Marsh v. J. Alexander’s LLC, 869 F.3d 1108 (9th Cir. 2017)

Alec Marsh, who worked as a server for J. Alexander’s, alleged violation of the Fair Labor Standards Act (“FLSA”) based upon the employer’s failure to pay him the federal minimum wage of $7.25 per hour. Marsh further alleged that he received more than $30 per month in tips and that J. Alexander’s took a tip credit (a credit against the minimum wage amount), which was illegal because Marsh spent time at work on a range of duties other than serving customers. Because Marsh failed to allege that his average hourly wage (including tips) across any given workweek was below the federal minimum wage, the district court dismissed Marsh’s claim and denied him leave to amend his complaint. The United States Court of Appeals for the Ninth Circuit reversed, holding that while the district court was correct in refusing to defer to the Department of Labor’s interpretation of the operative regulation, the lower court should have granted plaintiff leave to amend his complaint.