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Fransioli v. 25 W. Hubbard Inc.

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

January 10, 2018

Jillian S. Fransioli, et al., Plaintiffs,
v.
25 W. Hubbard Inc., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Ronald A. Guzman, United States District Judge

         For the reasons set forth below, Defendants' motion to dismiss [23] is denied.

         STATEMENT

         In their amended complaint, Plaintiffs seek to recover on behalf of themselves and all similarly-situated individuals unpaid wages, unlawfully-retained tips, interest, and attorney's fees and costs under the Fair Labor Standards Act ("FLSA"), the Illinois Minimum Wage Law ("IMWL") and the Illinois Wage Payment Collection Act ("IWPCA"). Plaintiffs seek to represent current and former tipped bartenders and cocktail servers who worked at Defendants' establishments. (1st Am. Compl., Dkt. # 21, ¶ 1.) According to Plaintiffs, Defendants paid them an hourly wage below the minimum wage, justifying the underpayment by improperly applying a "tip credit" to their wages, which did not comply with the relevant tip credit provisions of the FLSA and the IMWL. (Id. ¶¶ 3-4.) Plaintiffs further allege that Defendants required them to perform untipped clerical and administrative work at the end of their shifts, for which they were paid a sub-minimum hourly rate or not at all. (Id. ¶ 6.) Plaintiff Fransioli asserts that when she confronted Defendant Sanchez about the purported improper payment practices, she was retaliated against in violation of the IWPCA. (Id. ¶ 7.)

         Defendants argue that Plaintiffs' claims should be dismissed because they fail to allege sufficient facts in support. To survive a Federal Rule of Civil Procedure ("Rule") 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief, " Fed.R.Civ.P. 8(a)(2), such that the defendant is given "fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). The factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level." E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiffs' well-pleaded factual allegations and draws all reasonable inferences in Plaintiffs' favor. Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618 (7th Cir. 2007).

         Applying these principles to the first amended complaint, the Court finds that it sufficiently alleges facts in support of Plaintiffs' illegal tip pools, including that:

8. Plaintiffs were directed by managerial staff, including but not limited to Defendant Roman Sanchez, to remit 15% of their nightly gratuities in cash to Defendants as the "house tip out."
9. At the close of business every night, each cocktail server and bartender on duty would tally up their cash and credit card receipts and tips and calculate his or her 15% "house tip out, " which was then payable in cash to the manager in duty before leaving work.
10. On occasions when Plaintiff Fransioli inquired as to the propriety of the "house tip out", she was told by Defendant Sanchez that the unlawfully retained 15% was used to pay for security staff and cleaning services contracted by Defendants and that providing this portion of her tips to Defendants was "for her own protection" and "to leave well enough alone."
11. While the FLSA and the IMWL permit an employer with tipped employees to pay those employees an hourly rate that is below the standard minimum wage, an employer's eligibility to do so lawfully is contingent upon the employer's compliance with the tip-credit provisions provided by the statutes. See 29 U.S.C. § 203(m); 820 ILCS 105/4(3)(c).
12. At all times relevant hereto, Defendants did not comply with the tip-credit provisions of the FLS A and FMWL because they operated a tip pool that was rendered illegal by virtue of the participation by management and ownership in the sharing of employee tips. 29 C.F.R. § 531.59.

(1st Am. Compl. Dkt. # 21, ¶¶ 8-12.)

         With respect to the claims regarding unpaid wages for non-tipped and off-the-clock work, Plaintiffs allege that:

13. Each night after closing, Plaintiffs' additional job responsibilities included tallying and tabulating sales receipts in order to both assist Defendants with their bookkeeping as well as to calculate and then effectuate the mandatory, ...

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