Walsh v. Dayemi Org., Inc.
| Decision Date | 24 June 2022 |
| Docket Number | Case No. 21-cv-56-SMY |
| Citation | 608 F.Supp.3d 715 |
| Parties | Martin J. WALSH, Secretary of Labor, United States Department of Labor , Plaintiff, v. DAYEMI ORGANIZATION, INC. d/b/a Longbranch Café and Bakery, an Illinois Corporation, and Elaine Ramseyer Greenberg, an Individual, Defendants. |
| Court | U.S. District Court — Southern District of Illinois |
Kevin Wilemon, Elisabeth P. Nolte, US Dept. of Labor-Dearborn St. Solicitor's Office, Chicago, IL, for Plaintiff.
Shari R. Rhode, Rhode Law Firm, Carbondale, IL, for Defendants.
Plaintiff Martin J. Walsh, Secretary of Labor, U.S. Department of Labor (the "Secretary") filed suit on behalf of 32 current and former employees against Defendants Dayemi Organization, Inc. d/b/a Longbranch Café and Bakery and Elaine Ramseyer Greenberg, alleging violations of the Fair Labor Standards Act, as amended 29 U.S.C. § 201 et seq ("FLSA"). The Secretary seeks back wages, liquidated damages, and injunctive relief.
The case is now before the Court for consideration of the Secretary's Motion for Summary Judgment (Doc. 23), which Defendants oppose (Doc. 29). For the following reasons, the motion is GRANTED in part and DENIED in part .
Construed in the light most favorable to the non-moving party, the evidence and reasonable inferences establish the following facts relevant to the pending motion: Defendant Dayemi Organization, Inc., d/b/a Longbranch Café and Bakery ("Longbranch"), is a corporation operating in Carbondale within Jackson County, Illinois (Doc. 16, ¶ II.A). Longbranch is owned by Dayemi Organization, Inc., which is owned by Baraka Trust (Doc. 24-1, at ¶¶ 8c, 9). Defendant Elaine Ramseyer Greenberg ("Greenberg") is an officer of Dayemi Organization and a board member of Baraka Trust. Id. ¶ 9.
Longbranch is composed of a full-service café/restaurant located at 100 E. Jackson St. (the "Café"), and an off-site bakery located 0.1 miles away from the Café at 218 N. Illinois St. (the "Bakery"). Id. The Café serves baked goods, coffee, and vegetarian/vegan fare and employs servers, baristas, cooks, and dishwashers, among others. Id. ¶ 4. The Bakery prepares baked goods for the Café and offers catering for weddings. Id. ¶ 5. Longbranch's gross annual dollar volume of sales for calendar years 2018 and 2019 were $809,303 and $766,884 respectively (Doc. 23-1, ¶8d; Doc. 19). It had an annual gross volume of sales approximately $211,000 in 2020 (Doc. 29-1, at p. 25).
Defendant Greenberg is the general manager of the Café and has held this position for approximately 18 years (Doc. 24-6, at p. 16). She is responsible for overseeing the general day-to-day operations of the Café, including supervising employees, and hiring and firing employees. Id. She also oversees operations of the Bakery, procures supplies, hires employees, and provides guidance regarding employee discipline. Id. at pp. 16-19.
Lindsey Corona, an employee of the U.S. Department of Labor, Wage, and Hour Division, was assigned to investigate Longbranch in February 2020 (Doc. 23-1, ¶ 4). The initial investigation was opened on February 3, 2020 and covered the Café and Bakery for the period of February 6, 2018 through February 5, 2020 ("the investigation period"). Id. During the course of the investigation, Corona conducted an unannounced visit to the Café, interviewed nine current and former employees, and reviewed Longbranch's pay records (Doc. 23-1).
Greenberg testified that she knew nothing about the FLSA prior to the initiation of the investigation (Doc. 24-11, at p. 91). Longbranch did not review the Wage & Hour Division's guidance or website, or consult with any lawyer, financial advisor, or government official about whether their pay practices complied with the FLSA. Id. at pp. 94-96.
Longbranch paid servers and baristas either $5 or $5.50 per hour and took a tip credit for the remainder of their minimum wage obligation (Doc. 19). Greenberg testified that servers and baristas were only notified of the tip credit when they saw it on their paychecks (Doc. 24-6, p. 41). There was no other notification to employees regarding the tip credit to her knowledge. Id. Longbranch computed the overtime premium rate for servers and baristas who worked more than 40 hours per workweek based on their hourly cash wage rate of $5 or $5.50 (Doc. 19).
Longbranch employed Wilbur Davis as the barista manager at the Café (Doc. 19). Davis was paid a salary of $471.15 per workweek during the entire investigation period. Id. He worked more than 40 hours during several workweeks from January 1, 2020 to February 5, 2020 (Doc. 23-3).
Longbranch paid the Café’s cooks and dishwashers at the hourly state minimum wage or higher during the investigation period and did not take a tip credit for them (Doc. 24-6, pp. 42-43). Dishwashers and cooks performed their work in the kitchen, which diners could not access, and did not receive tips from customers. Id. at pp. 42-43. Cooks and dishwashers did not hold any other positions at the Café. Id.
Longbranch had a longstanding tip pool in which servers and baristas placed all tips received during a shift into a tip jar (Doc. 24-6, pp. 46-48). Money from the tip jar was distributed at the end of each shift to employees who worked that shift: 90% divided between the servers and baristas, 5% to the cook(s), and 5% to the dishwasher. Id. at pp. 51-54. The tip policy was included in the Front of the House Standard Operating Procedures ("FOH SOP") (Doc. 24-2). The "Tip Out Policy" states:
(Doc. 24-2). The Policy explains how the tip pool operates, including instructions for how servers should pay cash and credit card tips into the tip jars and how the money from the tip pool should be distributed. Id.
Greenberg and other employees informed interviewees and newly hired servers and baristas about the tip pool, including how it operated and amounts paid to cooks and dishwashers from the tip pool (Doc. 24-6, pp. 58-61). Greenberg testified that new hires were told that the tip pool was part of "the practices we follow here" at the Café and no one ever said they were not willing to do it. Id. at pp. 60-61. She did not recall if the servers and baristas had any meetings about the tip pool in 2018 or 2019; "it was a longstanding tradition." Id. at p. 62. In the past, the servers and baristas met from time to time and chose to continue the sharing of tips practice that they had endorsed for many years; "everyone always said yes." Id. at p. 63. The decision to pool tips belonged to the servers and baristas. Id. at p. 64; Doc. 29-1, p. 70. The servers and baristas could change the system or choose not to participate in the tip pool. Id. at p. 70. Servers and baristas could absolutely choose to keep their cash tips if they wanted to. Id.
Some employees understood the tip pool to be mandatory (Doc. 33-1, at ¶ 9; Doc. 33-4, at ¶ 15; Doc. 33-5, ¶ 9). These employees averred that they had no control over whether to pay into the tip pool, what amount to contribute, or how the tip pool was distributed. Id. The servers and baristas were unhappy about sharing their tips and complained about the practice amongst themselves (Doc. 33-1, ¶¶ 10-11; Doc. 33-4 ¶ 10; Doc. 33-5, ¶ 12). Servers and baristas who deviated from the tip pool rules, inadvertently or otherwise, were made to comply (Doc. 33-1 at ¶ 11; Doc. 33-4, at ¶¶ 12-13; Doc. 33-5, at ¶ 11.)
Other employees averred that the tip pool was a decision made only by the servers and baristas; that servers and baristas decided to continue the on-going voluntary practice of sharing tips with the cooks and dishwashers; and that they never disagreed with tip sharing (Doc. 29-2, at ¶ 14-19; Doc. 29-3, at ¶ 14-19; Doc. 29-4, at ¶ 14-19; Doc. 29-5, at ¶ 14-19; Doc. 29-6, at ¶ 14-19).
The Café’s pay records for the investigation period show that Longbranch paid servers and baristas a regular hourly cash wage of $5 or $5.50 and overtime at one-and-one-half times their hourly cash wage. Id. at ¶ 15c; (Doc. 23-3; Doc. 23-4). Longbranch did not document the amount of tips received by Café employees (Doc. 19). At the Bakery, Longbranch used timecards to record the hours worked each day and week by Bakery employees but threw away the timecards after they were used to input the biweekly payroll into Quickbooks (Doc. 23-1, at ¶ 16; Doc. 24-11 at p. 29).
Summary judgment is proper if the moving party can demonstrate that there is no genuine issue as to any material fact – that is where the non-moving party "has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the evidence is merely colorable or is not sufficiently probative, summary judgment should be granted. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249–50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Any doubt as to the existence of a genuine issue of material fact must be resolved against the moving party. Lawrence v. Kenosha County, 391 F.3d 837, 841 (7th Cir. 2004).
The Secretary moves for summary judgment, arguing that Longbranch improperly took a tip credit for tipped employees in violation of FLSA's minimum wage provisions, paid tipped employees less than one-and-one-half times their regular rates for overtime work, misclassified a manager as FLSA exempt in violation of the Act's overtime requirements, and failed to make and keep appropriate pay and time records.
FLSA imposes duties on employers with respect to compensation of employees engaged in commerce or employed...
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