## Facts

- Becky Doty, Vicky Doty, David Price, and Roy Price worked as waitresses/waiters at a restaurant owned and operated by Eddy Elias.
- Elias paid no hourly wage or salary; the workers’ only compensation was retaining customer tips.
- The workers sued under the Fair Labor Standards Act (FLSA), alleging violations of minimum-wage and overtime requirements.
- Months after leaving the job, at a Department of Labor representative’s request, plaintiffs reconstructed their work schedules from memory (days and hours worked).
- At a bench trial, plaintiffs were permitted to refer to the reconstructed schedules to aid their testimony; the schedules themselves were not admitted into evidence.
- The district court found plaintiffs were FLSA “employees,” held Elias violated the FLSA minimum-wage provision, awarded back wages and prejudgment interest, and denied liquidated damages.
- Elias appealed (employee status, legality of tip-only pay, evidentiary rulings, and hours calculation), and plaintiffs cross-appealed the denial of liquidated damages.

## Issues

1. Whether plaintiffs were “employees” covered by the FLSA rather than independent contractors.
2. Whether paying no cash wage and relying solely on customer tips satisfies the FLSA’s minimum-wage requirements.
3. Whether the trial court improperly admitted plaintiffs’ hours-worked testimony when plaintiffs used reconstructed schedules to refresh memory.
4. Whether the district court clearly erred in calculating hours worked and resulting back wages.
5. Whether the district court erred by denying liquidated damages without a sufficient showing under 29 U.S.C. § 260.

## Decision

- Affirmed the finding that plaintiffs were FLSA employees under the economic-realities test.
- Affirmed that Elias’s tip-only compensation method violated the FLSA minimum-wage requirement.
- Affirmed the admission of plaintiffs’ testimony concerning hours worked, including use of reconstructed schedules to refresh recollection.
- Affirmed the district court’s hours-worked findings and related back-wage calculations as not clearly erroneous.
- Reversed the denial of liquidated damages and remanded for entry of liquidated damages because Elias failed to meet the statutory standard to avoid them.

## Legal Principles

- FLSA employment status turns on the “economic realities” of the relationship, with the central question being economic dependence; relevant factors include control, opportunity for profit or loss, investment, permanence, and skill.
- An employer cannot satisfy the FLSA minimum wage by paying no cash wage and simply allowing tipped employees to keep customer tips; compliance requires meeting statutory conditions for tipped employees.
- A witness may use a writing to refresh present recollection during testimony; allowing such use is generally within the trial court’s discretion and does not require admitting the writing into evidence.
- When an employer’s records are inadequate, employees may prove uncompensated work and the extent of hours by evidence supporting a “just and reasonable inference,” and the factfinder’s resulting calculation is reviewed for clear error.
- Liquidated damages under the FLSA are the default remedy for minimum-wage/overtime violations; denial is permitted only if the employer proves both subjective good faith and objectively reasonable grounds under 29 U.S.C. § 260.

## Conclusion

The court held that tipped restaurant servers paid only through customer tips were FLSA employees and that a tip-only pay practice violated federal minimum-wage law; it also upheld proof of hours through testimony refreshed by reconstructed schedules, but required liquidated damages because the employer did not satisfy the statutory prerequisites to avoid them.


Doty v. Elias, 733 F.2d 720 (10th Cir. 1984)