No. 15-­--1058 ROBERT SCHAEFER v. Walker Bros. Enterprises, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-­‐‑1058
ROBERT SCHAEFER, et al.,
Plaintiffs-­‐‑Appellants,
v.
WALKER BROS. ENTERPRISES, INC., et al.,
Defendants-­‐‑Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 10 C 6366 — Charles Ronald Norgle, Judge.
____________________
ARGUED SEPTEMBER 25, 2015 — DECIDED JULY 15, 2016
____________________
Before WOOD, Chief Judge, and BAUER and EASTERBROOK,
Circuit Judges.
EASTERBROOK, Circuit Judge. Through corporations he
controls, Ray Walker operates six Original® Pancake House
restaurants in Illinois. Robert Schaefer, who worked as a
server at three of these restaurants, contends that they vio-­‐‑
late the Fair Labor Standards Act, 29 U.S.C. §§ 201–19, and
its state equivalent the Illinois Minimum Wage Law, 820
ILCS 105/1 to 105/15. Federal and state laws provide that tips

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2 No. 15-­‐‑1058
count toward the minimum wage and permit employers to
pay less in the expectation that tips will make up the differ-­‐‑
ence. Both statutes require some cash payment from the em-­‐‑
ployer, however, no matter how much a worker receives in
tips. In Illinois the employer must pay at least 60% of the
normal minimum wage. 820 ILCS 105/4(c). This is called the
tip-­‐‑credit rate in both state and federal nomenclature. Be-­‐‑
cause the Illinois floor is higher than the federal minimum
set by 29 U.S.C. §203(m)(1), the restaurants paid all servers
the Illinois rate.
The district court certified this suit as a class action on
behalf of the approximately 500 servers who worked in the
restaurants within the period of limitations. The class seeks
recovery under Illinois law. Suits under the Fair Labor
Standards Act cannot proceed as class actions. Instead they
are opt-­‐‑in representative actions. 29 U.S.C. §216(b) (“No em-­‐‑
ployee shall be a party plaintiff to any such action unless he
gives his consent in writing to become such a party and such
consent is filed in the court in which such action is
brought.”). Twenty-­‐‑four members of the state-­‐‑law class
agreed to be plaintiffs in the federal-­‐‑law action; of these, 13
accepted offers of judgment, leaving 11 in addition to
Schaefer. For convenience, we use Schaefer’s name to desig-­‐‑
nate both the class members and the federal-­‐‑law plaintiffs.
Schaefer contends that, until May 2011, the restaurants
failed to give servers the information that §203(m) requires
as a condition of paying a tip-­‐‑credit wage. (In May 2011 the
restaurants started using a brochure designed by the De-­‐‑
partment of Labor to implement a regulation that took effect
that month. 29 C.F.R. §531.59(b). Schaefer concedes that this
notice is adequate.) This claim is based exclusively on feder-­‐‑

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No. 15-­‐‑1058 3
al law and is limited to Schaefer plus the 11 who opted in.
Schaefer’s other claim affects all servers. He contends that
servers at the restaurants spent some of their time doing
non-­‐‑tipped duties such as slicing mushrooms and tidying up
their service areas, and that the restaurants had to pay the
full minimum wage for the time that the class members
spent on the non-­‐‑tipped work. This contention rests on both
state and federal law, but Schaefer relies exclusively on fed-­‐‑
eral regulations and precedents, which both sides have as-­‐‑
sumed are equally applicable under Illinois law. Like the
district court, we shall do likewise. The district court granted
summary judgment to the restaurants. 2014 U.S. Dist. LEXIS
177157 (N.D. Ill. Dec. 17, 2014).
We start with the dual-­‐‑jobs claim, which applies to all of
the servers. Task lists posted at the restaurants, and affida-­‐‑
vits from some of the servers, show that they were assigned
to a variety of tasks in addition to taking customers’ orders
and delivering food. They were required to wash and cut
strawberries, mushrooms, and lemons; prepare applesauce
and jams by mixing them with other ingredients; prepare
jellies, salsas, and blueberry compote for use; restock bread
bins and replenish dispensers of milk, whipped cream, syr-­‐‑
up, hot chocolate, and straws; fill ice buckets; brew tea and
coffee; wipe toasters and tables; wipe down burners and
woodwork; and dust picture frames. Servers would rotate
among these tasks; some servers apparently never per-­‐‑
formed some of these tasks. Different servers estimated that
these duties took between 10 and 45 minutes daily, depend-­‐‑
ing on which tasks were assigned on a given day and the
server’s experience and aptitude with them.

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4 No. 15-­‐‑1058
The Department of Labor has a regulation, 29 C.F.R.
§531.56(e), that distinguishes between dual jobs and “related
duties” that may be performed by a tipped employee with-­‐‑
out requiring the employer to pay the full cash wage. This
regulation reads:
In some situations an employee is employed in a dual job, as for
example, where a maintenance man in a hotel also serves as a
waiter. In such a situation the employee, if he customarily and
regularly receives at least $30 a month in tips for his work as a
waiter, is a tipped employee only with respect to his employ-­‐‑
ment as a waiter. He is employed in two occupations, and no tip
credit can be taken for his hours of employment in his occupa-­‐‑
tion of maintenance man. Such a situation is distinguishable
from that of a waitress who spends part of her time cleaning and
setting tables, toasting bread, making coffee and occasionally
washing dishes or glasses. It is likewise distinguishable from the
counterman who also prepares his own short orders or who, as
part of a group of countermen, takes a turn as a short order cook
for the group. Such related duties in an occupation that is a
tipped occupation need not by themselves be directed toward
producing tips.
The restaurants contend that the duties assigned to its serv-­‐‑
ers all are similar to “cleaning and setting tables, toasting
bread, making coffee and occasionally washing dishes or
glasses” and therefore are “related duties” rather than indi-­‐‑
cators of a dual job. The restaurants also rely on §30d00(e) of
the Department’s Field Operations Handbook, which says:
Reg 531.56(e) permits the taking of the tip credit for time spent in
duties related to the tipped occupation, even though such duties
are not by themselves directed toward producing tips (i.e.
maintenance and preparatory or closing activities). For example
a waiter/waitress, who spends some time cleaning and setting
tables, making coffee, and occasionally washing dishes or glasses
may continue to be engaged in a tipped occupation even though
these duties are not tip producing, provided such duties are in-­‐‑

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No. 15-­‐‑1058 5
cidental to the regular duties of the server (waiter/waitress) and
are generally assigned to the servers. However, where the facts
indicate that specific employees are routinely assigned to
maintenance, or that tipped employees spend a substantial
amount of time (in excess of 20 percent) performing general
preparation work or maintenance, no tip credit may be taken for
the time spent in such duties.
Schaefer does not contest the validity of the regulation and
treats the Handbook as entitled to deference under Auer v.
Robbins, 519 U.S. 452 (1997). See Fast v. Applebee’s Internation-­‐‑
al, Inc., 638 F.3d 872, 877–79 (8th Cir. 2011) (applying Auer to
§30d00(e)). The estimates in discovery of 10 to 45 minutes a
day for non-­‐‑tipped activities all come well under 20% of an
8-­‐‑hour shift. (Ten minutes is 2% and 45 minutes is 9.4%.)
Still, Schaefer contends that none of the servers’ duties quali-­‐‑
fies as “related” to tipped work.
That position is untenable. The restaurants’ servers en-­‐‑
gaged in making coffee, cleaning tables, and several other
activities that the regulation or handbook give as examples
of duties that may be performed by persons paid at the tip-­‐‑
credit rate. Other duties performed at the restaurants, such
as ensuring that hot cocoa is ready to serve and that straw-­‐‑
berries are spread on the waffles, are of the same general
kind. In Fast the Eighth Circuit concluded that cutting fruit
and cleaning blenders are related to a server’s tipped tasks—
though the restaurant lost in Fast because non-­‐‑tipped duties
took more than 20% of the employees’ time. That some of
our plaintiffs’ tasks may be performed by untipped staff at
other restaurants does not make them unrelated as a matter
of law. To see this think of dish removal (clearing tables),
which the regulation gives as an example of a related activi-­‐‑
ty. At some restaurants busboys remove dishes after diners

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6 No. 15-­‐‑1058
have finished, while at others the servers perform this chore.
So it is not helpful to ask, as Schaefer proposes, whether
cooks or busboys or janitors do one or another task at other
restaurants; the right question is whether the tasks are “re-­‐‑
lated” or “incidental” to tipped duties under the regulation
and handbook.
The most problematic duties at these restaurants are wip-­‐‑
ing down burners and woodwork and dusting picture
frames. These do not seem closely related to tipped duties—
though the fact that the regulation gives “cleaning and set-­‐‑
ting tables … and occasionally washing dishes or glasses” as
examples of related duties means that cleanup tasks cannot
be categorically excluded. We need not decide what to make
of wiping the woodwork or dusting picture frames, because
in the district court Schaefer aggregated all of the duties. For
all this record shows, the time servers spend dusting picture
frames is negligible. The Supreme Court told us in Sandifer v.
United States Steel Corp., 134 S. Ct. 870, 880 (2014), that the
Fair Labor Standards Act does not “convert federal judges
into time-­‐‑study professionals” and require every minute to
be accounted for. Sandifer holds that, when the “vast majori-­‐‑
ty” of employees’ time qualifies for a particular treatment
under the Act, that treatment can be applied to the entire pe-­‐‑
riod. Id. at 881. Given the flexibility of words such as “relat-­‐‑
ed” and the 20% cap for un-­‐‑tipped duties, and given how
much less than 20% of working time these servers spent on
un-­‐‑tipped duties at these restaurants, the possibility that a
few minutes a day were devoted to keeping the restaurant
tidy does not require the restaurants to pay the normal min-­‐‑
imum wage rather than the tip-­‐‑credit rate for those minutes.

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No. 15-­‐‑1058 7
Now we turn to the question that is pertinent to the 12
plaintiffs under the Fair Labor Standards Act: whether the
restaurants told their servers of the rules governing tip-­‐‑
credit wages. Here is the pertinent language of §203(m):
In determining the wage an employer is required to pay a tipped
employee, the amount paid such employee by the employee’s
employer shall be an amount equal to—
(1) the cash wage paid such employee which for purposes of
such determination shall be not less than the cash wage re-­‐‑
quired to be paid such an employee on August 20, 1996; and
(2) an additional amount on account of the tips received by
such employee which amount is equal to the difference be-­‐‑
tween the wage specified in paragraph (1) and the wage in
effect under section 206(a)(1) of this title.
The additional amount on account of tips may not exceed the
value of the tips actually received by an employee. The preced-­‐‑
ing 2 sentences shall not apply with respect to any tipped em-­‐‑
ployee unless such employee has been informed by the employ-­‐‑
er of the provisions of this subsection, and all tips received by
such employee have been retained by the employee, except that
this subsection shall not be construed to prohibit the pooling of
tips among employees who customarily and regularly receive
tips.
The trailing paragraph says that employers may not reduce
the cash wages of tipped employees unless each “employee
has been informed by the employer of the provisions of this
subsection” and the employees keep all tips they receive
(unless tips are pooled among employees).
Schaefer reads §203(m) to require the employer to tell
each tipped worker five things: (1) the cash wage the em-­‐‑
ployee will receive; (2) the difference between this payment
and the minimum wage (that is, how much tip credit the
employer is claiming); (3) that the worker is entitled to the

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8 No. 15-­‐‑1058
full minimum wage through a combination of the cash wage
plus tips (in other words, that if tips are less than the tip
credit, the employer must make up the difference); (4) that
the worker is entitled to keep all tips received (unless tips
are pooled among the staff); and (5) that the tip credit cannot
be taken in the absence of the first four notices. Since May
2011 the restaurants have told their servers all five of these
things, using language provided by the Department of Labor
and required by a regulation that took effect that month. 29
C.F.R. §531.59(b). But it is not clear from the statute alone
(which governs events before May 2011) that all five pieces
of information are required.
Take No. 5—notice that the employer can’t take a tip
credit without providing the first four pieces of information.
If the employer does tell the worker the first four things, then
it can take the tip credit; the fifth does not add anything to
the worker’s fund of knowledge (unless the worker is study-­‐‑
ing to be a lawyer and planning to represent tipped employ-­‐‑
ees at other establishments).
And consider No. 4—notice that the worker is entitled to
keep all tips received, unless a pooling arrangement is in ef-­‐‑
fect. This appears in the statute after the requirement that
workers be “informed” of the subsection’s provisions. The
structure of the statutory language is that workers be in-­‐‑
formed of the rules and that they keep non-­‐‑pooled tips.
That’s a strange way to require workers to be informed that
they keep all tips. Trying to explain “keep unless pooling”
would breed questions such as “how does pooling work?”
and “what’s a valid pooling arrangement?” If a given em-­‐‑
ployer does not have a pooling arrangement, as the restau-­‐‑
rants in this case did not, it is kinder to the employee to pass

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No. 15-­‐‑1058 9
the subject in silence. As the Sixth Circuit has remarked, the
word “informed” differs from the word “explained”: work-­‐‑
ers are entitled to knowledge about the tip-­‐‑credit program
but not to a comprehensive explanation. Kilgore v. Outback
Steakhouse of Florida, Inc., 160 F.3d 294, 298 (6th Cir. 1998).
Schaefer tells us that the restaurants could and should
have complied with §203(m) by providing each worker with
a copy of the statute. That’s not a sensible way to “inform”
non-­‐‑lawyers about how the tip-­‐‑credit program works. The
statute is hard to parse, even for someone with a legal educa-­‐‑
tion, given its opaque structure and its use of the minimum
wage from 1996. An employer ought to boil it down and tell
workers directly what matters to them.
Three things are apt to matter most to employees at es-­‐‑
tablishments such as these defendants: (a) in anticipation of
tips the employer will pay less than the minimum wage; (b)
how much the cash wage will fall short of the current mini-­‐‑
mum wage; and (c) if tips plus the cash wage do not at least
match the current minimum wage, the employer must make
up the difference. We think that a person told these things
has been adequately “informed” for the purpose of the stat-­‐‑
ute, during the time before the Department of Labor elabo-­‐‑
rated by regulation.
When Schaefer was hired, the restaurant gave him a doc-­‐‑
ument that explained uniforms and tipping. Its language in-­‐‑
cluded: “Tip Credit. I understand that a portion of the wages
I receive are from tips. The Company can apply a credit to
the minimum wage to include those tips as wages. The tip
credit in Illinois is 40% of minimum wage.” The restaurants’
handbook for employees provided an example:

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10 No. 15-­‐‑1058
Minimum wage $5.15
Tip Credit -­‐‑ $2.06
Hourly rate $3.09
Schaefer received this handbook when he started work in
November 2005. The handbook ignored the federal rules,
which depend on the minimum wage as of 1996. Worse: the
minimum wage in Illinois in 2005 was $6.50 an hour, not
$5.15, so the example was wrong about how much the res-­‐‑
taurant would claim in tip credit. (For a $6.50 hourly mini-­‐‑
mum wage, the employee gets a cash payment of at least
$3.90 per hour and the tip credit cannot exceed $2.60 per
hour.) And neither the text nor the example told Schaefer
that, if he did not receive enough in hourly tips to equal or
exceed the credit the employer was taking, then the restau-­‐‑
rant had to make up the difference. Illinois does not require
that piece of information, but federal law does.
The restaurants contend that it is enough that workers
know that they will receive less than the minimum wage, in
anticipation of tips. Schaefer admitted that he understood
that the cash wage had been reduced for this reason. But the
handout and the handbook collectively did not contain a vi-­‐‑
tal piece of information required by federal law.
These restaurants did furnish that information separate-­‐‑
ly, however. Federal law requires employers to put posters
about minimum-­‐‑wage rules in areas that employees frequent
during the workday. Each restaurant put up at least one
poster with this information:
Employers of “tipped employees” must pay a cash wage of at
least $2.13 per hour if they claim a tip credit against their mini-­‐‑
mum wage obligation. If an employee’s tips combined with the
employee’s cash wage of at least $2.13 per hour do not equal the

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No. 15-­‐‑1058 11
minimum hourly wage, the employer must make up the differ-­‐‑
ence. Certain other conditions also must be met.
Schaefer contends that these posters, despite saying in easy-­‐‑
to-­‐‑understand language that the employer must top up the
cash wage if tips do not cover the credit, do not meet the res-­‐‑
taurants’ statutory obligation because they are not employ-­‐‑
ee-­‐‑specific. That is, they explain the rules for tip-­‐‑credit wag-­‐‑
es (a separate part of the poster states the minimum wage
that cash plus tips must equal or exceed) but do not tell any
given employee whether a tip credit has been deducted from
that employee’s wages. But if the employee has been told
separately—by the handout, the handbook, and the pay
stub—that a tip credit is being deducted, then the essential
information has been supplied. The posters are addressed to
all of the establishment’s workers, some tipped and some
not tipped. They have to be general, while the rest of the in-­‐‑
formation comes from what the employer conveyed directly
to the tipped workers.
Schaefer does not contend that he or any of the 11 opt-­‐‑in
plaintiffs failed to put two and two together and understand
that the cash wage was below the minimum and that the
employer must pay more if the cash wage plus tips did not
reach the minimum wage. It certainly would have been pref-­‐‑
erable for the restaurants to put all of the information in one
place, as they started to do in May 2011, and provide accu-­‐‑
rate numerical examples, but §203(m) does not say that all of
the information must be in a single document. The handout
plus the handbook plus the poster collectively supplied the
information required by federal law, and the handbook’s er-­‐‑
ror in stating the Illinois minimum wage is not dispositive
given that the cash wage promised ($3.09) and paid ($3.60)

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12 No. 15-­‐‑1058
both exceeded the federal minimum cash wage of $2.13 an
hour required by §203(m).
Schaefer asserts that the poster is “not enough” but does
not explain why it is inadequate. If posters don’t count,
what’s the point of requiring them? In lieu of making an ar-­‐‑
gument, Schaefer points us to Driver v. AppleIllinois, LLC, 917
F. Supp. 2d 793, 801–03 (N.D. Ill. 2013). Driver thought the
Department of Labor’s own pre-­‐‑2011 poster inadequate be-­‐‑
cause it did not contain all five pieces of information speci-­‐‑
fied by the 2011 regulation, and in particular omitted the re-­‐‑
quirement that employees keep their tips unless the employ-­‐‑
er uses tip pooling. But regulatory changes are not retroac-­‐‑
tive, see Bowen v. Georgetown University Hospital, 488 U.S. 204
(1988), and we have explained why the statute on its own
does not necessarily call for all of the advice required by the
regulation. It would be hard to fault an employer for provid-­‐‑
ing exactly the information the Department of Labor then
required, in the Department’s own words. Schaefer does not
contend that he was unable to keep all tips he received. The
handbook and poster together supply the restaurants’ work-­‐‑
ers with the three pieces of information that we believe con-­‐‑
stitute the statutory minimum.
AFFIRMED

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