US High Court Rejects Applebee's Appeal In Minimum-Wage Case

    By Brent Kendall


    WASHINGTON (Dow Jones)--The U.S. Supreme Court on Tuesday refused to consider Applebee's International Inc.'s challenge to a lawsuit by more than 5,500 bartenders and servers who alleged the restaurant chain underpaid them.

    At issue was the "tip credit" in federal labor law that allows restaurants to pay tipped employees a reduced hourly wage, so long as their tips make up the difference between the reduced rate and the full minimum-wage, which currently stands at $7.25 an hour.

    The plaintiffs, current and former bartenders and servers, alleged that Applebee's, a subsidiary of DineEquity Inc. (DIN), required them to spend a substantial amount of time on non-tip-producing work, such as cleaning and general preparation. They said Applebee's should have paid them the full minimum wage for the time spent performing such duties.

    Applebee's argued it was permitted to pay the reduced hourly rate because the duties in question were a normal part of the employees' tip-producing jobs as bartenders and servers.

    Lower federal courts in Missouri allowed the lawsuit to proceed, deferring to a 1988 Labor Department handbook that said tipped workers were entitled to the full minimum wage for their non-tip-producing duties if they spent more than 20% of their time on such work.

    In asking the Supreme Court to hear the case, Applebee's said the Labor Department's legal interpretations in the handbook were at odds with the Fair Labor Standards Act and the agency's own regulations. The company said the lower court rulings would "impose crushing administrative and financial burdens on restaurants and other employers of tipped employees."

    The high court rejected Applebee's appeal without comment. The case is Applebee's v. Fast, 11-425.
