Labor & Employment Law Daily Restaurant fails to decertify class claim related to sidework of its servers
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Wednesday, October 7, 2020

Restaurant fails to decertify class claim related to sidework of its servers

By Ronald Miller, J.D.

The servers had evidence they were expected to perform sidework tasks for most, if not all, of the time before customers arrived, and that this opening sidework alone exceeded 20 percent of a given workweek.

Finding that the common threshold question remained whether an employer’s sidework policy was legal, a federal district court in Illinois denied a restaurant employer’s motion to decertify that portion of a class and collective action which alleged the employer required servers to perform non-table-service-related work at less than minimum wage. That there was evidence certain servers did not spend more than 20 percent of their time on sidework did not change the fact that the servers were expected to perform sidework tasks for most, if not all, of the time before customers arrived. Moreover, that question predominated “over questions of whether any individual server actually performed a sufficient amount of sidework on a given shift to trigger liability” (Berger v. Perry’s Steakhouse of Illinois, LLC, October 1, 2020, Durkin, T.).

In this action, servers at a restaurant alleged that the employer failed to pay them all tips and other compensation owed, required them to perform non-table-service-related work at less than minimum wage, and failed to give them adequate notice of their intent to take a “tip credit” and use a “tip pool” in violation of the FLSA and the Illinois Minimum Wage Law (IMWL).

Credit card offset fee. An employer may offset its minimum wage obligations as to a tipped employee by the tips the employee actually receives. Each server at the restaurant is a “tipped employee” as defined by the FLSA and is paid at the Illinois tip credit rate of $4.95 per hour. This case stems in part from a credit card offset fee the employer implemented when it opened in November 2013. That fee acted as a deduction from servers’ cash tips and was purportedly used to recoup the expense involved with the nightly cashing out of those tips (the so-called “tip refund”).

According to the employees, the credit card offset fee policy violated the FLSA and IMWL because the amounts deducted were more than was necessary to cover the costs associated with the credit card transactions, and thus the employer should lose the “tip credit” and be required to pay minimum wage as a result.

Motion to decertify. In March 2018, the court granted the employees’ motion for partial class and collective action certification of three subclasses as to the notice, credit card offset fee, and sidework claims. Presently before the court was the employer’s motion for partial decertification, arguing that: (1) the sidework claim should be decertified in its entirety; (2) the credit card offset fee class definition should be modified; (3) the notice and sidework subclass definitions should be modified; (4) the notice claim subclass definition should be further modified to limit membership to those servers who performed server duties and received the allegedly problematic notice before January 2017; and (5) each subclass definition should be modified to restrict membership to those servers who timely opted in to the FLSA collective action.

Credit card offset fee subclass. As an initial matter, the court considered the employer’s contention that the credit card offset fee subclass definition should be modified to restrict membership to servers who “performed server duties such that they were subject to the credit card offset fee prior to October 12, 2014,” the date on which the employer ceased use of the credit card offset fee policy. Here, the court determined that because the modification amounted to a mere clarification, and because the employees failed to explain how they would be prejudiced by it, the definition was modified to take into account the October 12, 2014 “cut off” date.

Notice subclass. The employer next sought to restrict membership in the notice subclass to servers who performed server duties between October 12, 2014. and the end of 2016, when the employer distributed and posted a new, compliant FLSA notice as of January 1, 2017. The court agreed with the employees and declined to modify the notice subclass to reflect the start date proposed by the employer, finding that modification of the notice subclass as a result of the court’s partial ruling on the credit card offset fee claim would be improper since it could negatively impact the servers’ right to recovery. On the other hand, the court ordered modification of the notice claim subclass definition to reflect the date the employer terminated the problematic policy.

Sidework subclass. The sidework claim arose from the employees’ allegations that the employer unlawfully paid servers less than minimum wage for untipped opening and closing “sidework” that was either: (1) unrelated to their tipped server duties; or (2) related to those duties but in excess of 20 percent of their total workweek hours in violation of the so-called “80/20 rule.” The employer contended that the sidework claim should be decertified, or modified to reflect a start date commencing after it abandoned the credit card offset fee policy. In the employer’s view, the evidence showed that issues related to individualized liability and damages determinations precluded continued certification.

However, the court observed that the employees produced evidence from which a jury could infer that servers are expected to—and do—perform sidework tasks for most, if not all, of the time before customers arrive, and that such opening sidework alone exceeds 20 percent of a given workweek. The common threshold question remained whether the employer’s sidework policy was legal. The fact that some evidence supported that certain servers did not spend more than 20 percent of their time on sidework did not change that. Moreover, that question predominated “over questions of whether any individual server actually performed a sufficient amount of sidework on a given shift to trigger liability.” Accordingly, the court declined to decertify the sidework subclass in its entirety.

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