Lawsuit by Outback Steakhouse Waiters and Bartenders Allowed to Proceed as Both Class Action and Collective Action

In Ervin v. OS Restaurant Services, a group of waiters and bartenders at Outback Steakhouse in Calumet City, Illinois brought a lawsuit to recover improperly withheld wages and tips.  Specifically, the workers argued that Outback Steakhouse violated the minimum wage and maximum hour provisions of the Fair Labor Standards Act (“FLSA”) and the Illinois Minimum Wage Law in three ways: (1) by requiring tipped employees to perform tasks during which they could not earn tips; (2) by using money that tipped employees were required to deposit in a “tip pool” to make up for shortages in restaurant cash registers; and (3) by demanding that the tipped employees contribute an excessive amount of their tips to the tip pool.  The Seventh Circuit Court of Appeals held that these restaurant employees were entitled to bring twin claims as both a collective action and a class action. Traditionally, employees in wage and hour disputes file two distinct types of claims in the same case -- class actions to address state-law claims and collective actions to address FLSA claims.  A major difference between these two types of claims is procedural.  Class actions require potential plaintiffs to “opt-in” to specific lawsuits if they wish to become a part of them.  On the other hand, collective actions typically include all potential plaintiffs by default, requiring them to affirmatively “opt-out” if they do not wish to take part in the litigation. Outback Steakhouse had argued that waiters should only be permitted to bring one type of action.  Outback asserted that such parallel litigation was too confusing for potential plaintiffs.  The court, however, dismissed this argument stating, “It does not seem like too much to require potential participants to make two binary choices: (1) decide whether to opt in and participate in the federal action; (2) decide whether to opt out and not participate in the state-law claims.” This decision is significant because it is the first time a federal circuit court has addressed this issue.