Schaefer v. Walker Bros. Enters., Inc.

• Decision Date: 15 July 2016
• Docket Number: No. 15-1058,15-1058
• Citation: 829 F.3d 551
• Parties: Robert Schaefer, et al., Plaintiffs–Appellants, v. Walker Bros. Enterprises, Inc., et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

829 F.3d 551

Robert Schaefer, et al., Plaintiffs–Appellants

v.Walker Bros. Enterprises, Inc., et al., Defendants–Appellees.

No. 15-1058

United States Court of Appeals, Seventh Circuit.

Argued September 25, 2015

Decided July 15, 2016

Jamie Golden Sypulski, Attorney, Law Office Jamie Golden Sypulski, Chicago, IL, for Plaintiff–Appellant.

Gerald Leonard Maatman, Jr., Jennifer A. Riley, Attorneys, Seyfarth Shaw LLP, Arthur J. Rooney, Attorney, Baker & Mckenzie LLP, Chicago, IL, for Defendants–Appellees.

Before WOOD, Chief Judge, and BAUER and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

Through corporations he controls, Ray Walker operates six Original®> Pancake House restaurants in Illinois. Robert Schaefer, who worked as a server at three of these restaurants, contends that they violate the Fair Labor Standards Act, 29 U.S.C. §§ 201 –19, and its state equivalent the Illinois Minimum Wage Law, 820 ILCS 105/1 to 105/15. Federal and state laws provide that tips count toward the minimum wage and permit employers to pay less in the expectation that tips will make up the difference. Both statutes require some cash payment from the employer, however, no matter how much a worker receives in tips. In Illinois the employer must pay at least 60% of the normal minimum wage. 820 ILCS 105/4(c). This is called the tip-credit rate in both state and federal nomenclature. Because the Illinois floor is higher than the federal minimum set by 29 U.S.C. § 203(m)(1), the restaurants paid all servers the Illinois rate.

The district court certified this suit as a class action on behalf of the approximately 500 servers who worked in the restaurants within the period of limitations. The class seeks recovery under Illinois law. Suits under the Fair Labor Standards Act cannot proceed as class actions. Instead they are opt-in representative actions. 29 U.S.C. § 216(b) (“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”). Twenty-four members of the state-law class agreed to be plaintiffs in the federal-law action; of these, 13 accepted offers of judgment, leaving 11 in addition to Schaefer. For convenience, we use Schaefer's name to designate both the class members and the federal-law plaintiffs.

Schaefer contends that, until May 2011, the restaurants failed to give servers the information that § 203(m) requires as a condition of paying a tip-credit wage. (In May 2011 the restaurants started using a brochure designed by the Department of Labor to implement a regulation that took effect that month. 29 C.F.R. § 531.59(b). Schaefer concedes that this notice is adequate.) This claim is based exclusively on federal law and is limited to Schaefer plus the 11 who opted in. Schaefer's other claim affects all servers. He contends that servers at the restaurants spent some of their time doing non-tipped duties such as slicing mushrooms and tidying up their service areas, and that the restaurants had to pay the full minimum wage for the time that the class members spent on the non-tipped work. This contention rests on both state and federal law, but Schaefer relies exclusively on federal regulations and precedents, which both sides have assumed are equally applicable under Illinois law. Like the district court, we shall do likewise. The district court granted summary judgment to the restaurants. 2014 WL 7375565, 2014 U.S. Dist. LEXIS 177157 (N.D. Ill. Dec. 17, 2014).

We start with the dual-jobs claim, which applies to all of the servers. Task lists posted at the restaurants, and affidavits from some of the servers, show that they were assigned to a variety of tasks in addition to taking customers' orders and delivering food. They were required to wash and cut strawberries, mushrooms, and lemons; prepare applesauce and jams by mixing them with other ingredients; prepare jellies, salsas, and blueberry compote for use; restock bread bins and replenish dispensers of milk, whipped cream, syrup, hot chocolate, and straws; fill ice buckets; brew tea and coffee; wipe toasters and tables; wipe down burners and woodwork; and dust picture frames. Servers would rotate among these tasks; some servers apparently never performed some of these tasks. Different servers estimated that these duties took between 10 and 45 minutes daily, depending on which tasks were assigned on a given day and the server's experience and aptitude with them.

The Department of Labor has a regulation, 29 C.F.R. § 531.56(e), that distinguishes between dual jobs and “related duties” that may be performed by a tipped employee without requiring the employer to pay the full cash wage. This regulation reads:

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.

The restaurants contend that the duties assigned to its servers all are similar to “cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses” and therefore are “related duties” rather than indicators of a dual job. The restaurants also rely on § 30d00(e) of the Department's Field Operations Handbook, which says:

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.

Schaefer does not contest the validity of the regulation and treats the Handbook as entitled to deference under Auer v. Robbins , 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997). See Fast v. Applebee's International, Inc. , 638 F.3d 872, 877–79 (8th Cir. 2011) (applying Auer to § 30d00(e)). The estimates in discovery of 10 to 45 minutes a day for non-tipped activities all come well under 20% of an 8-hour shift. (Ten minutes is 2% and 45 minutes is 9.4%.) Still, Schaefer contends that none of the servers' duties qualifies as “related” to tipped work.

That position is untenable. The restaurants' servers engaged in making coffee, cleaning tables, and several other activities that the regulation or handbook give as examples of duties that may be performed by persons paid at the tip-credit rate. Other duties performed at the restaurants, such as ensuring that hot cocoa is ready to serve and that strawberries are spread on the waffles, are of the same general kind. In Fast the Eighth Circuit concluded that cutting fruit and cleaning blenders are related to a server's tipped tasks—though the restaurant lost in Fast because non-tipped duties took more than 20% of the employees' time. That some of our plaintiffs' tasks may be performed by untipped staff at other restaurants does not make them unrelated as a matter of law. To see this think of dish removal (clearing tables), which the regulation gives as an example of a related activity. At some restaurants busboys remove dishes after diners have finished, while at others the servers perform this chore. So it is not helpful to ask, as Schaefer proposes, whether cooks or busboys or janitors do one or another task at other restaurants; the right question is whether the tasks are “related” or “incidental” to tipped duties under the regulation and handbook.

The most problematic duties at these restaurants are wiping down burners and woodwork and dusting picture frames. These do not seem closely related to tipped duties—though the fact that the regulation gives “cleaning and setting tables ... and occasionally washing dishes or glasses” as examples of related duties means that cleanup tasks cannot be categorically excluded. We need not decide what to make of wiping the woodwork or dusting picture frames, because in the district court Schaefer aggregated all of the duties. For all this record shows, the time servers spend dusting picture frames is negligible. The Supreme Court told us in Sandifer v. United States Steel Corp. , –––U.S. ––––, 134 S.Ct. 870, 880, 187 L.Ed.2d 729 (2014), that the Fair Labor Standards Act does not “convert federal judges into time-study professionals” and require every minute to be accounted for. Sandifer holds that, when the “vast majority” of employees' time qualifies for a particular treatment under the Act, that treatment can be applied to the entire period. Id. at 881. Given the flexibility of words such as “related” and the 20% cap for un-tipped duties, and given how much less than 20% of...