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Osorio v. Tile Shop, LLC

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

March 23, 2018

ADRIEL OSORIO, on behalf of himself and all similarly situated persons, Plaintiff,
THE TILE SHOP, LLC, Defendant.



         Plaintiff Adriel Osorio, a former employee of The Tile Shop, LLC, has sued Tile Shop for failing to comply with the overtime pay requirements of the Fair Labor Standards Act (FLSA) (Count 1) and the Illinois Minimum Wage Law (Count 3). Osorio also has alleged that Tile Shop violated the Illinois Wage Payment and Collection Act (IWPCA) by making excessive deductions from his paycheck and the paychecks of other Tile Shop employees (Count 2). This Court granted Osorio's motion for class certification with respect to the IWPCA claim in December 2016. See Osorio v. The Tile Shop, LLC, No. 15 C 15, 2016 WL 7491810 (N.D. Ill.Dec. 30, 2016). Tile Shop has moved for summary judgment on the IWPCA claim, and Osorio has filed a cross-motion for partial summary judgment on the same claim. For following reasons, the Court grants Tile Shop's motion for partial summary judgment on the IWPCA claim and denies Osorio's cross-motion for partial summary judgment.


         A. Factual background

         The Tile Shop is specialty tile retailer. From September 2013 until February 2014, Osorio worked as a sales associate at one of Tile Shop's Illinois stores. He worked as an assistant manager at another Tile Shop store in New Mexico from February to July 2014. The other class members are persons currently or formerly employed in Tile Shop stores in Illinois (except as store managers) who had certain types of deductions made from their paychecks from January 2, 2005 onward.

         Tile Shop sales associates and assistant managers earn commissions on the products they sell. Although these commissions are supplemented by various incentive payments, they are the primary form of compensation for Tile Shop's sales associates and most assistant managers. Tile Shop calculates its employees' compensation on a semi-monthly basis and pays them accordingly. If a sales associate or assistant manager earns less than $1, 000 in a pay period, Tile Shop pays that employee the difference as what it calls a "recoverable draw." Def.'s Statement of Undisputed Material Facts (SUMF), App. Tab 2 (Behrman Decl.), Ex. C, at 4. If, for example, a sales associate's commission and incentive income for a particular pay period adds up to only $900, Tile Shop pays the employee a $100 draw "to bring his or her total compensation for the pay period to $1, 000." Behrman Decl. ¶ 18. Tile Shop then reconciles the $100 draw against future compensation in excess of $1, 000 per pay period, theoretically leaving the employee with a guaranteed $1, 000 per pay period. In practice, however, for Osorio's pay period ending on December 15, 2013, Tile Shop recovered $247.74 from only $1, 247.73 in earnings, leaving him $.01 short of $1, 000 for that period. See Behrman Decl., Ex. E.

         Although Tile Shop has revised portions of its Pay Plan during the relevant period, the terms that are material to this lawsuit have not changed. The Pay Plan provides the following explanation of how Tile Shop compensates its sales representatives:

All full time sales representatives' compensation is comprised of commissions earned on Net Sales gross profit dollars, Spiffs [bonuses on sales of certain products] earned on Net Sales dollars, and periodic incentives. If compensation earned during a pay period is less than $1, 000.00 dollars [sic], the employee will be paid the difference as a recoverable draw. This draw will be recovered from future compensation in excess of $1, 000.00 on the following pay periods until paid in full. The pay period draw amount of $1, 000.00 is based on an annual amount of $24, 000.00.

Behrman Decl., Ex. C, at 4.

         Both parties agree that the commission income "may vary significantly from pay period to pay period, from a few hundred dollars or less to several thousand dollars, " depending on a number of variables including sales volume, the profitability of products sold, and the circumstances of the particular store where the employee works. Behrman Decl. ¶ 16. "By paying employees a draw, The Tile Shop ensures that its sales personnel receive a guaranteed minimum compensation even during pay periods when sales were lower." Id. ¶ 19; see also Pl.'s Resp. to Def.'s SUMF ¶ 21 (admitting Tile Shop's statement except to the extent that the use of the term "draw" implies it is not a cash advance under the IWPCA). The draws in question count as part of an employee's gross wages and are subject to payroll and income taxes. A Tile Shop employee may receive a draw during his last pay period of employment, even though he is not expected to make additional sales or render other future services to Tile Shop. If an employee has an outstanding draw balance at the end of his employment, Tile Shop does not require reimbursement of that sum.

         B. Procedural background

         The procedural history of this case provides context for the present decision. In his first amended complaint, Osorio alleged that Tile Shop violated the IWPCA, 820 ILCS 115/9, by making deductions from his paycheck to recoup earlier draws without obtaining his express written authorization. Am. Compl. ¶¶ 49-53. In November 2015, the Court granted Tile Shop's motion for partial judgment on the pleadings with respect to Osorio's original IWPCA claim, finding that Osorio sufficiently authorized the deductions in question by signing the Pay Plan attached to his offer of employment. See Osorio v. The Tile Shop, LLC, No. 15 C 15, 2015 WL 7688442, at *3-4 (N.D. Ill. Nov. 27, 2015). In granting Tile Shop's motion, the Court observed that the deductions at issue looked like recoupments of cash advances, although the parties had not characterized them as such. In light of this apparent similarity, the Court also evaluated the sufficiency of the agreement under section 300.750 of title 56 of the Illinois Administrative Code, which imposes specific requirements on agreements regarding repayment of cash advances through payroll deductions. Id. at *4. Ultimately, the Court concluded that the signed Pay Plan provided valid, express authorization-both under the IWPCA, 820 ILCS 115/9, and under 56 Ill. Admin. Code 300.750-for Tile Shop to recoup prior draws from Osorio's paycheck. Id.

         Osorio subsequently filed a motion for reconsideration, which the Court denied in January 2016. See Osorio v. The Tile Shop, LLC, No. 15 C 15, 2016 WL 316941 (N.D. Ill. Jan. 28, 2016). In its January 2016 opinion, the Court clarified that, whether or not the Pay Plan Osorio signed was in fact an agreement to repay cash advances through later payroll deductions, it was sufficient to provide express written authorization for the deductions in question. Id. at *1-2.

         In March 2016, the Court granted Osorio leave to file a second amended complaint in which he asserted a modified version of his IWPCA claim. See Osorio v. The Tile Shop, LLC, No. 15 C 15, 2016 WL 1270435 (N.D. Ill. Mar. 31, 2016). Specifically, Osorio sought to recharacterize the deductions at issue as repayments of cash advances. In granting Osorio's motion for leave to amend, the Court noted that it had not previously decided whether Tile Shop's draws constituted cash advances but rather had merely observed that the Pay Plan appeared to contemplate something like the repayment of a cash advance. Id. at *2-3. The Court concluded that the issue of whether Tile Shop's draws ...

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