In December 2014, a federal district court in Illinois in Schaefer v. Walker Bros. Enters., Inc. held in
favor of the restaurant group, Walker Bros. Enterprises, in an action brought by servers for violation of
the Fair Labor Standards Act (“FLSA”). Among other claims, the servers contended that the restaurant
violated the FLSA because of the side duties required of them in addition to tipped services, including
tasks such a placing ice cream on waffles, adding blueberries to a blueberry compote, brewing iced tea,
cleaning hot chocolate and lemonade machines, restocking butters and jams, garnishing plates, and they
would occasionally help with maintenance (e.g., polishing brass). The decision by the district court in
favor of the restaurant was not only significant because the restaurant won the case, but also because
there is not a lot of case law giving direction to restaurateurs as to what constitutes a violation.
On July 15, 2016, the Second Circuit Court of Appeals affirmed the Shaefer decision by the district
court. As a circuit court of appeals decision it serves as precedent for courts in its own circuit and
persuasive authority for courts in other circuits. Thus, although other courts in other circuits, including
our Eleventh Circuit, do not have to follow the Second Circuit Court of Appeals in Schaefer, and although
the facts are different in every case, it is at least some recent persuasive authority on which to make
good arguments on the employer side of this issue.
By way of background, under the Department of Labor (“DOL”) regulations, employers are allowed
to pay tipped employees $2.13 an hour in wages rather than the federal minimum hourly wage of $7.25
so long as the employees’ tips make up the difference between the $2.13 and $7.25 an hour. This is
referred to as the tip credit.
But there are many ways that the employer’s ability to actually take a tip credit can be affected. If
the tip credit is lost, then the employer has to pay minimum wage to the employee for the hours worked
and the employee gets his or her tips on top of that. Under DOL regs, for example, the employer can
only apply the tip credit for hours spent by a tipped employee performing tasks which qualify the
employee as a tipped employee and duties related to the employee's tipped occupation. 1 The DOL Field
Operations Handbook further says that those related duties are those that are incidental to the server's
regular duties and generally assigned to servers. None of these terms are defined or give any specifics,
leaving employers at risk in assigning non-tipped tasks to tipped employees.
In Schaefer, the Plaintiffs argued that their side duties fell outside of those allowed under the DOL
regs. In its disagreement with them, the Schaefer case is at least instructive as to what tasks might be
deemed incidental to a server’s duties and withstand a challenge. Now, with the affirmation by the
Second Circuit Court of Appeals, Schaeffer may be even more helpful to restaurateurs in other circuits
1 There is also a limit to how much time can be spent on incidental duties (generally 20%), not at issue in Schaefer