               FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


ALEC MARSH,                        No. 15-15791
          Plaintiff-Appellant,
                                       D.C. No.
              v.                 2:14-cv-01038-SMM

J. ALEXANDER’S LLC,
          Defendant-Appellee.



CRYSTAL SHEEHAN,                   No. 15-15794
          Plaintiff-Appellant,
                                       D.C. No.
              v.                 2:14-cv-00464-SMM

ROMULUS INCORPORATED,
DBA International House of
Pancakes,
          Defendant-Appellee.
2             MARSH V. J. ALEXANDER’S

SILVIA ALARCON,                      No. 15-16561
           Plaintiff-Appellant,
                                         D.C. No.
               v.                  2:14-cv-00465-SMM

ARRIBA ENTERPRISES
INCORPORATED, DBA Arriba
Mexican Grill,
          Defendant-Appellee.



SAROSHA HOGAN; NICHOLAS              No. 15-16659
JACKSON; SKYLAR VAZQUEZ;
THOMAS ARMSTRONG; PHILIP                D.C. Nos.
TODD; MARIA HURKMANS,              2:14-cv-00051-SMM
          Plaintiffs-Appellants,   2:14-cv-00766-SMM
                                   2:14-cv-00768-SMM
               v.                  2:14-cv-00769-SMM
                                   2:14-cv-01243-SMM
AMERICAN MULTI-CINEMA,             2:14-cv-01244-SMM
INC., DBA AMC Theatres
Esplanade 14,
           Defendant-Appellee.
              MARSH V. J. ALEXANDER’S               3

NATHAN LLANOS, an individual,        No. 16-15003
          Plaintiff-Appellant,
                                         D.C. No.
               v.                  2:14-cv-00261-SMM

P.F. CHANG’S CHINA BISTRO,
INC.,
          Defendant-Appellee.



KRISTEN ROMERO, an                   No. 16-15004
individual,
            Plaintiff-Appellant,         D.C. No.
                                   2:14-cv-00262-SMM
               v.

P.F. CHANG’S CHINA BISTRO,
INC.,
          Defendant-Appellee.



ANDREW FIELDS, an individual,        No. 16-15005
          Plaintiff-Appellant,
                                         D.C. No.
               v.                  2:14-cv-00263-SMM

P.F. CHANG’S CHINA BISTRO,
INC.,
          Defendant-Appellee.
4                MARSH V. J. ALEXANDER’S

ALTO WILLIAMS,                          No. 16-15118
           Plaintiff-Appellant,
                                           D.C. No.
                 v.                  2:14-cv-01467-SMM

AMERICAN BLUE RIBBONS
HOLDINGS LLC,
          Defendant-Appellee.



STEPHANIE R. FAUSNACHT,                 No. 16-16033
           Plaintiff-Appellant,
                                           D.C. No.
                 v.                  2:15-cv-01561-SMM

LION’S DEN MANAGEMENT,
LLC, DBA Denny’s,                           OPINION
          Defendant-Appellee.


         Appeal from the United States District Court
                  for the District of Arizona
    Stephen M. McNamee, Senior District Judge, Presiding

            Argued and Submitted April 20, 2017
                 San Francisco, California

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

    Before: Richard A. Paez and Sandra S. Ikuta, Circuit
        Judges, and David A. Faber,* District Judge.

                  Opinion by Judge Ikuta;
   Partial Concurrence and Partial Dissent by Judge Paez


                            SUMMARY**


                             Labor Law

    The panel vacated the district court’s final orders and
judgments in favor of the defendants in actions brought under
the Fair Labor Standards Act by former servers and
bartenders who alleged that their employers improperly
claimed their tips as a credit toward the required minimum
wage.

    Disagreeing with the Eighth Circuit, the panel held that
the Department of Labor’s interpretation, in its Field
Operations Handbook, of 29 C.F.R. § 531.56(e), a regulation
addressing application of the FLSA’s tip credit provision to
the situation in which an employee works for an employer in
two different jobs, did not merit controlling deference
because the DOL’s interpretation was inconsistent with the
dual jobs regulation and attempted to create de facto a new
regulation. The panel held that no provision with the force of


    *
     The Honorable David A. Faber, United States District Judge for the
Southern District of West Virginia, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
6                MARSH V. J. ALEXANDER’S

law permitted the DOL to require employers to engage in
time tracking and accounting for minutes spent in diverse
tasks before claiming a tip credit.

    The panel held that the plaintiffs could not state a claim
by alleging that discrete “related” tasks or duties, which were
performed intermittently over the course of the day and were
intermingled with their duties directed at generating tips,
comprised a dual job when aggregated together over the
course of a workweek. The plaintiffs also could not state a
claim by alleging the performance of “unrelated” duties that
were similarly dispersed and generally assigned.

    The panel vacated the district court’s final orders and
judgments and remanded to allow the plaintiffs an
opportunity to propose new amended complaints in light of
the panel’s opinion.

    Concurring and dissenting, Judge Paez wrote that he
would follow the Eighth Circuit and defer to the DOL’s
interpretation of the regulation, 29 C.F.R. § 531.56(e). Judge
Paez wrote that the DOL’s guidance was entitled to deference
because it interpreted the DOL’s own ambiguous regulation
and was neither plainly inconsistent with that regulation nor
erroneous. Judge Paez would vacate and remand for further
proceedings on whether the defendants violated the FLSA by
paying their employees well below minimum wage for
untipped work.


                         COUNSEL

Jahan C. Sagafi (argued), Outten & Golden LLP, San
Francisco, California; Clifford P. Bendau II, The Bendau Law
                MARSH V. J. ALEXANDER’S                    7

Firm, Phoenix, Arizona; Jamie G. Sypulski, Law Office of
Jamie Golden Sypulski, Chicago, Illinois; Douglas M.
Werman, Werman Salas P.C., Chicago, Illinois; for Plaintiffs-
Appellants.

Paul DeCamp (argued), Jackson Lewis P.C., Reston,
Virginia; Stephanie M. Cerasano, Jackson Lewis P.C.,
Phoenix, Arizona; for Defendant-Appellee P.F. Chang’s
China Bistro.

David A. Selden (argued), Julie A. Pace, and Heidi Nunn-
Gilman, The Cavanagh Law Firm, Phoenix, Arizona, for
Defendant-Appellee Romulus, Inc.

Robert W. Horton and Mary Leigh Pirtle, Bass Berry & Sims
PLC, Nashville, Tennessee; Eric M. Fraser, Osborn Maledon
P.A., Phoenix, Arizona; for Defendant-Appellee J.
Alexander’s LLC.

Karen L. Karr, Clark Hill PLC, Scottsdale, Arizona, for
Defendants-Appellees Arriba Enterprises Inc. and Lion’s Den
Management LLC.

Tracy A. Miller, Ogletree Deakins Nash Smoak & Stewart
P.C., Phoenix, Arizona, for Defendant-Appellant American
Multi-Cinema Inc.

Caroline Larsen and Alexandra J. Gill, Ogletree Deakins
Nash Smoak & Stewart P.C., Phoenix, Arizona, for
Defendant-Appellee American Blue Ribbon Holdings LLC.

Sarah K. Marcus (argued), Senior Attorney; Paul L. Frieden,
Counsel for Appellate Litigation; Jennifer S. Brand,
Associate Solicitor; M. Patricia Smith, Solicitor of Labor;
8                  MARSH V. J. ALEXANDER’S

Office of the Solicitor, United States Department of Labor,
Washington, D.C., for Amicus Curiae Secretary of Labor.


                             OPINION

IKUTA, Circuit Judge:

    The Fair Labor Standards Act of 1938 (FLSA) generally
requires employers to pay a cash wage of $7.25 per hour to
their employees. 29 U.S.C. § 206(a)(1)(c). But where an
“employee engage[s] in an occupation in which he
customarily and regularly receives more than $30 a month in
tips,” id. § 203(t), his employer may pay a reduced cash wage
and claim the employee’s tips as a credit towards the $7.25
per hour minimum, id. § 203(m). The plaintiffs in these
consolidated appeals are former servers and bartenders who
allege that their employers improperly claimed this credit,
thereby failing to pay the required minimum wage. In
support of their theory of the case, the employees rely on a
regulation, 29 C.F.R. § 531.56(e), as most recently interpreted
by the Department of Labor (DOL).1 See Department of
Labor Wage and Hour Division, Field Operations Handbook
§ 30d00(f) (2016). The district court held that the DOL’s
interpretation of the regulation is not entitled to deference and
concluded that the employees failed to state claims for
minimum wage violations. We largely agree with the district
court’s analysis of the deference question, but we vacate and
remand to allow the plaintiffs an opportunity to propose
amended pleadings in light of our holding.


    1
      We use “DOL” to refer both to the Department generally and to the
Secretary of Labor specifically.
                    MARSH V. J. ALEXANDER’S                              9

                                     I

    From November 2012 through April 2013, Alec Marsh
worked as a server for J. Alexander’s, a restaurant in Phoenix,
Arizona.2 In May 2014, he filed a one-count complaint
alleging that J. Alexander’s violated the FLSA’s minimum
wage provision by failing to pay him an appropriate wage.
See 29 U.S.C. § 206(a)(1)(c).

   To understand Marsh’s legal theory, one must first
understand the FLSA’s scheme for guaranteeing a minimum
wage to employees, like Marsh, who routinely earn tips.

    2
      Because the specific circumstances of the plaintiffs’ workweeks are
materially identical, we recount in detail only the facts pertaining to the
plaintiff in the lead case, Alec Marsh, and we refer to the plaintiffs
collectively as “Marsh.” The additional plaintiffs are Crystal Sheehan
(No. 15-15794); Silvia Alarcon (No. 15-16561); Sarosha Hogan, Nicholas
Jackson, Skylar Vazquez, Thomas Armstrong, Philip Todd, and Maria
Hurkmans (No. 15-16659); Nathan Llanos (No. 16-5003); Kristen Romero
(No. 16-15004); Andrew Fields (No. 16-15005); Alto Williams (No. 16-
15118); and Stephanie Fausnacht (No. 16-16033). We refer to the
defendants collectively as “J. Alexander’s.” The additional defendant
establishments are International House of Pancakes (No. 15-15794);
Arriba Mexican Grill (No. 15-16561); AMC Theatres Esplanade 14 (No.
15-16659); P.F. Chang’s China Bistro (Nos. 16-15003/04/05); American
Blue Ribbon Holdings LLC (No. 16-15118); and Denny’s (No. 16-16033).

     Six of these appeals arise from orders granting motions to dismiss,
two appeals are from judgments on the pleadings, and the final appeal
comes from an order granting summary judgment. For the complaints that
the district court dismissed pursuant to Rule 12(b)(6) or as to which the
district court granted judgment on the pleadings under Rule 12(c) of the
Federal Rules of Civil Procedure, we assume the truth of “well-pleaded,
nonconclusory factual allegation[s].” Ashcroft v. Iqbal, 556 U.S. 662, 680
(2009). For the appeal from summary judgment, we view the facts in the
light most favorable to the non-moving party, which here is the plaintiff.
Nolan v. Heald Coll., 551 F.3d 1148, 1154 (9th Cir. 2009).
10              MARSH V. J. ALEXANDER’S

Although all employers must pay their employees a minimum
wage of at least $7.25 per hour, id., the FLSA creates a
special rule for how an employer can compensate a “[t]ipped
employee,” which is defined as “any employee engaged in an
occupation in which he customarily and regularly receives
more than $30 a month in tips,” id. § 203(t). The applicable
statute provides:

       In determining the wage an employer is
       required to pay a tipped employee, the amount
       paid such employee by the employee’s
       employer shall be an amount equal to–

           (1) the cash wage paid such employee
           which for purposes of such determination
           shall be not less than the cash wage
           required to be paid such an employee on
           August 20, 1996; and

           (2) an additional amount on account of the
           tips received by such employee which
           amount is equal to the difference between
           the wage specified in paragraph (1) and
           the wage in effect under section 206(a)(1)
           of this title.

       The additional amount on account of tips may
       not exceed the value of the tips actually
       received by an employee.
                    MARSH V. J. ALEXANDER’S                           11

Id. § 203(m).3 The practical effect of this provision is that an
employer must pay a tipped employee a cash wage of $2.13,
and can make up the difference between $2.13 and the federal
minimum wage by taking a credit for the employee’s tips
(known as a “tip credit”).4 Cumbie v. Woody Woo, Inc.,
596 F.3d 577, 580 (9th Cir. 2010). If the $2.13 cash wage
plus the tips the employee actually received are insufficient
to meet the $7.25 per hour minimum wage, then the employer
must increase the cash wage to meet the minimum wage
requirement. Id. As a result, tipped employees always earn
at least the federal minimum wage.

    The FLSA’s tip credit provision, 29 U.S.C. § 203(m), is
not the only pertinent part of this regulatory regime. Through
regulations interpreting § 203(t), the DOL has addressed the
application of the tip credit provision to the situation in which
an employee works for an employer in two different jobs.
This “dual jobs” regulation provides:

         Dual jobs. In some situations an employee is
         employed in a dual job, as for example, where
         a maintenance man in a hotel also serves as a


    3
     Additional language in § 203(m) that is not relevant here (1) permits
employers to include as wages certain costs for facilities furnished to
employees in some circumstances and (2) imposes certain obligations on
employers claiming the tip credit. See Cumbie v. Woody Woo, Inc.,
596 F.3d 577, 580 & n.8 (9th Cir. 2010).
    4
       At all relevant times, Arizona’s minimum wage law was more
stringent than the FLSA and set the maximum tip credit that an employer
could claim at $3.00, which is less than the $5.12 allowed under federal
law. See Ariz. Rev. Stat. § 23-363(C) (as added by Proposition 202 in
2006). This distinction between state and federal law is immaterial for
purposes of these cases.
12              MARSH V. J. ALEXANDER’S

       waiter. In such a situation the employee, if he
       customarily and regularly receives at least $30
       a month in tips for his work as a waiter, is a
       tipped employee only with respect to his
       employment as a waiter. He is employed in
       two occupations, and no tip credit can be
       taken for his hours of employment in his
       occupation of maintenance man. Such a
       situation is distinguishable from that of a
       waitress who spends part of her time cleaning
       and setting tables, toasting bread, making
       coffee and occasionally washing dishes or
       glasses. It is likewise distinguishable from
       the counterman who also prepares his own
       short orders or who, as part of a group of
       countermen, takes a turn as a short order cook
       for the group. Such related duties in an
       occupation that is a tipped occupation need
       not by themselves be directed toward
       producing tips.

29 C.F.R. § 531.56(e).

    The dual jobs regulation is also not the regime’s end; the
DOL has promulgated internal agency guidance that places a
specific interpretive gloss on the regulation. The DOL’s most
recent interpretation, which the DOL made public in 2016, is
set out in its Wage and Hour Division’s Field Operations
Handbook (FOH). The FOH states:

       (1) When an individual is employed in a
       tipped occupation and a non-tipped
       occupation, for example, as a server and
       janitor (dual jobs), the tip credit is available
         MARSH V. J. ALEXANDER’S                     13

only for the hours spent in the tipped
occupation, provided such employee
customarily and regularly receives more than
$30.00 a month in tips. See 29 CFR
531.56(e).

(2) 29 CFR 531.56(e) permits the employer to
take a tip credit for time spent in duties related
to the tipped occupation of an employee, even
though such duties are not by themselves
directed toward producing tips, provided such
related duties are incidental to the regular
duties of the tipped employee and are
generally assigned to the tipped employee.
For example, duties related to the tipped
occupation may include a server who does
preparatory or closing activities, rolls
silverware and fills salt and pepper shakers
while the restaurant is open, cleans and sets
tables, makes coffee, and occasionally washes
dishes or glasses.

(3) However, where the facts indicate that
tipped employees spend a substantial amount
of time (i.e., in excess of 20 percent of the
hours worked in the tipped occupation in the
workweek) performing such related duties, no
tip credit may be taken for the time spent in
those duties. All related duties count toward
the 20 percent tolerance.

(4) Likewise, an employer may not take a tip
credit for the time that a tipped employee
spends on work that is not related to the
14                   MARSH V. J. ALEXANDER’S

         tipped occupation. For example, maintenance
         work (e.g., cleaning bathrooms and washing
         windows) are not related to the tipped
         occupation of a server; such jobs are non-
         tipped occupations. In this case, the employee
         is effectively employed in dual jobs.

FOH § 30d00(f) (2016).5

     Marsh alleges that as a J. Alexander’s employee, he
“customarily and regularly” received more than $30 a month
in tips.6 As part of his job as a server, Marsh had a range of
duties in addition to serving customers. For instance, Marsh
brewed tea during every opening shift and as needed, which
took about ten minutes to complete each time, for a total of
forty minutes over the course of any given workweek. He
also brewed coffee for each customer who ordered it, which
took about five minutes to complete each time, and added up
to approximately eighty minutes of any given workweek.
Marsh also cut, arranged, and stocked lemons and limes
during every opening shift and throughout his shifts, each
session taking approximately five minutes, for a total of forty
minutes in any given workweek. Marsh cleaned the soft


     5
       According to DOL’s amicus brief in this case, the FOH § 30d00(f)
is its current official interpretation of the dual jobs regulation. This
guidance is currently available in Chapter 30 of the FOH posted on the
DOL’s website, www.dol.gov/whd/foh/foh_ch30.pdf. Marsh’s complaint
relies on an interpretation of the dual jobs regulation that is consistent with
DOL’s current interpretation. Therefore, we refer to FOH § 30d00(f)
when analyzing the merits of Marsh’s claim.
     6
     We rely on Marsh’s proffered amendments and proposed amended
complaint as the source of the facts recited here because these allegations
provide more detail.
                    MARSH V. J. ALEXANDER’S                           15

drink dispensers and their nozzles, replaced soft drink syrups,
and stocked ice. Each task took about five minutes to
complete, and over the course of a workweek these tasks
respectively took twenty, ten, and forty minutes.
J. Alexander’s also assigned Marsh cleaning duties, such as
wiping tables (five to twenty minutes each time, for a total of
one hour and forty minutes over the course of a week), taking
out trash (ten minutes each time, for a total of twenty minutes
over the course of a week), scrubbing walls when the
restaurant was slow (one hour over the course of the week),
sweeping floors (about ten minutes each time, for a total of
forty minutes over the course of a week), and cleaning
restrooms (ten minutes each time, for a total of thirty minutes
over the course of a week).7

    J. Alexander’s took a tip credit for the entire time Marsh
spent at work, including the time he spent on duties that were
not directly connected with generating tips. Because these
“related duties” took up more than 20 percent of Marsh’s
working hours, Marsh’s first complaint relied on the DOL’s
interpretation of the dual jobs regulation, 29 C.F.R.
§ 531.56(e), to allege that J. Alexander’s improperly took a
tip credit for the time Marsh spent on the “related duties”
described in his complaint.




    7
       Although Marsh alleges in his proposed amended complaint
that some of these duties were performed before and after his shifts,
and therefore not related to customer interaction, Marsh conceded at
oral argument that all of his duties were intermingled throughout the time
he spent working. See Oral Argument at 40:45–42:06, Marsh v.
J. Alexander’s, — F.3d — (9th Cir. 2017) (No. 15-15791+),
available at http://www.ca9.uscourts.gov/media/view_video.php?
pk_vid=0000011413.
16               MARSH V. J. ALEXANDER’S

    Marsh’s complaint was one of several filed in the district
court alleging the same theory of FLSA liability, so the cases
were consolidated before a single judge. A few months after
consolidation, Marsh moved for leave to file a proposed
amended complaint alleging in a second count that the
cleaning duties described in his complaint were “unrelated”
to his occupation and that J. Alexander’s was categorically
not allowed to take a tip credit for any of the time spent on
those duties. Therefore, consistent with the FOH § 30d00(f),
Marsh alleged that he should have been paid a cash wage of
$7.25 per hour for his time spent on the related and unrelated
duties that were not directed towards generating tips.
Because J. Alexander’s had paid Marsh a cash wage of less
than $7.25 per hour for the time spent on those duties, Marsh
argued that he was entitled to compensation for the difference
between the full minimum wage and the cash wage he was
paid for the time spent on tasks that did not generate tips.

    J. Alexander’s opposed Marsh’s motion to amend the
complaint and moved to dismiss the original complaint. The
district court ruled on the motions in March 2015 and made
two key holdings. Most important, the district court held that
Marsh’s complaint did not allege that he was working dual
jobs, as defined in the dual jobs regulation. It rejected
Marsh’s reliance on the DOL’s interpretation of the
regulation because the regulation was unambiguous, and the
DOL’s interpretations of the regulation did not merit
deference. Alternatively, the district court also held that “no
minimum wage violation occurs so long as the employer’s
total wage paid to an employee in any given workweek
divided by the total hours worked in the workweek equal or
exceeds the minimum wage rate.” Because the complaint
failed to allege that Marsh’s average hourly wage (including
tips) across any given workweek was below the federal
                   MARSH V. J. ALEXANDER’S                            17

minimum wage, Marsh failed to state a claim. Given this
reasoning, the district court granted J. Alexander’s motion to
dismiss and denied as futile Marsh’s motion for leave to
amend.

    This timely appeal followed.8 We have jurisdiction under
28 U.S.C. § 1291. We review each final order in these
appeals and the questions of statutory and regulatory
interpretation de novo. See Christopher v. SmithKline
Beecham Corp., 635 F.3d 383, 389 (9th Cir. 2011), aff’d,
567 U.S. 142 (2012); Nolan v. Heald Coll., 551 F.3d 1148,
1153 (9th Cir. 2009) (summary judgment); Honey v.
Distelrath, 195 F.3d 531, 533 (9th Cir. 1999) (judgment on
the pleadings); Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1527
(9th Cir. 1995) (motion to dismiss).

                                   II

   To resolve this appeal, we must determine whether we
owe deference to the DOL’s interpretation of the dual jobs
regulation, 29 C.F.R. § 531.56(e), and whether that regulation
supports Marsh’s theory of J. Alexander’s liability.

                                   A

     We first consider our framework for examining agency
interpretations of statutes and regulations. If a statute is clear,
then we “give effect to the unambiguously expressed intent
of Congress.” Chevron, U.S.A., Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837, 842–43 (1984). But if a statute
is silent or ambiguous as to the question at issue, the agency

     8
       The other cases in this consolidated appeal followed similar paths
to this court.
18                  MARSH V. J. ALEXANDER’S

charged with administering the statute may resolve the
ambiguity or fill the statutory gap through regulations,
“which are entitled to deference if they resolve the ambiguity
in a reasonable manner.” Coeur Alaska, Inc. v. Se. Alaska
Conservation Council, 557 U.S. 261, 277–78 (2009).

    If the regulation itself is ambiguous, we consider the
agency’s interpretation of the regulation, even if the
“interpretation comes to us in the form of a legal brief.” Auer
v. Robbins, 519 U.S. 452, 462 (1997); see also Chase Bank
USA, N.A. v. McCoy, 562 U.S. 195, 208 (2011). While we
generally defer to an agency’s interpretations of its own
ambiguous regulations, we do not do so when the
interpretation is “plainly erroneous or inconsistent with the
regulation,” Auer, 519 U.S. at 461 (internal quotation marks
omitted), or when such deference would impermissibly
“permit the agency, under the guise of interpreting a
regulation, to create de facto a new regulation,” Christensen
v. Harris County, 529 U.S. 576, 588 (2000).9 Further, we
must always ensure that the interpretation is not inconsistent
with a congressional directive; “[a] court need not accept an
agency’s interpretation of its own regulations if that


     9
      The dissent errs in stating that we may “decline to apply Auer
deference only where the agency’s interpretation is ‘plainly erroneous or
inconsistent’ with the regulation.” Dissent at 42 (emphasis in original).
We may also withhold Auer deference when an agency’s interpretation is
inconsistent with its prior pronouncements or results in an unfair surprise
to regulated parties. See Christopher v. SmithKline Beecham Corp.,
567 U.S. 142, 155–56 (2012). The district court held that no deference
was owed to the DOL because of its inconsistent interpretation of the dual
jobs regulation over time, and J. Alexander’s contends that we may
withhold deference from the DOL’s interpretation due to both
inconsistency and unfair surprise. Because we resolve the deference
question on different grounds, we do not reach these arguments.
                 MARSH V. J. ALEXANDER’S                      19

interpretation is . . . inconsistent with the statute under which
the regulations were promulgated.” Mines v. Sullivan,
981 F.2d 1068, 1070 (9th Cir. 1992) (citing United States v.
Larionoff, 431 U.S. 864, 872–73 (1977)); see also Cumbie,
596 F.3d at 582 & n.13 (declining to give Auer deference to
a DOL regulatory interpretation that was inconsistent with the
FLSA and the regulation’s text).

    “[W]hen Auer deference is not warranted, an agency’s
interpretation of an ambiguous regulation should be evaluated
under the principle laid down in Skidmore v. Swift & Co.,
323 U.S. 134 (1944).” Indep. Training & Apprenticeship
Program v. Cal. Dep’t of Indus. Relations, 730 F.3d 1024,
1035 (9th Cir. 2013). Under this standard, we accord the
agency’s interpretation “a measure of deference proportional
to the thoroughness evident in its consideration, the validity
of its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to
persuade.” Id. at 1036 (quoting Christopher v. SmithKline
Beecham Corp., 567 U.S. 142, 159 (2012) (internal quotation
marks omitted)).

                               B

    We now turn to the question whether the DOL’s
interpretation of the dual jobs regulation is consistent with the
regulation and statute. To answer this question, we consider
the statute, the regulation, and the DOL’s interpretations in
their historical contexts.

   As originally enacted in 1938, the FLSA did not expressly
address the effect of an employee’s tips on the amount of
wages paid by the employer. In 1966, however, Congress
amended the FLSA to extend its coverage to workers
20                 MARSH V. J. ALEXANDER’S

employed in the hotel and restaurant industries. Or. Rest. &
Lodging Ass’n v. Perez, 816 F.3d 1080, 1083 (9th Cir. 2016).
Because the 1966 amendments brought many traditionally
tipped employees within the FLSA’s protection, Congress
was careful to design the amendments “to permit the
continuance of existing practices with respect to tips.” S.
Rep. No. 89-1487 (1966), as reprinted in 1966 U.S.C.C.A.N.
3002, 3014. Among other changes, the 1966 amendments
added § 203(m) and § 203(t), which respectively allowed an
employer to take a credit against the minimum wage for
employees who were already compensated by tips and
provided a definition of “tipped employee” as meaning “any
employee engaged in an occupation in which he customarily
and regularly receives” the requisite amount of tips.10 See
Fair Labor Standards Amendments of 1966, Pub. L. No. 89-
601, § 101, 80 Stat. 830, 830.

    The 1966 amendments also authorized the DOL “to
promulgate necessary rules, regulations, or orders with regard
to the amendments made.” Id. § 602, 80 Stat. at 844.
Pursuant to this grant of authority, the DOL promulgated
regulations in 1967 in order to clarify the FLSA’s tip credit
provisions, 29 U.S.C. §§ 203(m) and (t). See 32 Fed. Reg.


     10
       The version of § 203(t) enacted in 1966 remains in effect today.
Although Congress amended § 203(m) into its current form in 1974, see
Or. Rest. & Lodging Ass’n, 816 F.3d at 1084, the change to that provision
is immaterial for purposes of this case. The dissent states that the 1974
amendments require the employer to prove “the amount of tip credit, if
any,” and faults the majority for not placing “the burden on the employer
to show it can use the tip credit.” Dissent at 51. But we are not called
upon to consider which party bears the burden of proving the correct
amount of tip credit; rather, we address the question whether the DOL’s
interpretation of the defined term “tipped employee” in § 203(t) merits
deference, which is a question of law for the courts.
                   MARSH V. J. ALEXANDER’S                           21

13,575–13,581 (Sept. 28, 1967). These regulations include
the DOL’s systematic explanation of each of the key words
and phrases in the definition of “tipped employee” codified
at § 203(t).

     As part of the DOL’s clarification of the statutory phrase
“more than $30 a month in tips,” the DOL promulgated the
“dual jobs” regulation, which remains in effect today and
contemplates that an employee can be “employed in a dual
job,” i.e., two different jobs.11 29 C.F.R. § 531.56(e). This
regulation provides that if the employee is engaged in one
occupation in which “he customarily and regularly receives
at least $30 a month in tips,” and is also engaged in a second
occupation in which the employee does not receive the
required amount of tips, then the employer can take a tip
credit only for the first occupation. Id. The regulation gives
one example of a situation where an employee is employed in
a dual job: “where a maintenance man in a hotel also serves
as a waiter.” Id. It also gives two examples of situations
where an employee is not employed in dual jobs: (1) “a
waitress who spends part of her time cleaning and setting
tables, toasting bread, making coffee and occasionally


    11
      The DOL’s procedure for promulgating the dual jobs regulation is
questionable in at least one respect: The DOL added the regulation after
the notice and comment period and without reasoned explanation or
forewarning. See 32 Fed. Reg. 13,575 (Sept. 28, 1967). J. Alexander’s
argues that this procedural defect renders the regulation unworthy of
deference because “where a proper challenge is raised to the agency
procedures, and those procedures are defective, a court should not accord
Chevron deference to the agency interpretation.” Encino Motorcars, LLC
v. Navarro, 136 S. Ct. 2117, 2125 (2016). Because this objection comes
well after the statute of limitations period for procedural challenges to
agency actions, we decline to reach the issue. See Perez-Guzman v.
Lynch, 835 F.3d 1066, 1077–79 (9th Cir. 2016).
22               MARSH V. J. ALEXANDER’S

washing dishes or glasses”; and (2) a “counterman who also
prepares his own short orders or who, as part of a group of
countermen, takes a turn as a short order cook for the group.”
Id.

    Following the promulgation of the dual jobs regulation,
employers requested guidance from the DOL regarding how
to determine whether employees are engaged in a single
occupation in which they receive more than $30 a month in
tips, or instead have two occupations. This was a significant
concern to employers, because if they violated the minimum
wage rule they could be liable not only for “unpaid minimum
wages,” but also for “an additional equal amount as liquidated
damages.” 29 U.S.C. § 216(b).

    The DOL first attempted to provide a workable standard
in a series of opinion letters issued between 1979 and 1985
(hereinafter, “Opinion Letters”). In its first letter on this
issue, the DOL responded to the question whether employees
who had been hired as waitresses, but were also required to
“report to work two hours before the doors are opened to the
public to prepare vegetables for the salad bar,” were engaged
in two different occupations. U.S. Dep’t of Labor, Wage &
Hour Div., Opinion Letter FLSA-895 (Aug. 8, 1979)
(hereinafter, “1979 Letter”). Interpreting the dual jobs
regulation, the DOL concluded that the “salad preparation
activities are essentially the activities performed by chefs,”
and therefore the employer had effectively employed the
workers in two occupations, one as waitresses and the other
as chefs. Id. Accordingly, the DOL concluded that the
employees were not “tipped employees” when engaged in the
chef job, and “no tip credit may be taken for the time spent in
preparing vegetables for the salad bar.” Id.
                 MARSH V. J. ALEXANDER’S                    23

    The DOL addressed a similar question in an opinion letter
issued the following year. U.S. Dep’t of Labor, Wage &
Hour Div., Opinion Letter WH-502 (Mar. 28, 1980),
available at 1980 WL 141336 (hereinafter, “1980 Letter”).
In that letter, the DOL answered the question whether
employees hired as waiters and waitresses, but who were also
required to “clean the salad bar, place the condiment crocks
in the cooler, clean and stock the waitress station, clean and
reset the tables . . . and vacuum the dining room carpet, after
the restaurant is closed,” were engaged in two different
occupations. Id. The DOL concluded that these employees
were engaged in a single tipped occupation because the after-
hours duties were “assigned generally to the waitress/waiter
staff” and there was no “clear dividing line between the types
of duties performed by a tipped employee, such as between
maintenance duties and waitress duties.” Id. Therefore, it did
not matter that some of the employees’ duties were not
“directed toward producing tips.” Id. The DOL analogized
the situation presented to that described in the dual jobs
regulation, id., which explains that “a waitress who spends
part of her time cleaning and setting tables, toasting bread,
making coffee and occasionally washing dishes or glasses” is
not employed in two occupations, 29 C.F.R. § 531.56(e).
Nevertheless, the DOL cautioned that a different rule might
apply where “specific employees [are] routinely assigned, for
example, maintenance-type work such as floor vacuuming.”
1980 Letter.

    In 1985, the DOL addressed the situation to which it had
alluded in the 1980 Letter. A restaurant employer asked
whether an employee who was hired as a waiter but was
assigned to arrive at the restaurant at least two hours before
opening to perform general preparatory duties was employed
in two different occupations. U.S. Dep’t of Labor, Wage &
24               MARSH V. J. ALEXANDER’S

Hour Div., Opinion Letter FLSA-854 (Dec. 20, 1985),
available at 1985 WL 1259240 (hereinafter, “1985 Letter”).
The DOL concluded that the general preparatory duties
constituted a separate occupation, and “no tip credit may be
taken for the hours spent by an assigned waiter or waitress in
opening responsibilities.” Id. In reaching this conclusion, the
DOL cited as material that (1) “only one waiter or waitress is
assigned to perform all preparatory activities,” (2) these
responsibilities “extend to the entire restaurant rather than to
the specific area or customers which they serve,” and (3) “the
activities performed prior to the opening of the restaurant
consume a substantial portion of the waiter or waitress’[s]
workday.” Id.

    While the Opinion Letters provided case-by-case
guidance as to when an employee is engaged in two separate
occupations, some general principles can be derived from this
guidance. Specifically, the DOL deemed an employee to be
engaged in two different occupations when there was a “clear
dividing line” between two different types of duties, such as
when one set of duties was performed in a distinct part of the
workday. See 1980 Letter (articulating the “clear dividing
line” standard); see also 1979 Letter (concluding that an
employee has dual jobs where the duties unrelated to tip
generation were temporally separated from tip-generating
duties). In addition, the DOL considered whether an
employer assigned a set of distinct duties to a single
employee and whether these duties occupied a significant
                    MARSH V. J. ALEXANDER’S                             25

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

    In 1988, the DOL gave its field officers revised guidance
for determining when an employee was engaged in two
different occupations. This guidance, which the DOL
formalized in its FOH, introduced the concept that where
“tipped employees spend a substantial amount of time (in
excess of 20 percent) performing preparation work or
maintenance, no tip credit may be taken for the time spent in
such duties.” FOH § 30d00(e) (1988).13 This was a
significant departure from the earlier guidance; instead of
determining whether an employee was engaged in two jobs
by looking for a “clear dividing line,” as it did in the Opinion
Letters, the DOL’s 1988 guidance required an employer to
sort the employees’ tasks into two different categories (tip-
generating tasks and related but not tip-generating tasks),
determine whether the related tasks take up more than


    12
        As the Opinion Letters demonstrate, the dissent errs in stating that
the DOL has “consistently limited the amount of time a tipped employee
can perform untipped work and still receive the tipped minimum wage.”
Dissent at 46. The Opinion Letters properly focus on the regulatory
question whether the employee is employed in dual jobs; the amount of
time spent in a particular task is only one factor (if considered at all) in
making that determination. In the 1980 Letter, for example, the DOL
focused exclusively on whether “after-hours clean-up” was “assigned
generally,” with no consideration of the time spent performing those
duties.
    13
      Although the DOL has since updated the FOH, the 1988 FOH
guidance is reprinted in full in a publicly available amicus brief that the
DOL filed in an Eighth Circuit case. See Brief for the Secretary of Labor
as Amicus Curiae in Support of Plaintiffs-Appellees at 12–13, Fast v.
Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) (Nos. 10-1725/26),
2010 WL 3761133.
26                  MARSH V. J. ALEXANDER’S

20 percent of the total time worked, and, if so, take a tip
credit only for the time spent on tip-generating tasks. In
effect, this required employers to take a time-tracking or
“time sheet” approach, i.e., evaluating employee work on a
duty-by-duty and minute-by-minute basis, to determine
whether an employer could take a tip credit.14

    In 2011, the DOL doubled down on its time sheet
approach to the dual jobs regulation and presented the FOH
§ 30d00(e) (1988) as its official interpretation of the dual jobs
regulation in an amicus brief to the Eighth Circuit. See Brief
for the Secretary of Labor as Amicus Curiae in Support of
Plaintiffs-Appellees at 12–13, Fast v. Applebee’s Int’l, Inc.,
638 F.3d 872 (8th Cir. 2011) (Nos. 10-1725/26), 2010 WL
3761133. In its amicus brief, the DOL argued that the FOH
§ 30d00(e) interpreted the waitress example in the dual jobs
regulation, which uses the phrase “part of her time” and the
word “occasionally,” by “affix[ing] a specific limit to the
regulation’s tolerance for the ‘occasional’ performance of
such related duties, capping it at 20 percent of the tipped
employee’s time.” See id. at 9.



     14
       The DOL later acknowledged that this guidance had “resulted in
some confusion and inconsistent application” by various courts and
attempted to provide some clarification. See U.S. Dep’t of Labor, Wage
& Hour Div., Opinion Letter (Jan. 16, 2009). In a 2009 opinion letter, the
DOL indicated that an employee engaged in an occupation in which the
employee customarily and regularly receives the requisite amount of tips
can engage in any amount of duties related to that occupation, but not
directed at generating tips, “so long as they are performed
contemporaneously with direct customer-service duties and all other
requirements of the [FLSA] are met.” Id. Following a change in
presidential administration, the DOL withdrew this guidance. See U.S.
Dep’t of Labor, Wage & Hour Div., Opinion Letter (Mar. 2, 2009).
                     MARSH V. J. ALEXANDER’S                             27

    In 2012, the DOL took its FOH guidance a step further,
resulting in the guidance now set forth in the FOH § 30d00(f)
(2016), which the DOL presents as its current official
interpretation of the dual jobs regulation.15 This new version
of the FOH guidance retains the rule that an employer cannot
take a tip credit for time the employee spends performing
“related duties” if those duties exceed 20 percent of the hours
on the job. FOH § 30d00(f)(3). It also adds a new rule: An
employer cannot take a tip credit for time spent in duties that
are “not related” to generating tips. Id. § 30d00(f)(4). This
new requirement imposes additional time-tracking duties:
The employer must sort the employee’s tasks into one of
three categories (tip-generating, related but not tip-
generating, or not related), and then apply the appropriate tip
credit eligibility rules (eligible, eligible only if less than
20 percent of the total time worked, and ineligible,
respectively).

    As this history illustrates, the DOL’s interpretations of the
dual jobs regulation have evolved from requiring a
determination as to whether an employee is “engaged in” two
distinct jobs (as explained in the Opinion Letters) to focusing
on what (in everyday language) would be called a single job
that involves a range of intermingled duties that must be
performed throughout the course of the day.



    15
       In Probert v. Family Centered Services of Alaska, Inc., we held that
“it does not appear . . . that the FOH is a proper source of interpretive
guidance” for purposes of Chevron deference. 651 F.3d 1007, 1012 (9th
Cir. 2011). We need not decide whether Probert applies in the context of
Auer deference, however, because the DOL has adopted the FOH’s
interpretations in its amicus brief, and it is well settled that we may defer
to interpretations presented in such briefs. E.g., Christopher, 567 U.S. at
155.
28                  MARSH V. J. ALEXANDER’S

                                    C

    We now ask whether the DOL’s interpretations in the
FOH § 30d00(f) merit controlling deference under Auer.
Because the FOH § 30d00(f) is both inconsistent with the
regulation, Auer, 519 U.S. at 461, and attempts to “create de
facto a new regulation,” Christensen, 529 U.S. at 588, we
conclude that it does not merit deference.

    As its focus on “dual jobs” indicates, the dual jobs
regulation interprets § 203(t)’s reference to employees
“engaged in an occupation” to mean employed in a “job,” not
performing an activity. See 29 C.F.R. § 531.56(e) (emphasis
added). When the regulation refers to minute-by-minute
tasks or activities, it uses the term “duties” rather than
“occupation.”16 See id. (referring to “related duties in an
occupation”). This interpretation of “occupation” to mean
“job” is consistent with the statute’s most natural meaning.
See Perrin v. United States, 444 U.S. 37, 42 (1979) (noting
the general rule that statutory terms “will be interpreted as
taking their ordinary, contemporary, common meaning”).
Nothing in the FLSA’s “context, structure, history, [or]
purpose” suggests that Congress intended to use the term
“occupation” in § 203(t) to mean discrete duties performed
over the course of the day. Abramski v. United States, 134 S.
Ct. 2259, 2267 (2014) (internal quotation marks omitted).
Indeed, the 1966 amendments at issue here governed how

     16
       DOL regulations consistently interpret the term “occupation” to
refer to a job, rather than to discrete tasks or duties. See 29 C.F.R.
§ 531.56(a) (referring to “[a]n employee employed full time or part time
in an occupation”); id. § 531.57 (contemplating that a tipped employee in
a qualifying occupation may take vacation or sick leave); id. (identifying
specific “occupations” in which one might be engaged as “waiters,
bellhops, taxicab drivers, barbers, or beauty operators”).
                    MARSH V. J. ALEXANDER’S                             29

employers were required to pay employees in jobs that were
traditionally tipped, see Or. Rest. & Lodging Ass’n, 816 F.3d
at 1083, without differentiating between employee duties in
those jobs. Moreover, the FLSA consistently uses the word
“occupation” to refer to jobs in particular industries, rather
than to discrete tasks. See, e.g., 29 U.S.C. § 203(l) (referring
to employment in an occupation other than manufacturing
and mining), § 214(b)(2) (referring to “any occupation in
agriculture”). The best inference from the FLSA’s consistent
use of “occupation” as “job” is that § 203(t), like the other
FLSA provisions discussing occupations, requires a job-based
focus. See IBP, Inc. v. Alvarez, 546 U.S. 21, 34 (2005)
(“[I]dentical words used in different parts of the same statute
are generally presumed to have the same meaning.”). Given
the “common sense” understanding that § 203(t) focuses on
jobs rather than duties, Abramski, 134 S. Ct. at 2267, coupled
with the dual jobs regulation’s use of that understanding, we
reject Marsh’s argument that § 203(t)’s language “engaged in
an occupation” can be read to mean “engaged in an
activity.”17


    17
        Marsh argues that because the FLSA is a remedial statute, it must
“be liberally construed to apply to the furthest reaches consistent with
Congressional direction.” Klem v. County of Santa Clara, 208 F.3d 1085,
1089 (9th Cir. 2000) (quoting Biggs v. Wilson, 1 F.3d 1537, 1539 (9th Cir.
1993)). The Supreme Court has held, however, that this principle does not
apply where, as here, we interpret provisions of the FLSA’s definitions
section, § 203. Sandifer v. U.S. Steel Corp., 134 S. Ct. 870, 879 n.7
(2014) (citing Christopher, 567 U.S. at 164 n.21). As Sandifer made
clear, the principle that “‘exemptions’ in the Fair Labor Standards Act ‘are
to be narrowly construed against the employers seeking to assert them’”
applies only to “exemptions from the Act [that] generally reside in § 213,
which is entitled ‘Exemptions’ and classifies certain kinds of workers as
uncovered by various provisions.” Id. Because the tip credit provisions
here are found in § 203, rather than § 213, and do not exempt any
employee from coverage under the minimum wage requirement, the
30                MARSH V. J. ALEXANDER’S

    Consistent with its reading of “occupation” in § 203(t) to
mean “job,” the dual jobs regulation provides a common
sense approach to defining what constitutes a “job.” This
regulatory approach relies on the everyday understanding that
a job is comprised of a cluster of tasks typically associated
with that job. In the regulation’s example of a “dual job,” a
hotel employs an employee to work in two distinct jobs, one
as a maintenance man and one as a waiter. 29 C.F.R.
§ 531.56(e). These jobs are ordinarily understood to involve
different types of duties: While a maintenance man has a
range of duties associated with keeping buildings or
equipment in good repair, a waiter has a range of duties
associated with serving customers at their tables in a
restaurant. In common usage, these constitute distinct jobs.
By contrast, the dual jobs regulation provides two examples
of jobs comprised of a relevant cluster of tasks: A waitress is
engaged in a single job so long as the range of duties she
performs is typical for a waitress job (e.g., some cleaning,
some food preparation), and a counterman is engaged in a
single job so long as his range of duties is typical for that job
(e.g., cooking some of his own orders, or taking a turn as a
chef) and his fellow countermen share in those duties. Id. As
these examples teach, if the employer has hired a person for
one job (such as waitress or counterman), but that job
includes a range of tasks not necessarily directed towards
producing tips, the person is still considered a tipped
employee engaged in a single job so long as the person
“customarily and regularly receives at least $30 a month in
tips.” Id.; cf. Schaefer v. Walker Bros. Enters., Inc., 829 F.3d
551, 555 (7th Cir. 2016) (“At some restaurants busboys


dissent’s attempt to characterize the definitions at issue here as
exemptions is contrary to Sandifer’s clear statement. See Dissent at
50–51.
                 MARSH V. J. ALEXANDER’S                      31

remove dishes after diners have finished, while at others the
servers perform this chore. So it is not helpful to ask . . .
whether cooks or busboys or janitors do one or another task
at other restaurants.”).

    Instead of providing further guidance on what constitutes
a distinct job, the FOH § 30d00(f) takes an entirely different
approach; it parses an employee’s tasks into three separate
categories (tip-generating, related to the generation of tips, or
unrelated to the generation of tips), and then disallows tip
credits on a minute-by-minute basis based on the type and
quantity of the tasks performed. Because the dual jobs
regulation is concerned with when an employee has two jobs,
not with differentiating between tasks within a job, the FOH’s
approach is inapposite and inconsistent with the dual jobs
regulation.

    Most fundamentally, the FOH ignores the regulation’s
requirement to identify distinct jobs. Under the FOH
§ 30d00(f)(4), an employee is per se engaged in two jobs if
the employee has spent any time at all on tasks not related to
the tipped occupation. Under the FOH § 30d00(f)(2) and (3),
an employee is per se engaged in two jobs if a time-tracking
analysis shows that the employee has spent some minutes
over the course of the day engaged in non-tipped tasks that
are related to tipped tasks, and these minutes in the aggregate
account for 20 percent or more of the hours worked over the
course of a workweek. But as the regulation’s examples
indicate, an employee is not engaged in two distinct jobs
merely because the employee performs different tasks over
the course of the day; rather, the regulation requires an
assessment whether a cluster of different tasks constitutes a
particular job, as that job is ordinarily understood. Moreover,
the FOH’s minute-by-minute and task-by-task approach is
32                  MARSH V. J. ALEXANDER’S

contrary to the statute, which considers only whether an
employee is engaged in a single job that generates the
requisite amount of tips. 29 U.S.C. § 203(t). Indeed,
requiring an employer to analyze every minute of its
employee’s workday to assess tip credit eligibility would
frustrate Congress’s goal “to permit the continuance of
existing practices with respect to tips.” S. Rep. No. 89-1487,
supra page 20, at 3014.

    Not only is the FOH § 30d00(f) inconsistent with the
regulation’s approach to defining the word “job,” it also
produces outcomes that are contrary to the dual jobs
regulation’s examples of tipped employees engaged in a
single occupation. For instance, under the FOH § 30d00(f)’s
approach, an employer would be required to track the time a
counterman spends working as a chef preparing short orders,
which is not a tip-generating task, and determine whether the
cooking duty took up more than 20 percent of the
counterman’s time.18 But the regulation requires no such
inquiry; as long as the task of preparing short orders is
generally assigned to all countermen, the counterman is
engaged in only his single tipped occupation. See 29 C.F.R.
§ 531.56(e). The FOH § 30d00(f) methodology could result
in an outcome whereby the counterman would be treated as
having two jobs, even though the regulation says he has only
one.




     18
       The regulation deems the preparation of short orders to be “related”
to the counterman’s job, 29 C.F.R. § 531.56(e), so in this hypothetical the
employer would not have to determine whether preparation of short orders
constitutes “unrelated” duties. But see 1979 Letter (advising that salad
preparation is a chef duty not related to the job of waitress).
                     MARSH V. J. ALEXANDER’S                              33

    In short, to the extent the FOH § 30d00(f) approach
provides an interpretation of the dual jobs regulation at all, it
provides one that is inconsistent with both the regulation’s
approach to determining whether an employee has two
distinct jobs and with the statute’s direction that any person
engaged in a job that generates the requisite amount of tips is
a “tipped employee.” In effect, the FOH § 30d00(f) creates
an alternative regulatory approach with new substantive rules
that regulate how employees spend their time. This is “de
facto a new regulation” masquerading as an interpretation,
and we decline to defer to it.19 Christensen, 529 U.S. at 588.

    Arguing against this conclusion, Marsh claims that the
dual jobs regulation is ambiguous because it uses the terms
“part of her time” and “occasionally” in the waitress
example.20 Because the DOL can interpret its ambiguous
regulation, Marsh contends that the FOH 30d00(f)’s
interpretation of those words merits Auer deference. In
making this argument, Marsh primarily relies on the Eighth
Circuit’s decision in Fast v. Applebee’s Int’l, Inc., which




    19
       Because the FOH § 30d00(f) is inconsistent with the regulation and
the statute, the FOH § 30d00(f) is also unpersuasive and not entitled to
deference under Skidmore. See Christopher, 567 U.S. at 159.
    20
        We are doubtful that the phrase “part of her time” and the word
“occasionally” in the dual jobs regulation’s waitress example make that
example ambiguous. The regulation merely describes the cluster of
activities that are typically part of a waitress job, and leaves to a case-by-
case determination the question whether an employee with a slightly
different mix of activities would still be a waitress or would have two
different jobs.
34                 MARSH V. J. ALEXANDER’S

deferred to the DOL’s interpretation in the FOH.21 638 F.3d
872, 879 (8th Cir. 2011).

     In Fast, the Eighth Circuit first determined that the dual
jobs regulation was ambiguous because “[b]y using the terms
‘part of [the] time’ and ‘occasionally,’ the regulation clearly
places a temporal limit on the amount of related duties an
employee can perform and still be considered to be engaged
in the tip-producing occupation,” yet the regulation does not
define the term “occasionally.” Id. at 879 (second alteration
in original). The Eighth Circuit noted that other courts relied
on temporal limits to determine whether an employee was
engaged in dual jobs, citing Myers v. Copper Cellar Corp.,
192 F.3d 546, 549–50 (6th Cir. 1999), which held “that
servers who spent entire shifts working as ‘salad preparers’
were employed in dual jobs.” Fast, 638 F.3d at 880. By
contrast, “where the related duties are performed
intermittently and as part of the primary occupation, the
duties are subject to the tip credit.” Id. (citing Pellon v. Bus.
Representation Int’l, Inc., 528 F. Supp. 2d 1306, 1313 (S.D.
Fla. 2007), aff’d, 291 Fed. App’x 310 (11th Cir. 2008)). The
Eighth Circuit concluded that the DOL’s interpretation was
reasonable because “[t]he 20 percent threshold used by the
DOL in its Handbook is not inconsistent with § 531.56(e) and
is a reasonable interpretation of the terms ‘part of [the] time’
and ‘occasionally’ used in that regulation.” Id. (second
alteration in original). The Eighth Circuit did not explain
why using 20 percent (rather than some other percent of the
workweek) was reasonable, other than to reference DOL



     21
       The Eighth Circuit deferred to an earlier DOL interpretation
codified at the FOH § 30d00(e) (1988), but the differences between that
interpretation and the one presented here are immaterial to our analysis.
                    MARSH V. J. ALEXANDER’S                             35

regulations in other contexts that had imposed a 20 percent
temporal limitation. See id.

    We disagree with the Eighth Circuit’s Auer analysis on
several grounds. Most important, the Eighth Circuit failed to
consider the regulatory scheme as a whole, and it therefore
missed the threshold question whether it is reasonable to
determine that an employee is engaged in a second “job” by
time-tracking an employee’s discrete tasks, categorizing
them, and accounting for minutes spent in various activities.
The Eighth Circuit focused on a few words in the regulation
(“part of her time” and “occasionally”), id. at 880, that in
context merely explain that a waitress who engages in a range
of typical tasks over the course of the day is not in a dual job.
The Eighth Circuit ignored the regulation’s second example
of an employee not engaged in a dual job, i.e., the
counterman, which does not include any language imposing
a temporal limitation on the amount of time that could be
spent engaging in related activities.22 29 C.F.R. § 531.56(e).
Because the Eighth Circuit narrowly focused on a few words
out of context, it failed to grapple with the crucial question
whether the FOH’s time sheet approach is a reasonable



    22
        The dissent contends that the language “takes a turn” in the
counterman example expresses a temporal limitation. Dissent at 45. We
disagree. Nothing in the regulation’s text would prohibit four countermen
from taking turns as the short order cook for equal periods during a shift,
such that each counterman spends 25 percent of the shift performing the
duty. That arrangement, which the regulation’s text allows, is
incompatible with the DOL’s arbitrary 20 percent threshold. If the
counterman example no longer reflects contemporary practice, as the
dissent suggests, see id. at 45 n.3, the solution is to amend the regulation
or the statute, not to craft a new rule under the guise of interpreting the
current unambiguous language.
36               MARSH V. J. ALEXANDER’S

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

    Moreover, the very cases that the Eighth Circuit cited to
support its ruling, Myers and Pellon, suggest that the FOH’s
approach is unreasonable. These cases hold, consistent with
the dual jobs regulation and the Opinion Letters, that in order
for an employee to be engaged in two different occupations
there must be a clear dividing line between two different
types of duties, such as when one set of duties is performed
in a distinct part of the workday. Compare Myers, 192 F.3d
at 549–50 (holding that a waitress’s shift as a salad preparer
was a dual job), with 1979 Letter (similar). As Fast
summarized the rule from Pellon, “where the related duties
are performed intermittently and as part of the primary
occupation, the duties are subject to the tip credit.” Fast,
638 F.3d at 880. Such intermittent duties are not a second
“job” as that word is reasonably understood. Yet under the
FOH, such intermittently performed duties may be treated as
a second job for which the employer may not take a tip credit.

    Finally, we disagree with Fast’s conclusion (and the
DOL’s argument) that the DOL’s prescription of a specific
temporal limit on certain duties (i.e., 20 percent of the total
time worked) is a reasonable method for determining when an
employee has a second job. The Eighth Circuit upheld this
arbitrary temporal limitation in part because it is consistent
with temporal limitations in other parts of the FLSA’s
regulatory regime. See id. at 881. But this fact is irrelevant
because each example of a temporal cap that the DOL and
Fast cite was either legislatively enacted or promulgated
through notice and comment rulemaking. See 29 U.S.C.
§ 213(c)(6); 29 C.F.R. §§ 552.6(b), 786.1, 786.100, 786.150,
786.200; Fast, 638 F.3d at 881. By allowing the DOL to
                    MARSH V. J. ALEXANDER’S                             37

impose a substantive 20 percent cap on the performance of
certain duties under the guise of interpreting the word
“occasionally,” the Eighth Circuit contravened the rule that
agencies not be allowed to create new substantive regulations
through interpretation. See Christensen, 529 U.S. at 588.
Although the regulations that the DOL cites may be
permissible constructions of the FLSA provisions they
implement, that tells us nothing about whether the FOH
§ 30d00(f) is consistent with the text of the dual jobs
regulation and § 203(t).23

    In short, the Eighth Circuit did not properly consider
whether the FOH was consistent with the regulation, Auer,
519 U.S. at 461, whether deference would allow the agency
to “create de facto a new regulation,” Christensen, 529 U.S.
at 588, or whether the interpretation would be consistent with
§ 203(t). Accordingly, we reject Marsh’s argument that we
should adopt Fast’s approach.24


    23
       For the same reason, we reject the dissent’s argument that the FOH
§ 30d00(f) is not inconsistent with the dual jobs regulation because other
regulations require employers to track an employee’s time. See Dissent
at 49 (citing 29 C.F.R. § 516.28(a)). The proper question is whether the
FOH § 30d00(f) is consistent with the regulation it purports to interpret,
not whether it bears some similarity to other aspects of the FLSA’s
statutory and regulatory scheme.
     24
        Marsh argues that the Seventh Circuit, like the Eighth, has deferred
to the DOL’s interpretation of the dual jobs regulation. We disagree. In
Driver v. AppleIllinois, LLC, the Seventh Circuit considered whether to
grant a petition to appeal a denial of class certification. 739 F.3d 1073,
1074 (7th Cir. 2014). When discussing the case’s background, Driver
mentioned the DOL’s interpretation of the dual jobs regulation in order to
provide context to the class definition in issue. See id. at 1075. Driver
was not presented with, and did not decide, the question whether Auer
compels deference to the DOL’s interpretation. More recently, the
38                 MARSH V. J. ALEXANDER’S

    After exhausting his legal arguments, Marsh urges us to
consider that the FOH’s approach to the dual jobs inquiry
simply “makes sense.” He contends that an employer should
not be able to hire an employee for a job that is traditionally
tipped, but then require the employee to engage in tasks
associated with a job that is traditionally not tipped.
According to Marsh, the dual jobs regulation and Opinion
Letters do not adequately address this problem, and so the
DOL must be free to step in with a solution. Our task,
however, is not to pass on the wisdom of the FOH’s
approach, but to determine whether the DOL can enforce this
approach in the guise of interpreting a regulation. We hold
only that, at present, no provision with the force of law
permits the DOL to require employers to engage in time
tracking and accounting for minutes spent in diverse tasks
before claiming a tip credit. Our decision today does not
prevent the DOL from attempting to promulgate this
approach through rulemaking, nor prevent Congress from
requiring such an approach through legislation.

                                   III

    Our refusal to defer to the FOH § 30d00(f) does not mean
that other guidance from the DOL might not warrant


Seventh Circuit held that the evidence before it did not establish a
violation of the FLSA even under the FOH, and therefore did not reach the
question whether the FOH merited deference. See Schaefer, 829 F.3d at
554–55.

     Because we reject Fast as unpersuasive, we also find unpersuasive
those district court cases that have followed Fast’s approach without
serious consideration or analysis of Fast’s errors. See, e.g., McLamb v.
High 5 Hospitality, 197 F. Supp. 3d 656, 662–63 (D. Del. 2016); Flood v.
Carlson Rest. Inc., 94 F. Supp. 3d 572, 582–83 (S.D.N.Y. 2015).
                     MARSH V. J. ALEXANDER’S                             39

deference. The DOL’s prior Opinion Letters, for example,
consider whether there is a “clear dividing line” between two
different types of duties, see 1980 Letter, whether one set of
duties is performed in a distinct part of the workday, see 1979
Letter, or whether duties that do not produce tips are
generally assigned, see 1985 Letter. We need not decide here
whether the Opinion Letters merit deference, however,
because Marsh conceded at oral argument that his “related”
and “unrelated” duties were all intermingled with the
performance of duties directed at generating tips. See supra
at 15, note 7. But because Marsh’s concession is in tension
with certain allegations in the proposed amended complaint,
e.g., that some of his cleaning tasks (such as wiping down
tables for 20 minutes after each closing shift) were temporally
separated from serving customers, the proper course here is
to remand to the district court to permit Marsh the
opportunity to propose an amended complaint that focuses his
allegations in light of our holding today.25 Cf. Mark H. v.
Lemahieu, 513 F.3d 922, 939 (9th Cir. 2008) (clarifying the
law and then remanding for an opportunity to propose an
amended complaint in light of the clarification). On remand,
if Marsh alleges facts that state a claim by reference to DOL
guidance other than the FOH § 30d00(f), such as the Opinion
Letters, the district court may consider in the first instance



     25
        This disposition is the same for all plaintiffs in these consolidated
appeals. In Crystal Sheehan’s appeal, the defendant asks us to affirm on
the alternative ground that the statute of limitations bars Sheehan’s claim.
We decline this invitation, as we believe that this argument would benefit
from further development in the district court, including possible
discovery on the issue of the willfulness of any alleged FLSA violation.
See 29 U.S.C. § 255(a); Fed. R. Civ. P. 56(d). We leave to the district
court’s sound discretion how to proceed with the resolution of this
question on remand.
40                  MARSH V. J. ALEXANDER’S

whether deference is owed to such guidance, and whether the
facts alleged state a claim.

    In sum, Marsh cannot state a claim under § 206(a) by
alleging that discrete “related” tasks or duties, which were
performed intermittently over the course of the day and were
intermingled with his duties directed at generating tips,
comprise a dual job when aggregated together over the course
of a workweek. Performance of dispersed, related, and
generally assigned duties is consistent with the waitress and
counterman examples in the dual jobs regulation, which are
examples of employment in a single tipped occupation.
29 C.F.R. § 531.56(e). Marsh also cannot state a claim by
alleging the performance of “unrelated” duties that were
similarly dispersed and generally assigned; that, too, is
inconsistent with the concept of a dual job. We do not reach
or decide whether allegations that an employee performed
general maintenance work for an extended period before or
after customer interaction began or ended rises to the level of
a dual job.26


     26
       We reject J. Alexander’s argument that we can affirm on the district
court’s alternative determination that Marsh failed to state a minimum
wage claim under 29 U.S.C. § 206(a) because he failed to allege that he
earned less than minimum wage in any given workweek. This argument
relies on United States v. Klinghoffer Brothers Realty Corp., in which an
employer required its employees to work extra hours without pay.
285 F.2d 487, 490 (2d Cir. 1960). The Second Circuit held that this
practice did not violate the FLSA’s minimum wage requirements so long
as the employees received the minimum wage for each hour worked when
the total weekly pay was divided by the total number of hours worked.
Id.; see also Adair v. City of Kirkland, 185 F.3d 1055, 1063 (9th Cir.
1999) (holding that a district court did not err in applying a similar
approach). In order to avoid FLSA liability under Klinghoffer’s approach,
an employer must pay its employees more than the minimum wage.
Because an employer relying on a tip credit to comply with the FLSA
                    MARSH V. J. ALEXANDER’S                            41

    Although we agree with the district court that the FOH
§ 30d00(f) does not warrant Auer deference, we vacate the
final orders and judgments in these cases and remand to allow
the plaintiffs opportunities to propose new amended
complaints in light of this opinion.27

    VACATED AND REMANDED.



PAEZ, Circuit Judge, concurring and dissenting:

    Contrary to the majority, I would defer to the Department
of Labor’s (“DOL”) interpretation of 29 C.F.R. § 531.56(e),
the tipped minimum wage regulation at issue in this case.1


never pays more than minimum wage to an employee, see 29 U.S.C.
§ 203(m) (allowing an employer to take a tip credit only for the amount
of tips necessary to ensure that the employee receives the minimum
wage), Klinghoffer is not applicable here. Therefore, Marsh’s complaint
and proposed amended complaint alleged that J. Alexander’s paid Marsh
less than minimum wage over the course of a workweek because he had
two jobs within the meaning of § 531.56(e) and was not paid the minimum
wage for the second job.
    27
       The parties will bear their own costs on appeal. See Fed. R. App.
P. 39(a)(4).
     1
       I agree with the majority that the dispositions below should be
vacated and remanded, but I would remand for further proceedings on the
merits of the plaintiffs’ claims as alleged. On several other minor points,
I also agree with the majority. I agree that Probert’s suggestion that the
Field Operations Handbook (“FOH”) was not “a proper source of
interpretative guidance” does not govern our Auer deference analysis.
Opin. at 27 n.15. Probert v. Family Centered Servs. of Alaska., Inc.,
651 F.3d 1007, 1012 9th Cir. 2011). I also agree that the wage averaging
scheme described in United States v. Klinghoffer Bros. Realty Corp.,
42                 MARSH V. J. ALEXANDER’S

Employees paid the tipped minimum wage for untipped work
are underpaid.2 Recognizing this problem, the DOL issued
guidance clarifying that under § 531.56(e), employers must
pay their tipped employees the full minimum wage when
such employees spend a substantial amount of time
performing untipped work. Because the DOL’s guidance
interpreted its own ambiguous regulation, and is neither
plainly inconsistent with that regulation nor erroneous, it is
entitled to Auer deference. For the reasons discussed below,
I would follow the Eighth Circuit’s persuasive opinion in
Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011),
and defer to the DOL’s important, necessary, and sound
guidance. Accordingly, I respectfully dissent from this part
of the majority’s opinion.

                                   I.

    An agency’s interpretation of its own ambiguous
regulation is ordinarily entitled to deference, because an
agency’s own regulation “reflect[s] the considerable
experience and expertise the [agency] ha[s] acquired over
time with respect to the complexities of the [statute].”
Gonzales v. Oregon, 546 U.S. 243, 256 (2006). We will
decline to apply Auer deference only where the agency’s
interpretation is “plainly erroneous or inconsistent” with the
regulation. Auer v. Robbins, 519 U.S. 452, 461 (1997)


285 F.2d 487, 490 (2d Cir. 1960) is not applicable here. Opin. at 40–41
n.26. I therefore concur in these aspects of the majority’s opinion.
     2
       See William Whittaker, Cong. Research Serv., RL33348, The Tip
Credit Provisions of the Fair Labor Standards Act 2–3 (2006) (explaining
that waiters and other service employees were not covered by the FLSA
until 1966, at which point Congress introduced the tipped minimum wage
so that such employees would receive the minimum wage).
                  MARSH V. J. ALEXANDER’S                      43

(internal quotation marks and citation omitted) (describing
the standard as “deferential”).           Where an agency’s
interpretation is plainly erroneous or inconsistent, we will still
defer to it, but only “proportional to the thoroughness evident
in its consideration, the validity of its reasoning, its
consistency with earlier and later pronouncements, and all
those factors which give it power to persuade.” Christopher
v. SmithKline Beecham Corp., 567 U.S. 142, 159 (2012)
(internal quotation marks and citations omitted).

    I part ways with the majority at each step of the Auer
deference analysis. First, § 531.56(e) is ambiguous, as it
employs undefined terms like “occasionally,” and provides
two examples which, at first pass, appear to conflict. Second,
the DOL’s interpretation of this ambiguous regulation has
been consistent over time. The DOL has consistently stated
that the amount of time a tipped employee can spend on
untipped work is limited. The DOL’s guidance setting that
limit at 20% of an employee’s time is also consistent with
other Fair Labor Standards Act (“FLSA”) provisions. In
contrast, as I understand its reasons for vacating and
remanding, the majority would require Marsh to show a
“clear dividing line” between, or distinct hours for, different
jobs, a requirement which is inconsistent with DOL guidance,
and would read out key regulatory provisions. The majority
also errs as the regulations embrace time tracking with
respect to each occupation. Third, underlying these errors,
the majority fails to apply the narrow construction principle
and mistakenly places the burden of proof on the employee.
44                MARSH V. J. ALEXANDER’S

                                II.

                                A.

     Section 531.56(e) provides:

        In some situations an employee is employed
        in a dual job, as for example, where a
        maintenance man in a hotel also serves as a
        waiter. In such a situation . . . no tip credit can
        be taken for his hours of employment in his
        occupation of maintenance man. Such a
        situation is distinguishable from that of a
        waitress who spends part of her time cleaning
        and setting tables, toasting bread, making
        coffee and occasionally washing dishes or
        glasses. It is likewise distinguishable from
        the counterman who also prepares his own
        short orders or who . . . takes a turn as a short
        order cook for the group. . . .

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

    Section 531.56(e) is ambiguous. First, § 531.56(e) uses
ambiguous terms, including “occasional[]” and “part of [the]
time,” without defining them. The majority does not provide
any definition of the terms nor does it explain why or how
these terms are unambiguous. Opin. at 33 n.20. The Eighth
Circuit in Fast, by contrast, does explain that the use of the
term “occasionally” is ambiguous because it does not explain
for how much time an employer can assign untipped work,
and still treat that work as “occasional.” 638 F.3d at 879. I
would join the Eighth Circuit’s persuasive holding that the
regulation is ambiguous.
                   MARSH V. J. ALEXANDER’S                           45

    Second, § 531.56(e) is ambiguous because it includes two
examples which, at first glance, seem to conflict. While the
regulation explains that a waitress cannot be paid the tipped
minimum wage for more than “part [] time [or] occasional[ ]”
work “cleaning and setting tables, toasting bread, making
coffee and . . . washing dishes or glasses,” the majority reads
the regulation to allow a counterman to be paid the tipped
minimum wage for any amount of time spent on work
“prepar[ing] short orders.” Opin. at 32; 29 C.F.R.
§ 531.56(e). The majority’s reading ignores crucial text in
§ 531.56(e) which does place a temporal limit on a
counterman’s work as a short order cook. For example, the
regulation allows a counterman to be paid the tipped
minimum wage when he “takes a turn as a short order cook
for the group,” which indicates a limit on the amount of time
he can work as a short order cook and still be paid the tipped
minimum wage. 29 C.F.R. § 531.56(e).3 In any case, any
confusion regarding how to harmonize the two examples only


     3
       The counterman example may be confusing as a result of when the
regulation was promulgated—1967. Fast, 638 F.3d at 878. It may have
been the case that in 1967 customers tipped countermen to cook short
orders in their presence. DOL’s December 2016 Fact Sheet makes clear
that countermen are tipped employees only when they “serve customers.”
U.S. Department of Labor, Wage and Hour Division Fact Sheet # 15:
Tipped Employees Under the Fair Labor Standards Act (FLSA) (rev. Dec.
2 0 1 6 ) ,                 a v a i l a b l e                    a t
https://www.dol.gov/whd/regs/compliance/whdfs15.htm. (last visited
August 22, 2017).

     The majority’s example of a four counterman group spending 25% of
their time cooking short orders explains precisely why the regulation is
ambiguous and guidance was due. Opin. at 35 n.22. A four counterman
group would cause each counterman to perform more than occasional
untipped work, while a five counterman group would only occasionally,
or 20% of the time, cook orders.
46               MARSH V. J. ALEXANDER’S

demonstrates that the regulation is ambiguous. Because the
regulation is ambiguous, the next step of the Auer analysis is
to determine whether the DOL’s interpretation is “plainly
erroneous or inconsistent.” 519 U.S. at 461.

                              B.

    The DOL’s interpretation is far from “plainly erroneous
or inconsistent” and is instead, consistent with nearly four
decades of interpretive guidance and with the statute and the
regulation itself. Id. The DOL’s guidance at issue, in its
Field Operations Handbook (“FOH”), provides that where
“tipped employees spend a substantial amount of time (i.e., in
excess of 20 percent of the hours worked in the tipped
occupation in the workweek) performing [] related [untipped]
duties, no tip credit may be taken for the time spent in those
duties.” FOH § 30d00(f) (2016).

    First, § 531.56(e) and the DOL’s interpretive guidance
have consistently limited the amount of time a tipped
employee can perform untipped work and still receive the
tipped minimum wage. We have held that a consistent view
over twenty-five years is a an “extended period of time”
meriting “[s]pecial deference.” Bassiri v. Xerox Corp.,
463 F.3d 927, 933 (9th Cir. 2006) (internal citations and
quotation marks omitted).             Section 531.56(e) was
promulgated in 1967, and itself places temporal limits on
untipped work by using the phrases “occasional[],” “part of
[the] time,” and “takes a turn.” Since 1979, the DOL has
issued opinion letters, fact sheets, amicus briefs, and the FOH
which have consistently placed temporal limits on untipped
work. See Brief for the Secretary of Labor as Amicus Curiae
in Support of Plaintiffs-Appellants, Marsh v. J. Alexander’s
LLC, Nos. 15-15791+ (9th Cir. July 13, 2016) (“DOL Amicus
                    MARSH V. J. ALEXANDER’S                            47

Brief”), at 8–10. As the Eighth Circuit explained in Fast, the
FOH drew from prior opinion letters, including the 1980
letter describing a waitress working after hours cleaning, and
the 1985 letter describing a waiter performing preparatory
work for 30% to 40% of her time, when it set a 20% threshold
on the amount of time a tipped employee could perform
untipped work. 638 F.3d at 878. Over thirty-eight years, the
DOL has consistently interpreted § 531.56(e) to involve a
temporal limit, and this interpretation is also consistent with
the regulation itself.4

   Second, the 20% threshold is also consistent with other
DOL provisions containing temporal limitations. Congress
and the DOL have defined occasional in many other FLSA
provisions to mean 20%. See 29 U.S.C. § 213(c)(6)(G);
29 C.F.R. § 552.5; 29 C.F.R. § 552.6(b); 29 C.F.R. § 786.150;

    4
       The majority points to the 1980 Opinion Letter as an example in
which the DOL did not consider the time spent performing those duties.
I disagree, as the 1980 Letter embraced time limits when it explained that
“routine[]” untipped work would not be permissible. 1980 Opinion Letter.

     The majority also suggests that the FOH is inconsistent with
§ 531.56(e) because it treats duties related and unrelated to tipped work
differently. Opin. at 27. But the regulation itself distinguishes between
related and unrelated work, for example in allowing a waitress to be paid
the tipped minimum wage for limited time setting tables and making
coffee, but disallowing a waiter to be paid the tipped minimum wage for
any time spent as a janitor. Moreover, the DOL’s guidance has also
consistently distinguished between related and unrelated duties. See, e.g.,
U.S. Dep’t Labor, Wage & Hour Div., Opinion Letter FLSA-895 (Aug. 8,
1979) (“1979 Opinion Letter”) (disallowing a waitress to be paid the
tipped minimum wage for time spent preparing vegetables for the salad
bar); U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter Fair Labor
Standards Act, WH-502, 1980 WL 141336 (“1980 Opinion Letter”)
(allowing a waiter to be paid the tipped minimum wage for restocking the
waiter station, but not for maintenance work).
48               MARSH V. J. ALEXANDER’S

29 C.F.R. § 786.1; 29 C.F.R. § 786.100; 29 C.F.R. § 786.200.
The DOL explained in its amicus brief in this case that it
derived the 20% threshold from these provisions. DOL
Amicus Brief, at 19, n.6; see also Fast, 638 F.3d at 881
(deferring to the FOH in part because the 20% threshold drew
from numerous other FLSA provisions). The 20% threshold
is consistent across the FLSA statutory scheme and
implementing regulations.

    The majority’s holding that the DOL’s interpretation was
inconsistent errs in several regards. First, I read the majority
to require Marsh to allege a “clear dividing line” between
time spent on tipped and untipped work (for example,
untipped work performed before or after the restaurant is
open to customers) on remand, but this requirement is
inconsistent with § 531.56(e) and the DOL’s interpretive
guidance. Opin. at 39. The 1980 Opinion Letter explains that
“where there is a clear dividing line between the types of
duties performed by a tipped employee, . . . no tip credit may
be taken for the time spent . . . performing maintenance
duties.” 1980 Opinion Letter. In other words, the phrase
“clear dividing line” in the opinion letter referred to a
division between “types of duties” rather than a division on
the basis of hours, and moreover, the letter actually approved
of limited “after-hours” duties related to tipped work. 1980
Letter. And the 1979 Letter upon which the majority relies,
concluded that waitresses must be paid the full minimum
wage because the work performed was similar to a chef’s
work, not because it was performed during a distinct part of
the day. 1979 Letter; Opin. at 39. The majority’s
requirement is therefore misplaced and inconsistent with the
DOL’s guidance.
                     MARSH V. J. ALEXANDER’S                               49

    Second, the majority asserts that the FOH is inconsistent
because it requires employers to analyze duties or tasks rather
than jobs or occupations. Opin. at 28. The regulation
provides that “[a]n employee who receives tips . . . is a
‘tipped employee’ . . . when, in the occupation in which he is
engaged, the amounts he receives as tips [exceed the requisite
amount].” 29 C.F.R. § 531.56(a). I agree with the Eighth
Circuit that the phrase “engaged in” requires the DOL to
interpret precisely when an employee is performing tipped
work, including by looking at when the employee performs
untipped duties like those of a janitor. See Fast, 638 F.3d at
879–80. Moreover, § 531.56(e) itself discusses both duties
and occupations. See 29 C.F.R. § 531.56(e) (referring both to
“two occupations” and “related duties in an occupation”).

    Third, the majority erroneously asserts that the FOH’s
interpretation is inconsistent with the statute and regulations
because it requires keeping track of the employee’s time,
while Congress intended “to permit the continuance of
existing practices with respect to tips.” Opin. at 31–32; S.
Rep. No 89-1487 (1966) reprinted in 1966 U.S.C.C.A.N.
3002, 3014. To the contrary, the FOH requires employers to
track an employee’s time in a manner that is consistent with
other DOL guidance regarding the tipped minimum wage.
FOH § 30d00(f) (2016). For example, 29 C.F.R. § 516.28(a)
requires employers to maintain records of each hour an
employee receives tips and each hour she does not. Any FOH
time tracking requirement is consistent with the DOL’s tipped
minimum wage guidance.5


    5
        The majority asserts that we should look only to the regulation to
determine consistency. Opin. at 37 n23. But the majority contradicts
itself, as it also correctly asserted that we look to prior interpretations and
pronouncements to determine consistency under Auer. Opin. at 18 n.9.
50              MARSH V. J. ALEXANDER’S

                             C.

    Finally, underlying these errors, the majority fails to
apply the narrow-construction principle to the tipped
minimum wage. Opin. at 29–30 n.17. In my view, the tipped
minimum wage is an exemption in the FLSA that should be
construed narrowly against employers. The “FLSA is to be
construed liberally in favor of employees [and] exemptions
are narrowly construed against employers.” Haro v. City of
Los Angeles, 745 F.3d 1249, 1256 (9th Cir. 2014) (citation
omitted). The majority points to two recent Supreme Court
cases which held that the narrow-construction principle did
not apply to two provisions in the FLSA definitions section,
the section which also contains the tipped minimum wage.
Opin. at 29–30 n.17; See Sandifer v. U.S. Steel Corp., 134 S.
Ct. 870, 879 n.7 (2014) (holding the narrow-construction
principle inapplicable to a definitions provision regarding
doffing clothing because narrowly construed exemptions
“generally reside in § 213, which is entitled ‘Exemptions’ and
classifies certain kinds of workers as uncovered by various
provisions”) (emphasis added); see also id. (Sotomayor, J.,
declining to join footnote 7); SmithKline, 567 U.S. at 164
n.21 (holding the narrow-construction principle inapplicable
to the “sale” definition because it was “a general definition
that applies throughout the FLSA”). The tipped minimum
wage is distinct from these definitional FLSA provisions,
however. Unlike “sale,” the provision at issue in SmithKline,
the tipped minimum wage is not a definition which applies
throughout the FLSA. 567 U.S. at 164 n.21. Likewise, the
tipped minimum wage more closely resembles the
exemptions in § 213 which have “generally” been the subject
of the narrow construction principle. See 29 U.S.C. § 213
(excluding from the minimum wage classes of employees
including executives and professionals, outside salesmen,
                 MARSH V. J. ALEXANDER’S                    51

amusement park employees, fishers, and farmers); Sandifer,
134 S.Ct. at 879 n.7. Further, we have held that the related
tip pool requirements should be narrowly construed, see
Oregon Rest. & Lodging Ass’n v. Perez, 816 F.3d 1080, 1090
(9th Cir. 2016), and, post-Sandifer and SmithKline, that a
provision defining employees “engaged in fire protection”
should be narrowly construed, see Haro, 745 F.3d at 1256.
I would, accordingly, consider the tipped minimum wage an
exemption, although it arises in the definitions section of
FLSA, and give it a narrow construction.

    Relatedly, the majority fails to place the burden on the
employer to show it can use the tip credit. DOL Amicus
Brief, at 25. Congress made clear that it intended for
employers to prove the requirements of the tip credit. S. Rep.
No. 93-690, at 43 (1974) ( “[T]he original intent of Congress
[was] to place on the employer the burden of proving . . . the
amount of tip credit, if any, which such employer is entitled
to claim.”); see Barcellona v. Tiffany English Pub, Inc.,
597 F.2d 464, 467 (5th Cir.1979) (recognizing that employers
bear the burden); see also Perez v. Lorraine Enters., Inc.,
769 F.3d 23, 27 (1st Cir. 2014) (same); Myers v. Copper
Cellar Corp., 192 F.3d 546, 549 n. 4 (6th Cir. 1999) (same).
The majority’s improper allocation of the burden and failure
to apply the narrow-construction principle underlie and
potentially explain its errors.

                             III.

    Because the DOL’s guidance interpreted an ambiguous
regulation, and did so in a manner that was not “plainly
erroneous or inconsistent,” it is entitled to Auer deference. I
would, accordingly vacate the district court’s orders granting
the motions to dismiss, judgments on the pleading, and the
52             MARSH V. J. ALEXANDER’S

order granting summary judgment, and remand for further
proceedings on the key issue of whether the defendants
violated the FLSA by paying its employees well below
minimum wage for untipped work.
