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Soto v. Wings R U.S. Romeoville Inc.

United States District Court, N.D. Illinois, Eastern Division

September 8, 2016

KATRINA SOTO, on behalf of herself and all other persons similarly situated, known and unknown, Plaintiffs,


          Robert M. Dow, Jr. United States District Judge.

         Before the Court are Defendants' partial motion to dismiss [26], Plaintiff's motion for step-one notice [40], the parties' joint motion for entry of an agreed confidentiality order [51], and Plaintiff's motion to toll the statute of limitations [67]. For the following reasons, Defendants' motion to dismiss [26] is denied, Plaintiff's motion for step-one notice [40] is granted, the parties' joint motion for entry of an agreed confidentiality order [51] is granted, and Plaintiff's motion to toll the statute of limitations [67] is denied without prejudice. This case is set for further status on September 15, 2016, at 9:30 a.m.

         I. Background

         From January 2011 until October 2015, Plaintiff Katrina Soto worked as a server at a Buffalo Wild Wings restaurant in Romeoville, Illinois. She now brings class action and collective action claims on behalf of all similarly situated servers and bartenders at four separate Buffalo Wild Wings locations (operated by the four Wings ‘R Us Defendants), alleging that Defendants violated the Illinois Minimum Wage Law (“IMWL”) 820 ILCS 105/1 to 105/15, and the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-19, for failing to pay Plaintiff and other similarly situated employees adequate minimum and overtime wages. Regarding the minimum wage claim, Plaintiff alleges that she and other similarly situated employees were paid as “tipped” employees for all hours worked (i.e., they were paid an hourly rate less than the minimum wage, subsidized by customer tips), even though, at times, they performed non-tipped duties outside the scope of their tipped occupation. For example, Plaintiff alleges that in addition to their tipped duties, servers and bartenders regularly performed such non-tipped duties as cleaning bathrooms, dishwashing, general restaurant cleaning, and trash removal. The theory is that Defendants should have paid these employees the full minimum wage for time spent performing these non-tipped duties, as opposed to taking a “tip credit” for that time. Plaintiff estimates that there are more than 200 employees who are similarly situated.

         After the parties completed their briefing of Defendants' motion to dismiss, Plaintiff filed an amended complaint [56], adding allegations that Defendants also violated the IMWL and FLSA by failing to pay their employees overtime wages at the correct rate for time worked in excess of forty (40) hours in individual workweeks.

         II. Motion to Dismiss[1]

         A. Legal Standard

         In reviewing the sufficiency of a complaint, a district court must accept all well-plead facts as true and draw all permissible inferences in favor of the plaintiff. Agnew v. Natl Collegiate Athletic Ass'n, 683 F.3d 328, 334 (7th Cir. 2012). The Federal Rules of Civil Procedure require only that a complaint provide the defendant with “fair notice of what the * * * claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Supreme Court has described this notice-pleading standard as requiring a complaint to “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). While factual allegations must be accepted as true, legal conclusions may not be considered. Id.

         B. Analysis

         Defendants have moved to dismiss Plaintiffs claim that they violated the FLSA and IMWL by paying Plaintiff a sub-minimum wage for time spent performing non-tipped duties unrelated to her tipped occupation.[2] According to the FLSA, an employer may pay a tipped employee less than minimum wage (i.e., the employer may take a “tip credit”), but if the tips, in combination with the below-minimum-wage hourly rate, do not add up to the minimum wage, the employer has to make up the difference. 29 U.S.C. § 203(m); Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1074 (7th Cir. 2014) (“[I]n effect [the tipped employees'] tips are credited against the minimum wage to which they would otherwise be entitled”). The IMWL also has a tip-credit provision that is substantially similar to the FLSA provision, but requires employers to pay a slightly larger percentage of the minimum wage to tipped employees. 820 ILCS 105/4(c).

         Employers have wrestled with how to apply this tip credit to tipped employees who also perform non-tipped tasks (referred to as a “dual-jobs” scenario). The question is whether and to what extent an employer can continue to take a tip credit for its employees' time spent performing non-tipped duties. For example, in this case, Plaintiff received her below-minimum-wage hourly rate both when she performed her tipped duties as a server and when she performed non-tipped duties such as cleaning bathrooms, dishwashing, cleaning the restaurant, and taking out the trash. Plaintiff says that she should have been paid the full minimum wage for her time spent performing non-tipped duties. Defendants disagree, claiming that these non-tipped tasks were related to Plaintiff's tipped occupation such that Defendants were not required to pay her differently for her time spent performing those tasks.

         The FLSA and IMWL expressly allow employers to take a tip credit against the minimum wage for employees in occupations that customarily receive gratuities:

In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee's employer shall be an amount equal to-
(1) the cash wage paid such employee which for purposes of such determination shall be not less than the cash wage required to be paid such an employee on August 20, 1996; and
(2) an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in paragraph (1) and the wage in effect under section 206(a)(1) of this title.
The additional amount on account of tips may not exceed the value of the tips actually received by an employee. The preceding 2 sentences shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.

29 U.S.C. § 203(m).

Every employer of an employee engaged in an occupation in which gratuities have customarily and usually constituted and have been recognized as part of the remuneration for hire purposes is entitled to an allowance for gratuities as part of the hourly wage rate * * *. The Director shall require each employer desiring an allowance for gratuities to provide substantial evidence that the amount claimed, which may not exceed 40% of the applicable minimum wage rate, was received by the employee in the period for which the claim of exemption is made, and no part thereof was returned to the employer.

820 Ill. Comp. Stat. § 105/4(c).

         However, both statutes are silent on the dual-jobs distinction. To fill the gap, courts often reference the Department of Labor regulations for guidance on this issue, where the focus is on whether the non-tipped duties are related to the tipped occupation:

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man. Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

29 C.F.R. § 531.56(e) (2012). The Department of Labor refined this “related to” standard in its Field Operations Handbook, stating that employers cannot take a tip credit if the employee spends more than 20 percent of his or her workday performing these related, non-tipped tasks:

Reg 531.56(e) permits the taking of the tip credit for time spent in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips (i.e. maintenance and preparatory or closing activities). For example a waiter/waitress, who spends some time cleaning and setting tables, making coffee, and occasionally washing dishes or glasses may continue to be engaged in a tipped occupation even though these duties are not tip producing, provided such duties are incidental to the regular duties of the server (waiter/waitress) and are generally assigned to the servers. However, where the facts indicate that specific employees are routinely assigned to maintenance, or that tipped employees spend a substantial amount of time (in excess of 20 percent) performing general preparation work or maintenance, no tip credit may be taken for the time spent in such duties.

         U.S. Department of Labor, Field Operations Handbook § 30d00(e) (June 30, 2000).[3]

         The Seventh Circuit addressed the dual-jobs standard in two recent opinions. First, in Driver v. AppleIllinois, LLC,739 F.3d 1073, 1075 (7th Cir. 2014), the court considered the propriety of the district court's denial of class certification to a putative class raising a dual-jobs claim very similar to Plaintiffs claim. Although the merits of that opinion are not directly relevant here, the court indirectly cast its imprimatur on the Department of Labor's aforementioned dual-jobs regulation and Field Operations Handbook, citing both the “related to” standard in 29 C.F.R. § 531.56(e) and the 20-percent standard in § 30d00(e). Id. at 1076. The court also listed-albeit in dicta-certain tasks that it considered unrelated to the tipped duties of restaurant servers, and thus tasks for which servers must be paid the full minimum wage: “But of course if the tipped employees also perform non-tipped duties (provided those duties are unrelated to their tipped duties-an important qualification, as we'll see), such as, in the case of restaurant servers, washing dishes, preparing food, mopping the floor, or cleaning bathrooms, they are entitled to the full minimum wage for the time they spend at that work.”[4]Id. at 1075 (emphasis added); see also Driver v. AppleIllinois, LLC, 890 F.Supp.2d 1008, 1032 (N.D. Ill. 2012) (tasks of “washing windows; cleaning chandeliers; picking up trash in the parking lot; taking out garbage; restocking bathrooms; and dumping and refilling the ‘sani' bucket” were unrelated to the plaintiffs' tipped occupations). The court only cited one ...

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