Name of Assigned Judge Blanche M. Manning Sitting Judge if Other or Magistrate Judge than Assigned Judge
The plaintiff's motion for class certification [48-1] is granted in part and denied in part as detailed below. The defendant's motion for summary judgment [85-1] is granted in part and denied in part as detailed below. The plaintiff's motion for summary judgment [91--1] is denied. The parties shall report for a status hearing before this court on October 20, 2011, at 11:00 a.m.
O [ For further details see text below.] Docketing to mail notices. 00:00
This dispute involves allegations by plaintiff Dionne Michelle Williams-Green that her employer, J. Alexander's Restaurants, Inc., violated stage wage laws by operating an improper tip pool and by failing to pay the proper amount of overtime pay. Williams-Green has filed a motion for class certification, and both parties have filed motions for summary judgment. See Federal Rule of Civil Procedure 56. For the reasons that follow, the motion for class certification is granted, the defendant's motion for summary judgment is granted in part and denied in part, and the plaintiff's motion for summary judgment is denied.
The court has subject-matter jurisdiction over this dispute because the parties are diverse (J. Alexander's is a Tennessee corporation with its principal place of business in Tennessee) and because calculations set out in the defendant's notice of removal reasonably suggest that damages may exceed $5,000,000. See 28 U.S.C. § 1332(d).
The following facts are undisputed except where noted. Defendant J. Alexander's operates restaurants across the country, including three in Illinois. Between November 2006 to December 2009, plaintiff Dionne Michelle Williams-Green worked as a server at two of those locations, one in Chicago and one in Northbrook.
When J. Alexander's hired Williams-Green, it informed her that like other servers, she would receive less than the full minimum wage because most of her money would come from tips. It also told her that it operates a tip pool, under which a portion of the tips earned by servers and bartenders is re-distributed to non-tipped staff members such as hosts and food runners. Under the tip pool, tipped employees contribute a tip share in the amount of 3% of their sales, which is collected by a manager at the end of their shift. Non-tipped staff then receive tips from the tip pool. A restaurant may take what is known as a tip credit, which allows it to pay its tipped employees less than the full minimum wage, as long as those employees receive enough in tips to cover the difference.
The parties dispute whether the entire tip pool was distributed to the non-tipped staff each day, or whether J. Alexander's improperly retained a portion of the tip pool. Williams-Green testified at her deposition that five managers-Ryan Marks, Kimberly Lashawzia, Jason Benish, Alexandria Demas, and Cory Milner-told her that the tip pool was split three ways between hosts, food runners, and that J. Alexander's retained a portion. According to Williams-Green, Marks told her that J.Alexander's retained a third of the 3% servers and bartenders had contributed to the pool.
J. Alexander's disputes that it kept any portion of the tip pool, and stresses that its corporate policy required that 100% of the tip pool be distributed to employees. J. Alexander's has also identified deposition testimony or declarations from Benish, Demas, and Milner in which those managers denied telling Williams-Green or any employee that J. Alexander's retained a portion of the tip pool.
In further support of its position, J. Alexander's director of information systems, Jason Parks, compiled summaries of tip pool distributions at the restaurant's three Illinois locations. Parks sampled each restaurant during different two-week pay periods between 2002 and 2010. He sampled a total of 10 pay periods at the Chicago location, 11 pay periods at the Northbrook location, and 12 pay periods at the Oak Brook location. The summaries show that during the sampled periods, the Chicago location distributed to employees a total of $7.80 more from the tip pool than had been contributed by tipped employees. However, during 4 of the 10 pay periods sample, J. Alexander's failed to distribute all of the money it had collected for the tip pool. At the Northbrook location, J. Alexander's failed to distribute all of the money it had collected for the tip pool for 7 of the 11 pay periods sampled, for a total shortage of $244.35. At the Oak Brook location, J. Alexander's failed to distribute all of the tip pool 10 of the 12 weeks sampled, for a total shortage of $837.89.
In addition to her claim that J. Alexander's retained a portion of the tip pool, Williams-Green alleges that J.Alexander's failed to compensate her for work she performed off-the-clock. Williams-Green testified that she always arrived to work one hour early. She testified that sometimes she would read or do crossword puzzles during that hour, but 3-4 times a week a manager would ask her to help perform "side work" to prepare the restaurant for opening. She contends that on some occasions, she would perform the work without telling her manager that she had not yet clocked in. On those occasions on which she would tell the manager that she had not yet clocked in, the manager would respond that she should clock in, or would offer to compensate her with lunch. She also testified that she never reported to anyone that she had worked offthe-clock, and never asked to be compensated for any work off-the-clock.
Finally, Williams-Green alleges that J. Alexander's failed to pay her time-and-a-half for her overtime. J. Alexander's admits that it had failed to aggregate the hours of employees who had worked at two different locations during the same week. It contends that as a result, it did not realize those employees' hours totaled more than 40 during a single week and, therefore, failed to pay them the correct rate for their overtime. After Williams-Green filed this suit, J. Alexander's discovered its error and sent checks to the affected employees in the amount of the overtime they were due plus interest calculated at the rate of 2% per month.
Williams-Green quit J. Alexander's in April 2009, after obtaining a job with Amtrak. She then filed what purports to be a class action lawsuit on August 4, 2009, seeking to represent two subclasses of plaintiffs: (1) employees who participated in the tip pool, and (2) employees who were improperly paid for overtime. The complaint consists of two counts. Count I alleges a claim under the Illinois Wage Payment and Collection Act, which Williams-Green alleges J. Alexander's violated by paying her sub-minimum wages while operating an invalid tip pool and by failing to properly pay for her overtime. Count II alleges a claim under the Illinois Minimum Wage Act, which Williams-Green alleges that J. Alexander's also violated by paying her a subminimum wage while operating an invalid tip pool.
Before the court are a motion for class certification filed by Williams-Green, as well as cross-motions for summary judgment. In the motion for class certification, William-Green seeks certification on her claim that
J. Alexander's improperly paid employees a sub-minimum wage.
In J. Alexander's motion for summary judgment, it seeks judgment on the three issues raised by Williams-Green in this case: (1) that J. Alexander's was not entitled to take a tip credit because it shared in the proceeds of its tip pool; (2) that J. Alexander's failed to properly compensate employees for their overtime; and (3) that J. Alexander's failed to compensate Williams-Green for work she performed off-the-clock. The final issue is not alleged in the complaint but, rather, appears to be an allegation William-Green first leveled during her deposition.
In Williams-Green's motion for summary judgment, she seeks partial summary judgment limited to liability on the same three issues identified in J. Alexander's motion for summary judgment.
I. SUMMARY JUDGMENT STANDARD OF REVIEW
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed R. Civ. P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Valenti v. Qualex, Inc., 970 F.2d 363, 365 (7th Cir. 1992), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Moreover, a court should grant a motion for summary judgment only when the record shows that a reasonable jury could not find for the nonmoving party. See Valenti, 970 F.2d at 365; see also Anderson, 477 U.S. at 248.
Thus, in order to withstand a motion for summary judgment, the nonmoving party must show that a dispute about a genuine issue of material fact exists. See Anderson, 477 U.S. at 248. The nonmoving party may not merely rest upon the allegations or details in his pleading, but instead, must set forth specific facts showing there is a genuine issue for trial. See Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248.
II. J. ALEXANDER'S MOTION FOR SUMMARY JUDGMENT [85-1]
A. Propriety of the Tip Credit
First, J. Alexander's seeks summary judgment on Williams-Green's claim that it was not entitled to a tip credit and, therefore, failed to fully compensate her as required under the Illinois Wage Payment and Collection Act or the Illinois Minimum Wage Act. Under the Illinois Wage Payment and Collection Act, an employer must pay an employee for time worked. See 820 Ill. Comp. Stat. 115/1 et seq.; Miller v. Kiefer Specialty Flooring, Inc., 739 N.E.2d 982, 986 (Ill. App. Ct. 2000) ("The purpose of the Act is to provide employees with a cause of action for the timely and complete payment of earned wages or final compensation without retaliation from employers."). Meanwhile, the Illinois Minimum Wage Act establishes the minimum hourly rate employers must pay. See 820 Ill. Comp. Stat. 105/4(a)(1).
However, for employees who are customarily tipped, an employer may take what is called a tip credit, which allows them to pay those employees only 60% of the minimum wage as long as the employer can demonstrate that the employee's tips made up the remaining 40% of the minimum wage and that the employer did not retain any of the tips. See 820 Ill. Comp. Stat. 105/4(c); Gillis v. Twenty Three East Adams Street Corp., No. 04 CV 4012, 2006 WL 573905, at *1 (N. D. Ill. Mar. 6, 2006). Tip credits are treated identically under both the Illinois Minimum Wage Act and the federal Fair Labor Standards Act, and so cases on the requirements for a tip credit under the FLSA are also relevant to the requirements of the Illinois Minimum Wage Act. ...