The United States Court of Appeals for the Seventh Circuit recently revived discrimination and retaliation claims asserted by two African-American cocktail waitresses under Title VII of the 1964 Civil Rights Act in Alexander v. Casino Queen, Inc., 7th Cir. Case No. 12-3696, 2014 WL 57947. The United States District Court for the Southern District of Illinois has dismissed such claims on the basis that the plaintiffs failed to show an “adverse action” necessary for a Title VII claim. The Seventh Circuit reversed that determination, finding that the lost tip potential alleged to have been suffered by the plaintiffs was sufficient to constitute an adverse action to support the discrimination and retaliation claims.
In Alexander, the plaintiffs were paid $7 to $8 an hour in salary, totaling approximately $60 per day. They also earned $40 to $160 per day in tips depending on their floor assignment. As such, tips compromised approximately 40% to 73% of the waitresses’ total compensation. Due to their seniority, the plaintiff waitresses were allowed to bid on assignments to areas of the casino known to generate higher tips. The plaintiffs alleged, however, that their supervisor would frequently reassign them to less lucrative areas, while Caucasian waitresses (often with less seniority) were reassigned to cover the more desirable areas. The plaintiffs alleged that these assignments occurred up to twice a week and cost them $50 per day.
To be actionable, an employment action must be a significant change in employment status (i.e. demotion or termination) or must cause a significant change in benefits. Here, the Seventh Circuit concluded that the floor reassignments constituted an adverse employment action sufficient to sustain the plaintiffs’ discrimination and retaliation claims because of the relative importance that tips had for these cocktail waitresses under their compensation structure. The Court reasoned as follows:
“Here, tips compromise anywhere from 40% to 73% of plaintiffs’ compensation. It is true that patrons pay these tips, not the employer; thus, the causal connection is not immediate. Nonetheless, Casino Queen’s alleged ‘decision caused a significant change in benefits’ through a clear causal relationship.”
The Seventh Circuit further rejected the lower court’s characterization of plaintiffs’ claims as speculative, finding instead that the plaintiffs were able to quantity the loss of tips based on their first-hand experience working at the Casino for 15 and 18 years respectively. While the plaintiffs’ losses were admittedly estimates, the Court concluded that such estimates were based on the valid grounds given the plaintiffs’ extensive experience. Accordingly, the Court concluded that the plaintiffs asserted sufficient evidence of an adverse action to get to the jury on their discrimination and retaliation claims.