Robert Schaefer v. Walker Bros. Enterprises, Inc.
829 F.3d 551
| 7th Cir. | 2016Background
- Ray Walker operated six Original Pancake House restaurants in Illinois; Robert Schaefer worked as a server at three and sued alleging wage violations under the FLSA and Illinois Minimum Wage Law.
- Illinois permits a tip credit but requires employers to pay at least 60% of the normal minimum wage in cash; federal law also allows a tip credit but conditions it on employer notice to employees under 29 U.S.C. § 203(m).
- The district court certified an Illinois-law class of ~500 servers; 24 class members opted into the FLSA portion, 13 accepted judgment, leaving Schaefer and 11 opt-ins for the FLSA claim.
- Schaefer asserted two main claims: (1) servers performed non-tipped duties requiring full minimum wage (dual-job / related duties issue); (2) employers failed to provide the notice §203(m) requires (pre-May 2011 practice).
- Evidence showed servers spent roughly 10–45 minutes per day on non-tipped tasks (well under 20% of an 8-hour shift); employers used an employee handbook, handout, and required workplace posters describing tip-credit rules (the handbook included an incorrect Illinois example).
- The district court granted summary judgment for the restaurants; the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether servers performed dual jobs or only "related duties" (making tip credit inapplicable if dual job or if non-tipped work >20%) | Schaefer: many assigned tasks (e.g., slicing, prep, cleaning, dusting) are not "related" to tipped work and thus require full minimum wage. | Restaurants: tasks are the kind listed in DOL regulation/Handbook as related/incidental; total non-tipped time (10–45 min/day) is well below the DOL 20% threshold. | Held for restaurants: tasks are largely related/incidental; aggregated time is well under 20% so tip credit valid for entire shift (Sandifer deference to practical aggregation). |
| Whether employer satisfied §203(m) notice requirement (pre-May 2011) | Schaefer: §203(m) requires employers to inform each tipped employee of five specific items (cash wage, amount of tip credit, that employer must make up shortfall, that employees keep all tips, and that tip credit cannot be taken without such notice); employer materials failed to provide all items in an employee-specific way. | Restaurants: combined materials (handbook, handout, and mandatory workplace poster) conveyed the statutory essentials; posters expressly stated employer must make up any shortfall; minor handbook error about Illinois minimum wage did not defeat actual notice; post-2011 DOL brochure complied. | Held for restaurants: collectively the poster, handout, and handbook conveyed the three core pieces the court deemed necessary (cash wage is reduced for tips; amount of shortfall; employer must make up if tips do not equal required wage). The §203(m) notice requirement was satisfied pre-2011. |
Key Cases Cited
- Auer v. Robbins, 519 U.S. 452 (deference to agency interpretations of its own regulations)
- Sandifer v. United States Steel Corp., 134 S. Ct. 870 (permitting practical aggregation of time when majority of duties qualify for a given treatment under the FLSA)
- Fast v. Applebee’s Intern., Inc., 638 F.3d 872 (8th Cir.) (application of DOL guidance on related duties and 20% threshold)
- Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294 (6th Cir.) (distinguishing being "informed" from having a full explanation)
- Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (regulatory changes are not retroactive)
- Driver v. AppleIllinois, LLC, 917 F. Supp. 2d 793 (N.D. Ill.) (discussion of sufficiency of pre-2011 DOL poster and notice requirements)