.
, 597 F

. 2d 464, 467 (5th Cir.1979) (recogniz ing that employ ers bear the b urden); see also Perez v. L orraine Enters., Inc.
, 769 F .3d 23, 27 (1st Cir. 2014) (same); Myers v. C o p p e r Cellar Corp.
, 192 F .3d 546, 549 n. 4 (6th Cir. 1999) (same). The majority ’s improper allocation o f the burden and failure
to apply the narr o w- construction principle underlie a nd potentially

ex p lain its errors.

III.

B e cause the D OL ’s g u idance interpreted an ambig uous reg ulation, and d id s o i n a manner that was not “plainly

erroneous or inconsistent,” it is entitled to Auer deference. I would, according ly vacate the district c ourt’s orders g ranting the motions to dismiss, judg ments on the pleading
, and theM A R S H V

. J

. A L E X A N D E R ’ S 52

order gr a n t i ng summary judg ment, and remand for f urther proceeding s on the key issue of w het h e r t he defendants violated the F L SA by pay ing its employ ees w e l l b elow minimum wag e for untipped work.