Appellate Court Delivers Triple Punch in Tip Credit Cases

The following article was first published on Shipman & Goodwin attorney Dan Schwartz’ Connecticut Employment Law Blog. It is reposted here with permission.

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The story of Connecticut’s tip-credit law is like one of those television procedural shows—full of drama and seemingly never ending.

The Connecticut Appellate Court added three more chapters to this long-running drama this week—and all three are good news for restaurant and hospitality employers.

In a trio of companion decisions officially released March 31, the Appellate Court affirmed the trial court’s granting of motions to strike in Farias v. Rodriguez, Woodford v. HRG Management, LLC, and Vasquez v. Sliders Restaurant Group, LLC.

Farias is the lead decision—a detailed opinion that provides the court’s full analytical framework—while Woodford and Vasquez are companion cases that expressly adopt Farias‘ reasoning and conclusions.

The Lead Case

Let’s start with Farias, which does the heavy lifting for all three decisions.

The plaintiff, Daniel Farias, was employed as a bartender at several Puerto Vallarta restaurant locations in Connecticut—including the Orange and Fairfield locations—from 2011 until 2022.

He brought a putative class action alleging that the defendants violated the old version of regulation §31-62-E3 (“old E3”) by failing to properly record the amount claimed as a tip credit on a weekly basis and failing to obtain signed weekly tip statements from servers.

He also alleged violations of old § 31-62-E4 (“old E4”)—the “dual duties” regulation that has been at the center of so much litigation—by improperly deducting a tip credit from his earnings for the performance of nonservice work.

this was the second putative class action brought against the Puerto Vallarta defendants on behalf of servers and bartenders.

The nonservice duties alleged will be familiar to anyone in the restaurant industry: setting up the restaurant before it was opened to the public, general cleaning and stocking duties, brewing coffee, cleaning iced tea containers, and filling ice bins, among other tasks.

If you run a restaurant in Connecticut, you’ve seen this list before—or one very much like it.

Notably, this was the second putative class action brought against the Puerto Vallarta defendants on behalf of servers and bartenders asserting substantially similar claims.

The first action, Reyes v. Rodriguez, was withdrawn in 2022 after the parties reached a settlement, and no ruling on class certification had been made.

Farias commenced his complaint on Dec. 6, 2022—critically, after Sept. 24, 2022.

The Companion Cases

The two companion decisions involve similar facts with different restaurant defendants.

In Woodford, the plaintiff was employed as a server and hostess at Wood-n-Tap restaurants—primarily at the Orange and Hamden locations—from approximately September 2018 until May 2022.

She brought a putative class action alleging violations of both old E3 and old E4. Her alleged nonservice “side work” included sweeping the kitchen line and common areas, taking out garbage, wiping down stations, rolling silverware, replacing ice under dressings, and cleaning whipped cream dispensers.

This was the fifth putative class action brought against the Wood-n-Tap defendants on behalf of servers and bartenders asserting substantially similar claims. The prior four actions were either withdrawn after settlement or dismissed for failure to prosecute, and none had reached a ruling on class certification.

She claimed the defendants failed to segregate her service and nonservice duties and improperly took a tip credit against her wages.

In Vasquez, the plaintiff was employed as a server at a Sliders Bar & Grill restaurant in Plainville from approximately 2017 until 2019.

She brought a putative class action alleging violations of old E4 only—claiming that the defendants failed to segregate her service and nonservice duties and improperly took a tip credit against her wages.

Her side work included cleaning and stocking bathrooms, wiping down shelves and server stations, running mesh through dishwashers, cleaning glass partitions, sweeping rugs, and disposing of garbage.

This was the third putative class action brought against the Sliders defendants on similar grounds.

The Farias Ruling

The Appellate Court affirmed the trial court’s decision to strike the complaint on all grounds. The court’s analysis can be distilled to three key holdings.

First, §31-68 does not provide a private cause of action for recordkeeping violations under old E3. This is now the third time the Appellate Court has reached this conclusion, following Nettleton v. C & L Diners, LLC (2023) and Anderson v. Reel Hospitality—the Dakota’s Steakhouse case I wrote about last July.

The court made clear that the recordkeeping requirements in old E3 are “directory” rather than “mandatory” and therefore do not give rise to a private right of action. Indeed, at oral argument, the plaintiff’s counsel acknowledged that Anderson effectively “removes from this court the power to adjudicate [the plaintiff’s] E3 arguments.”

Second, and this is the more consequential holding, Public Act 22-134—the 2022 legislation titled “An Act Concerning Employee Record Keeping”—did not retroactively take away the plaintiff’s substantive causes of action under the Connecticut Minimum Wage Act.

Rather, the court concluded that § 31-60(d)(4), as amended by P.A. 22-134, is prospective in nature: it mandates that any claim filed after Sept. 24, 2022 “shall be adjudicated, solely, under section 31-60-2 of the regulations of Connecticut state agencies effective on Septe. 24, 2020, and any amendments thereto.”

The word “solely” was key—the court found it emphasized that all actions brought under § 31-60(d)(4) must be brought only under the new regulations, and any other interpretation would render the term superfluous.

The court’s analysis can be distilled to three key holdings.

The court also noted something important for those who have been following the legislative history on this blog: when the legislature first attempted to repeal old E4 in 2019 through P.A. 19-198, Gov. Ned Lamont vetoed it precisely because it was expressly retroactive and presented due process concerns.

P.A. 22-134, by contrast, reflects a deliberate effort by the legislature to make the amendments prospective. The legislature effectively provided a four-month grace period between the statute’s effective date of May 27, 2022 and Sept. 24, 2022 for plaintiffs to file old E3 and old E4 claims. Farias did not file within that window.

Because Farias filed his complaint after Sept. 24, 2022 and alleged violations of only old E3 and old E4—not the current regulations—his complaint was legally insufficient.

Third, even assuming P.A. 22-134 was retroactive as applied, such retroactive application did not violate due process.

The court relied on the Connecticut Supreme Court’s decision in Massa v. Nastri, a 1939 case which held that “a right of action in tort, not existing at common law but depending wholly upon statutory authority and not reduced to judgment before repeal of the statute upon which it rests … is lost by and upon repeal without a saving clause.”

Because the plaintiff’s cause of action was purely statutory and had not been reduced to judgment—or even commenced—before the passage of P.A. 22-134, the plaintiff did not have a vested property interest. His interest was, in the court’s words, “more in the nature of a mere expectancy or inchoate hope.”

All three plaintiffs raised tolling arguments based on the Supreme Court’s American Pipe doctrine and Lamont’s COVID-era executive orders, but the court declined to address those claims in any of the cases, finding them moot in light of its dispositive conclusion that §31-60(d)(4) applied and the plaintiffs had not complied with its requirements.

Companion Decisions

With Farias having done the analytical heavy lifting, Woodford and Vasquez were relatively straightforward.

In both cases, the court expressly adopted the reasoning and conclusions of Farias, describing that decision as having “thoroughly resolved” the plaintiffs’ claims.

There was nothing in either case that would mandate a different result.

Why This Matters—And Why It Doesn’t

If you’ve been following this blog’s coverage of this issue—from my early reporting on the little-noticed bill that revoked old E4 in 2019, to the governor’s veto, to the compromise legislation, to the new dual duties regulations released in 2020, to the Anderson decision last year—you know that these decisions should be one of the concluding chapters of a very specific era of tip credit litigation in Connecticut.

These rulings effectively slam the door on putative class actions brought under the old regulations for claims filed after Sept.r 24, 2022.

For the Puerto Vallarta defendants, facing their second go-round, and the Wood-n-Tap defendants, who had been sued five separate times on essentially the same theories, today’s decisions will no doubt provide welcome finality. For the Sliders defendants, facing their third such suit, it does the same.

The rules have changed, and with them, the compliance obligations.

But—and there’s always a “but” on this blog—this does not mean hospitality employers can breathe easy going forward.

As I wrote last July in my post on Anderson: “Indeed, this decision has extremely limited practical impact for restaurants today.” The Farias court itself noted that employees may still make claims under the minimum wage act—they just must comply with the updated regulations.

And critically, the General Assembly, through P.A. 22-134, explicitly created a private right of action for tip credit recordkeeping violations occurring after September 24, 2022. The rules have changed, and with them, the compliance obligations.

Tips for Hospitality Employers

So where does this leave restaurants, hotels, and other hospitality employers in Connecticut? Here are two takeaways.

1. Your recordkeeping obligations are more important than ever—not less. The old claims may be dead, but the new regulatory framework under §31-60-2 is alive and well, and it comes with a private right of action that the old regulations lacked. Employers should record tip credits claimed as separate line items on a daily, weekly, or bi-weekly basis, and continue obtaining statements from tipped employees confirming gratuities received. The new regulations give employers more flexibility in some respects—daily or bi-weekly reporting is now permitted where only weekly reporting was allowed before—but the enforcement teeth are sharper. Don’t let today’s favorable decisions lull you into complacency.

3. The plaintiffs’ bar is watching. As I noted years ago on this blog, there are attorneys whose business model rests on seeking out restaurant workers to serve as class action plaintiffs. The fact that the old claims are being dismissed does not mean new claims won’t be filed under the current regulations. If anything, the clarity provided by P.A. 22-134’s explicit private right of action makes it easier for plaintiffs’ attorneys to bring these claims going forward. The best defense remains what it has always been: compliance.

Today’s decisions—Farias, Woodford, and Vasquez—bring a measure of closure to a litigation saga that has stretched across nearly two decades of Connecticut employment law.

But the broader lesson for hospitality employers hasn’t changed: get the tip credit right, keep meticulous records, and train your staff on the current rules.

The penalties for getting it wrong remain steep, and there are plenty of attorneys ready to remind you of that.

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About the author: Dan Schwartz is a partner at Shipman & Goodwin and has decades of experience solving complex, employment law problems for companies.