CHICAGO — A decision in favor of a suburban Chicago chain of pancake houses in a wage dispute over how much it pays its tipped staff could have ramifications far beyond the local restaurant landscape.

The lawsuit was filed by a group of servers employed by Walker Bros. Enterprises, the entity that owns several The Original Pancake House restaurants in the Chicago area, in the case Schaefer v. Walker Bros. Enterprises. In the lawsuit, the servers claimed Walker Bros. paid them below minimum wage when they performed side duties at the end and beginning of their shift which included cleaning, food prep and, at times, cleaning the restaurant.

The plaintiffs alleged that Walker Bros. was in violation of federal and state minimum wage laws. They claimed that the company inaccurately used the tip credit when figuring wages during tasks that didn’t involve serving customers. The plaintiffs also alleged that Walker Bros. failed to inform the servers of the wage when performing these activities.

The U.S. Seventh Circuit Court of Appeals ruled in favor of Walker Bros., stating the company did indeed inform employees of the pay scale by handing out employee handbooks and displaying notice posters throughout the restaurant, as required by the state. It also ruled the side work duties were limited and didn’t have a major impact on the servers’ regular duties.

“I think this ruling should have a fairly significant impact on the restaurant industry, including an impact beyond the Seventh Circuit,” Jennifer A. Riley, partner at Seyfarth Shaw in Chicago, told the Cook County Record. “A few courts really address the type of allegations the plaintiff levied in the Walker Bros. case. Plaintiffs have been able to take advantage of the lack of clarity in the law. I think this opinion should bring some clarity and it should reduce plaintiff incentive to bring these type of lawsuits.”

It is expected that this decision will have implications for other tipped positions that use the tip credit to account for wages, especially in positions where side work or duties are performed. With this ruling in favor of employers, side work has become a duty that tipped employees may need to perform at the tip credit wage.

“There have been a few cases by tipped workers outside the restaurant industry that allege the same type of claims issued in Walker Bros. that were issued for airport skycaps and airport baggage handlers,” Riley said. “I think it should apply to tipped workers regardless of the industry they work in.”

This may be one of the first cases on dual role job positions under the tip credit that has been heard by the Seventh Circuit. While new to this federal circuit, cases alleging similar claims have been filed in district court against other employers.

“There’ve been some District Courts that have addressed it, but I think this is the first Circuit Court to do so," Riley said. "The (Seventh Circuit) opinion is certainly in line with the District Court that has addressed this.”

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