United States District Court, N.D. Illinois, Eastern Division
Jillian S. Fransioli, et al., Plaintiffs,
25 W. Hubbard Inc., et al., Defendants.
MEMORANDUM OPINION AND ORDER
A. Guzman, United States District Judge
reasons set forth below, Defendants' motion to dismiss
 is denied.
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.)
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).
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
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.)
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