Labor & Employment Law

Tipped Employees - Delegate with Caution

By Mark E. Tabakman, Esq.

This week, Judge Ronald Guzman of the U.S. District Court for the Northern District of Illinois granted class certification in Ervin et al. v. OS Restaurant Services, Inc., a Fair Labor Standards Act suit accusing Outback Steakhouse of failing to pay minimum wage to employees at one of its locations.  

The plaintiffs, former employees of an Outback Steakhouse, filed the suit in February 2008. They all worked as bartenders, servers and other tipped employees and were paid less than minimum wage under the tip-credit provision of state and federal minimum wage law. However, the suit claims that tipped employees were regularly required to do work that did not involve being paid tips, yet they continued to be paid their sub-minimum wage salary.

Judge Guzman decided to certify the class based on the magistrate judge's conclusion that the plaintiffs had made a modest factual showing for all of their claims under the FLSA sufficient for class certification. However, the Judge denied certification for the plaintiff's state law claim on the grounds that the state law opt-out component did not comport with the FLSA's opt-in component. Indeed, under the rules governing class claims, eligible class members in the state law action would be included in the suit unless they opt out, while no one can become a class member in an FLSA suit unless he opts in.

Given that incompatibility, the magistrate judge recommended, and Judge Guzman agreed, that only the FLSA class should be certified.

The lesson that employers should take away from this decision is to be more aware of the tasks delegated to employees who are paid less than minimum wage pursuant to the tip-credit provision of state and federal minimum wage law.

Full post as published by Wage & Hour - Development & Highlights on July 29, 2009 (boomark / email).