Ill.: Restaurant Servers Not Entitled to Minimum Wage

By SHRM Online staff Jan 23, 2015
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A trial court granted summary judgment to a restaurant owner, finding that restaurant servers whose side work related to their tipped occupation were not entitled to minimum wage.

Walker Bros. Enterprises Inc. owns six restaurants and has employed over 500 people as servers since 2007. The company gave all new servers an employee handbook that explained how it applied a tip credit to reduce servers’ hourly wages by 40 percent below minimum wage. The company also displayed posters approved by the U.S. Department of Labor and Illinois Department of Labor that explain the tip credit. The company applies the tip credit because the servers receive monetary tips from customers as part of their primary duty of serving tables.

Walker Bros. also assigned “side work” to its servers in addition to their primary duties, which varied depending on the location they were working, the time of their shift and the number of servers on duty. The side work did not include maintenance or janitorial work.

Robert Schaefer worked as a server for Walker Bros. and knew he would receive his part of his wages in tips. Schaefer filed a class action law suit on behalf to himself and other similarly situated servers against Walker Bros. for violations of the Fair Labor Standard Act (FLSA) and the Illinois Minimum Wage Law (IWLA). He claimed the company incorrectly used the tip credit to reduce servers’ wages below minimum wage while requiring them to perform duties outside of their tipped occupation. He also claimed Walker Bros had not informed the servers about the company’s intent to apply the tip credit the servers’ wages. The court granted class certification for all persons employed as servers with Walker Bros. from Oct. 5, 2007, to the conclusion of the suit, who were paid a sub-minimum, tip-credit wage rate, and who performed duties unrelated to their tipped occupation for which they were not paid minimum wage. Walker Bros. filed for summary judgment.

Schaefer argued that because the company required servers to prepare food and perform other non-tipped work, the servers should have received minimum wage for such work. The FLSA and IWLA allow employers to pay tipped workers less than the minimum wage rate as long as the workers’ pay meets or exceed minimum wage with the addition of tips, the court explained. It noted that when an employee works in a “dual job” such as a maintenance man and a server, employers cannot take advantage of the tip credit when the employee is performing tasks unrelated to his tipped occupation. However, if employees are performing related duties to their tipped occupation, then the employer can continue to apply the tip credit and pay them below minimum wage.” The court said that there was no definition of “related duties” but cited the U.S. Department of Labor Field Operations Handbook that states employers must pay minimum wage to tipped employees who spend more than 20 percent of their time on general maintenance work.

Because Schaefer did not claim that the servers spent more than 20 percent of their time on side work, he had to show that the side work was unrelated to the servers’ tipped occupation of serving tables, according to the court. Schaefer argued the side work related to food preparation, such as slicing fruit, and restocking supplies, but Walker Bros. argued the tasks related to the servers’ primary duties.

The court noted that it is undisputed that the servers’ tipped occupations and primary duties were to serve their customers by delivering drinks, dishes, condiments and other requests. The court concluded that the side work performed by the servers was incidental to their regular duties and subject to the tip credit. The court granted Walker Bros. motion for summary judgment.

The court also concluded that Walker Bros. informed its servers of the tip credit in several ways, including providing workers with copies of its employee handbook, displaying posters about the tip credit and having servers sign a “Server Uniform and Tip Credit Agreement.” As a result, the court also granted summary judgment on the claim that Walker Bros. failed to inform the servers of the tip credit provisions.

Schaefer v. Walker Bros Enters., Inc., N.D. Ill, No. 10 CV 6366 (Dec. 17, 2014).

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