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Amaral Brothers, Inc. v. Department of Labor

Supreme Court of Connecticut

April 4, 2017


          Argued December 12, 2016

          Melinda A. Powell, with whom was Robin B. Kallor, for the appellant (plaintiff).

          Gregory T. D'Auria, solicitor general, with whom were Krista D. O'Brien and Thomas P. Clifford III, assistant attorneys general, and, on the brief, George Jepsen, attorney general, and Philip M. Schulz, assistant attorney general, for the appellee (defendant).

          Rogers, C. J., and Palmer, Eveleigh, McDonald, Espinosa and Robinson, Js.


          McDONALD, J.

         General Statutes § 31-60 (b) carves out certain exceptions to Connecticut's minimum wage laws. Among other things, § 31-60 (b) directs the Labor Commissioner, acting through the defendant, the Department of Labor, to adopt regulations that recognize that employers may include gratuities as part of the minimum fair wage for employees in the restaurant and hotel industries who customarily and regularly receive gratuities (tip credit). The primary question raised by this appeal is whether the department's regulations, which limit the tip credit to bartenders and traditional wait staff and do not allow employers to count gratuities toward the minimum wage for other employees such as restaurant delivery drivers, conflict with the enabling statute. Because we conclude that the regulations are not incompatible with § 31-60 (b), we affirm the judgment of the trial court dismissing the appeal of the plaintiff, Amaral Brothers, Inc., from the commissioner's declaratory ruling that the plaintiff's drivers are not subject to a tip credit.

         The following undisputed facts and procedural history are relevant to our disposition of this appeal. The plaintiff is a Connecticut corporation that operates Domino's pizza franchises in Groton and Mystic. The plaintiff employs approximately forty drivers who deliver food items to customers' homes. The drivers own and maintain their vehicles, but the plaintiff reimburses them for travel expenses. The drivers commonly receive gratuities from customers and are required to report their gratuities on an electronic system that the plaintiff maintains.

         In 2013, the plaintiff filed a petition for a declaratory ruling with the commissioner seeking a determination that it could pay a reduced minimum wage to its delivery drivers because they regularly receive gratuities that, on average, result in the drivers earning in excess of the minimum wage. The plaintiff relied on § 31-60 (b), which provides in relevant part that the commissioner ‘‘shall adopt such regulations . . . as may be appropriate to carry out the purposes of this part. Such regulations . . . shall recognize, as part of the minimum fair wage, gratuities in an amount . . . equal to [a] per cent of the minimum fair wage per hour for persons, other than bartenders, who are employed in the hotel and restaurant industry . . . who customarily and regularly receive gratuities . . . .'' The plaintiff also challenged the validity and application of department regulations that distinguish between service employees, for whom restaurant industry employers can apply a tip credit and pay the reduced minimum wage, and nonservice employees, who must receive the full minimum wage. See Regs., Conn. State Agencies §§ 31-62-E1 through 31-62-E4.

         The commissioner issued a declaratory ruling finding that the exclusion of restaurant employees other than waitstaff from the application of the tip credit regulations was valid. The commissioner observed, among other things, that (1) the regulations had been the subject of prior unsuccessful legal challenges, and (2) the regulations are consistent with the notion that the minimum wage law is a remedial statute that should receive a liberal construction to accomplish its purpose of ensuring the payment of fair and just wages. The commissioner also noted that exceptions to rules such as the minimum wage requirement must be narrowly construed and that a petitioner seeking to declare an administrative regulation invalid bears a heavy burden.

         Having determined that the department's tip credit regulations did not contravene the enabling statute and were not arbitrary or invalid, the commissioner then considered the question whether delivery drivers satisfy the regulatory definition of restaurant service employees for whom a credit may be taken. In relevant part, the regulations define a service employee as ‘‘any employee whose duties relate solely to the serving of food and/ or beverages to patrons seated at tables or booths, and to the performance of duties incidental to such service, and who customarily receives gratuities. . . .'' Regs., Conn. State Agencies § 31-62-E2 (c). The commissioner determined that the plaintiff's delivery drivers perform various on the road duties that fail to satisfy this definition in two respects: ‘‘While the drivers are clearly not delivering food to patrons [sitting] at tables or booths, the [department] finds that the regulation is inapplicable primarily because the majority of the specific duties performed by the drivers do not relate solely to the serving of food . . . and to the performance of duties incidental to such service . . . within the meaning of the regulation.''[1] (Emphasis in original; footnote omitted; internal quotation marks omitted.) The commissioner rejected the plaintiff's theory that a driver transporting pizza from a Domino's restaurant to a customer's location is comparable to a server carrying food from a restaurant kitchen to a customer's table. Rather, she found that ‘‘only the solitary act of transferring possession of food from a driver's vehicle to a customer at the doorway of a home is analogous to . . . [the] serving of food . . . .'' (Internal quotation marks omitted.) Drivers' other on the road duties-everything from driving and navigating to vehicle and license maintenance to remote communications with the employer- were deemed to be materially different from the service functions performed by traditional waitstaff while serving food to patrons within the confines of a restaurant.

         The commissioner also found that pizza delivery drivers differ from traditional waitstaff in ways that may impair their capacity to earn gratuities. For example, drivers do not have anopportunity to establish a rapport with customers by taking the initial order, providing status updates, checking periodically on customer satisfaction and needs, or cleaning the service area. Rather, the sole interaction with the customer is the brief exchange of food and payment at the time of delivery. Noting that ‘‘the interaction between the driver and the customer is minimal in duration and quality, '' the commissioner concluded that ‘‘the [on the road] functions possess none of the characteristics customarily associated with the complement of services provided by waitstaff in a restaurant.'' Finally, the commissioner found relevant the fact that, whereas the waitstaff has the opportunity to earn gratuities continuously by servicing multiple tables at once, a delivery driver can earn gratuities from at most one customer at a time and must frequently return to the restaurant for additional assignments, during which time no gratuities can be earned.[2]

         Consistent with these findings, the commissioner concluded that there is a rational basis for distinguishing between delivery drivers and restaurant service employees and, therefore, declined to invalidate the department's regulations as applied to the plaintiff. The commissioner also declined the plaintiff's request to amend the regulations or to promulgate new ones. As a result of the ruling, the plaintiff is unable to take a tip credit and pay its drivers a reduced minimum wage.

         The plaintiff took an administrative appeal of the commissioner's decision to the trial court pursuant to General Statutes § 4-183. The plaintiff claimed that the department acted in an arbitrary and capricious manner and abused its discretion by, among other things: (1) adopting regulations that distinguish between service and nonservice duties in a manner that is not authorized by, and is inconsistent with, the enabling statute, § 31-60 (b); (2) concluding that a driver is only performing service related duties during the time that he or she leaves his or her vehicle to walk the food to the customer's door; and (3) making findings as to the nature of food delivery versus waitstaff work that were not supported by the record. The court, Schuman, J., concluded that the challenged regulations are valid and that the plaintiff's drivers do not satisfy the regulatory definition of service employees. Accordingly, the court affirmed the decision of the commissioner and dismissed the plaintiff's appeal.

         The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1. On appeal, the plaintiff contends that the department's tip credit regulations, as applied to the plaintiff's delivery drivers, are not authorized by § 31-60 (b), and that the trial court should not have deferred to the department's interpretation of the statute. We affirm the judgment of the trial court dismissing the plaintiff's administrative appeal.

         In most instances, the party challenging the validity of an administrative regulation claims that the regulation was inconsistent with an authorizing statute or beyond the legislature's grant of authority to the agency at the time the regulation was issued. Dugas v. Lumbermens Mutual Casualty Co., 217 Conn. 631, 640, 587 A.2d 415 (1991). The present case is different. Here, the plaintiff concedes that the relevant regulations; Regs., Conn. State Agencies§ 31-62-E1 et seq.; were valid when the department first promulgated them but contends, in essence, that they were repealed by implication by a subsequent amendment of the enabling statute.

         We thus begin our analysis by reviewing the history of Connecticut's tip credit laws. The distinction between service and nonservice restaurant employees, as well as the rule that the former can be paid a lower minimum wage than the latter, traces its origins to regulations adopted by the former Department of Labor and Factory Inspection in 1950, before the legislature had authorized a formal tip credit. See Dept. of Labor and Factory Inspection, Mandatory Order No. 4A, § 180-6-1, 16 Conn. L.J., No. 73, p. 5 (March 28, 1950) (establishing minimum wages for women and minors employed as service and nonservice employees in restaurant occupations).[3]Those regulations defined a service employee as ‘‘any employee whose duties relate solely to the serving of food and/or beverage to patrons seated at tables or booths, and to the performance of duties incidental to such service, and who customarily receives gratuities.'' Id., § 180-6-13, p. 6. A nonservice employee, by contrast, was defined as ‘‘an employee other than a service employee, as herein defined. A non-service employee shall include, but is not limited to, counter girls, counter-waitresses and those employees serving food or beverage to patrons seated at tables or booths and who do not customarily receive gratuities . . . .''[4]Id., § 180-6-14. With respect to diversified employment involving both service and nonservice work, the regulations provided that ‘‘[i]f service and non-service duties of an employee are interchanged, and the duties are definitely segregated and recorded, the appropriate hourly rate . . . for each type of work may be used. If service and non-service duties are interchanged, but cannot be definitely segregated or are not recorded, the non-service rate is to be applied . . . .'' Id., ยง 180-6-1 (c), p. 5. At that time, the minimum wage was forty-five ...

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