By: Catriona Coppler

Chicago taxi drivers (“drivers”) filed a putative class action against their employer, Chicago Carriage Cab Corporation (“defendants”), claiming that the defendants violated the Illinois Wage Payment and Collection Act (“IWPCA”).[1] The IWPCA provides employees with a “cause of action against employers for the timely and complete payment of earned wages.”[2] The drivers alleged that the defendants: (1) improperly classified them as independent contractors; (2) failed to pay minimum wage or overtime pay; (3) improperly charged them to work; and (4) forced them to bear their own operating expenses.[3] Additionally, the drivers asserted that the defendants were unjustly enriched from the drivers’ employment arrangements, which required the drivers to pay substantial sums of money to the defendants to work.[4] The district court held that the drivers failed to state a claim because the agreement between the drivers and defendants did not require defendants to pay the drivers any wages and, as a result, the drivers’ claims could not be brought under the IWPCA.[5] Therefore, the district court dismissed the drivers’ IWPCA claims and the unjust enrichment claim because it was based on the same allegedly improper conduct.[6]

On appeal, the drivers challenged the district court’s dismissal on three grounds.[7] First, the drivers claimed that the district court relied on an overly narrow definition of “wages.”[8] The drivers argued that “wages” should be interpreted to include indirect compensation.[9] The drivers primarily relied on cases from other state courts involving exotic dancers who successfully brought claims for unpaid wages under their state minimum wage statutes despite not receiving base wages from employers to support their contention that wages should be interpreted to include indirect compensation.[10] The Court rejected this argument; instead, it narrowly defined wages.[11]

The Court first examined the language of IWPCA, which defined “wages” as “compensation owed an employee by an employer pursuant to an employment contract or agreement between the two parties.”[12] The Court compared this language to the Illinois Minimum Wage Law, which broadly defined “wages” to include “compensation due to an employee by reason of his employment.”[13] The Court reasoned that the textual differences indicated that IWPCA was intend to narrowly define wages as compensation owed by an employer and not a third party.[14] Therefore, in order to state a claim, the drivers had to show that they were owed compensation from the defendants pursuant to an employment agreement.[15]

The Court concluded that the drivers’ claims failed because the employment agreement did not obligate defendants to compensate the drivers.[16] Rather, the agreement required defendants to make their cabs and medallions available to drivers so that the drivers could collect tips and fares from passengers and not the taxi company.[17] Because the defendants do not pay the drivers’ wages, the Court held that the district court properly dismissed the drivers’ IWPCA claims. [18]

Second, the drivers argued that, even under the narrow definition of wages in the IWPCA, the district court ignored evidence that the drivers received wages from the defendants in the form of credit card remittances.[19] For example, when a passenger pays with a credit card, that fare is processed by the defendants’ credit card processing service and then remitted to the driver.[20] This indicated that, in a way, the defendants were paying the drivers.[21] The Court rejected this argument because the obligation to pay the drivers still arose from the passenger and not the taxi company.[22] The Court explained that if a passenger’s credit card was declined and the passenger had no cash, the taxi company would not be required to compensate the driver for the money that the passenger owed.[23]

Finally, the drivers argued that the unjust enrichment claim provided an independent cause of action under Illinois law.[24] The Court refused to resolve this issue because a party may not bring an unjust enrichment claim when the two parties’ relationship is governed by a contract, unless the claim falls outside the contract.[25] Because the drivers’ claim challenged the terms of the contract, the theory of unjust enrichment could not be applied.[26] Therefore, the Court affirmed the district court’s ruling.[27]

By refusing to construe wages under the IWPCA to include indirect compensation, the Court essentially assured that many occupations would fall outside the scope of the IWPCA. Therefore, the IWPCA will no longer provide a right of action to a large number of employees who are indirectly compensated, which is something that a business could use to its advantage. For example, in order to avoid paying employees a minimum wage, a business might choose to classify all its employees as contractors and switch its business model so that the customers are the ones directly paying the employees. The business would no longer be liable for its employees’ wages and therefore, the IWPCA would no longer apply to those employees. The business would be able to save money, but at a cost only the employees would feel. This narrow interpretation of the IWPCA could leave a large group of employees without the means to acquire “timely and complete payment of earned wages.”[28] Therefore, under this Court’s interpretation, the IWPCA would fail to accomplish its purpose for all those employees who are indirectly compensated.

[1] Enger v. Chi. Carriage Cab Corp., No. 15-1057, 2016 WL 106878, at * 1 (7th Cir. Dec. 7, 2015).

[2] Id.

[3] Id.

[4] Id. at * 1, * 4.

[5] Id. at * 2.

[6] Id.

[7] See id. at * 2- 4.

[8] Id. at * 2.

[9] Id. at * 3.

[10] Id.

[11] Id. at * 2-3.

[12] Id. at * 2.

[13] Id. at * 3.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id. at * 4.

[19] Id. at * 3.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id. at * 4.

[25] Id.

[26] Id.

[27] Id.

[28] Id. at * 1.