SCHAEFER v. WALKER BROS (7th Cir. 2016) decision on tip credits for non-server time and adequacy of poster notice to servers

waitress“Through corporations he controls, Ray Walker operates six Original® Pancake House restaurants in Illinois. Robert Schaefer, who worked as a server at three of these restaurants, contends that they violate the Fair Labor Standards Act, 29 U.S.C. §§ 201–19, an its state equivalent the Illinois Minimum Wage Law, 820 ILCS 105/1 to 105/15. Federal and state laws provide that tips count toward the minimum wage and permit employers to pay less in the expectation that tips will make up the difference. Both statutes require some cash payment from the employer, however, no matter how much a worker receives in tips. In Illinois the employer must pay at least 60% of the normal minimum wage. 820 ILCS 105/4(c). This is called the tip-­credit rate in both state and federal nomenclature. Because the Illinois floor is higher than the federal minimum set by 29 U.S.C. §203(m)(1), the restaurants paid all server the Illinois rate.

Schaefer contends that, until May 2011, the restaurants failed to give servers the information that §203(m) requires as a condition of paying a tip-­credit wage. (In May 2011 the restaurants started using a brochure designed by the Department of Labor to implement a regulation that took effect that month. 29 C.F.R. §531.59(b). Schaefer concedes that this notice is adequate.) This claim is based exclusively on federal law and is limited to Schaefer plus the 11 who opted in.

Schaefer’s other claim affects all servers. He contends that servers at the restaurants spent some of their time doing non-­tipped duties such as slicing mushrooms and tidying up their service areas, and that the restaurants had to pay the full minimum wage for the time that the class members spent on the non-­tipped work. This contention rests on both state and federal law, but Schaefer relies exclusively on federal regulations and precedents, which both sides have assumed are equally applicable under Illinois law. Like the district court, we shall do likewise. The district court granted summary judgment to the restaurants. 2014 U.S. Dist. LEXIS 177157 (N.D. Ill. Dec. 17, 2014).

We start with the dual-jobs claim, which applies to all of the servers. Task lists posted at the restaurants, and affidavits from some of the servers, show that they were assigned to a variety of tasks in addition to taking customers’ orders and delivering food. They were required to wash and cut strawberries, mushrooms, and lemons; prepare applesauce and jams by mixing them with other ingredients; prepare jellies, salsas, and blueberry compote for use; restock bread bins and replenish dispensers of milk, whipped cream, syrup, hot chocolate, and straws; fill ice buckets; brew tea and coffee; wipe toasters and tables; wipe down burners and woodwork; and dust picture frames. Servers would rotate among these tasks; some servers apparently never performed some of these tasks. Different servers estimated that these duties took between 10 and 45 minutes daily, depending on which tasks were assigned on a given day and the server’s experience and aptitude with them.

The Supreme Court told us in Sandifer v. United States Steel Corp., 134 S. Ct. 870, 880 (2014), that the Fair Labor Standards Act does not “convert federal judges into time-­study professionals” and require every minute to be accounted for. Sandifer holds that, when the “vast majority” of employees’ time qualifies for a particular treatment under the Act, that treatment can be applied to the entire period. Id. at 881. Given the flexibility of words such as “related” and the 20% cap for untipped duties, and given how much less than 20% of working time these servers spent on untipped duties at these restaurants, the possibility that a few minutes a day were devoted to keeping the restaurant tidy does not require the restaurants to pay the normal minimum wage rather than the tip-­credit rate for those minutes.

Now we turn to the question that is pertinent to the 12 plaintiffs under the Fair Labor Standards Act: whether the restaurants told their servers of the rules governing tip-­credit wages.

It would be hard to fault an employer for providing exactly the information the Department of Labor then required, in the Department’s own words. Schaefer does not contend that he was unable to keep all tips he received. The handbook and poster together supply the restaurants’ workers with the three pieces of information that we believe constitute the statutory minimum.


Read entire decision by clicking link below:

In the United States Court of Appeals For the Seventh Circuit

No. 15-­1058






timeclockIf you feel that you have not been compensated for the hours you have worked you may call the law office for a FREE strictly confidential consultation about your claim for minimum wage or unpaid overtime wage violations at: (954) 948-8130. Or you can complete the simple form below for submission to us.  Please be advised that by merely submitting this form, no Attorney-Client relationship is formed with the law firm.   You must provide your name,  home or cell phone number, your email address and your zip code in the form.  We look forward to discussing your possible minimum wage and/or overtime pay violations claim We are passionate about defending and enforcing workers’ rights for unpaid wages.