In September 2017, the Ninth Circuit split with the Eighth Circuit on whether to defer to a handbook promulgated by the Department of Labor interpreting one of its regulations.
In particular, the FLSA requires employers to pay a cash wage of $7.25 per hour to their employees, 29 U.S.C. § 206(a)(1)(c), except 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 or her 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).
As part of the Department of Labor’s interpretation of the statutory phrase “more than $30 a month in tips,” the DOL promulgated the “dual jobs” regulation, which maintains that an employee can be “employed in a dual job.”. 29 C.F.R. § 531.56(e). Under the regulation, 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.
To further clarify enforcement, the Department of Labor provided guidelines in its Field Operations Handbook to interpret the regulation. The Handbook states that side work, even though related to the tip work, may not occupy more than 20 percent of the employee’s workweek. If it does, the employee must earn minimum wage for that work.
In September, the Ninth Circuit held that it would not defer to the Handbook because the regulation was unambiguous. Marsh v. J. Alexander’s, No. 15-15791 (9th Cir. Sept. 6, 2017).
This created a circuit split with the Eighth Circuit, which had applied Auer deference to uphold this handbook rule in a similar case. See Fast v. Applebee’s Int’l, Inc., 638 F.3d 872, 879 (8th Cir. 2011).
Oral argument in the Ninth Circuit's case can be viewed here.
It looks like at least one unknown judge wants to argue that the case should be reheard en banc because an order was entered for responses to the petition for rehearing en banc. Since there is no intra-circuit split, a rehearing en banc is unlikely although one can make the argument that this is a decision of national importance.
More likely is that one or more judges will issue opinions concurring or dissenting from the denial en banc in order to tee it up for what would be eventually Supreme Court review on the circuit split.