In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 18-2609

ADRIEL OSORIO,

Plaintiff-Appellant,

v.

THE TILE SHOP, LLC,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 15 C 15 — Matthew F. Kennelly, Judge.

____________________

ARGUED DECEMBER 3, 2018 — DECIDED SEPTEMBER 23, 2019

____________________

Before SYKES, BARRETT, and ST. EVE, Circuit Judges.

SYKES, Circuit Judge. Anyone who has worked in a commissioned sales position knows that earnings are unpredictable. Commissions often fluctuate from one pay period to 

the next. The Tile Shop, LLC, a specialty retailer of ceramic 

and stone tile, uses a compensation system designed to 

smooth the earnings of its commissioned sales staff. The Tile 

Shop pays a semimonthly “draw” of $1,000 ($24,000 annually) even if a sales associate earns less than that amount in 
2 No. 18-2609

commissions during the pay period. The Tile Shop reconciles 

and recovers any shortfall between actual earned commissions and the $1,000 draw in subsequent pay periods, but 

only from commissions in excess of $1,000.

For ten months Adriel Osorio sold tile and related products for The Tile Shop, first in Illinois and then in New 

Mexico. His earnings reflected the ebb and flow of sales. 

When business was slow and his commissions totaled less 

than $1,000 in a pay period, The Tile Shop paid him the 

guaranteed $1,000 and reconciled the difference in later pay 

periods when his commissions exceeded $1,000. He quit in 

July 2014.

Months later Osorio filed this class action alleging that 

The Tile Shop’s “recoverable draw” system violates the 

Illinois Wage Payment and Collection Act (“IWPCA” or “the 

Act”) and its implementing regulations. As relevant here, the 

regulatory scheme prohibits employers from deducting

more than 15% from an employee’s wages per paycheck as

repayment for previous cash advances. Osorio’s suit claimed

that The Tile Shop’s compensation system functions as a 

series of cash advances and his former employer deducted 

more than 15% of his wages at various points to recoup 

previous draw payments.

Ruling on cross-motions for summary judgment, the district judge held that The Tile Shop’s compensation system 

does not involve “cash advances,” so no violation of Illinois 

law occurred. We affirm, though on a different rationale. The 

Act prohibits “deductions by employers from wages or final 

compensation” unless specified conditions are met. 820 ILL.

COMP. STAT. 115/9 (2018). The rules for repayment of cash 

advances are found in the regulations, but the threshold 
No. 18-2609 3

question is whether The Tile Shop’s draw reconciliations are 

“deductions” from wages or final compensation. They are 

not. The reconciliations determine the employee’s gross 

wages before tax withholding and other deductions are

made.

I. Background

The Tile Shop, LLC, sells tile and related materials and 

accessories. It operates 128 retail stores across 31 states. Each 

store employs a manager, one or two assistant managers, 

and a staff of sales associates. Sales associates and assistant 

managers are primarily responsible for sales. 

The Tile Shop pays its sales associates and assistant managers pursuant to a “Sales Associate Pay Plan.” The company gives prospective employees a copy of the plan with its 

offer letter. Portions of the plan have been revised over the 

years, but the material terms have not changed. The plan

explains how the company compensates its sales staff,

primarily through commissions but also with bonuses on 

sales of certain products and periodic incentives. The Tile 

Shop pays employees on a semimonthly basis. 

Commission income naturally varies from pay period to 

pay period depending on sales volume, the profitability of 

products sold, and the specific circumstances at the store in 

question. To provide a stable and reliable income, The Tile 

Shop guarantees its sales staff a minimum of $1,000 for each 

semimonthly pay period, for an annual salary of at least 

$24,000. If an employee earns less than $1,000 in commissions in a pay period, The Tile Shop reconciles and recovers 

the difference in subsequent pay periods, but only against 

commission earnings in excess of the guaranteed minimum.
4 No. 18-2609

The $1,000 “draw” counts toward gross wages for purposes of payroll and income taxes, and it is prorated if the 

employee does not work the full pay period. An employee’s

first three pay periods are essentially a grace period. The Tile 

Shop pays the guaranteed $1,000 and does not seek to 

recover any shortfall in actual commissions. Beginning with 

the fourth pay period, The Tile Shop reconciles any commission shortfalls below $1,000 against future commissions

exceeding $1,000 in subsequent pay periods until recovered

in full. Notably, this reconciliation formula determines gross 

wages for purposes of payroll and income taxes and any

other applicable deductions. An employee who leaves the 

company receives a draw payment during his final pay 

period of employment even though he will not make additional sales. The Tile Shop does not require reimbursement 

of an outstanding draw balance at the end of employment.

The Tile Shop employed Osorio as a sales associate in an 

Illinois store from September 2013 until February 2014 and 

as an assistant manager in a New Mexico store from 

February to July 2014. His pay schedule reflects The Tile 

Shop’s system of draws and reconciliations. For example, 

Osorio’s total compensation for the second pay period in 

December and first pay period of January included draw 

payments. The Tile Shop recovered the difference after 

Osorio’s strong performance to end January. In total, Osorio 

received $2,038.47 in recoverable draw compensation during 

his employment, and $1,141.46 was reconciled against 

subsequent commissions and incentive payments. When he

left the company, he did not have to repay the balance.

In January 2015 Osorio filed this class-action lawsuit 

against The Tile Shop alleging violations of the federal Fair 
No. 18-2609 5

Labor Standards Act, the IWPCA, and the Illinois Minimum 

Wage Law. The district judge granted The Tile Shop’s motion 

for partial judgment on the pleadings with respect to 

Osorio’s IWPCA claim. His original complaint alleged that 

the company did not have his written authorization to 

recoup the draw payments. The judge ruled that he had 

authorized the recoupment by signing the pay plan attached 

to his offer of employment.

Osorio sought reconsideration, but the judge declined to 

revisit his decision. Osorio later moved to amend his complaint to recharacterize the IWPCA claim as a challenge to 

impermissible recoupments of “cash advances.” The judge 

granted the motion. Osorio then moved for class certification 

on the reformulated IWPCA claim, proposing the following 

definition of the class:

All persons employed in a Tile Shop retail store

in the State of Illinois, except store managers, 

who had a deduction made to a paycheck received at any time from January 2, 2005[,] up to 

and including the date of trial, in order to recoup a cash advance where the deduction was 

in excess of 15% of the gross pay received in 

that paycheck.

This definition correlated to Osorio’s new legal theory, 

which rested on the Act’s implementing regulations—more 

specifically, an administrative rule providing that “[n]o cash 

advance repayment agreement shall provide for a repayment schedule of more than 15% of an employee’s gross 

wages or final compensation per paycheck.” ILL. ADMIN.

CODE tit. 56, § 300.800 (2018). The judge granted the classcertification motion.
6 No. 18-2609

The parties then filed cross-motions for summary judgment on the IWPCA claim. The judge granted The Tile 

Shop’s motion and denied Osorio’s. He determined that the 

claim “hinge[d] on the question ... whether [The] Tile 

Shop’s ‘recoverable draw’ system is a cash advance repayment agreement.” He then examined the pay plan in detail 

and found one aspect particularly compelling: a departing 

employee receives a draw in his final paycheck even if he 

makes less than $1,000 in commissions, and he is not required to pay it back. “Because the undisputed facts establish that [The] Tile Shop does not always require repayment 

of draws,” he concluded, “they do not constitute cash 

advances.”

The parties settled the FLSA and Illinois Minimum Wage 

Law claims, and the judge entered final judgment on the 

IWPCA claim. Osorio appealed. 

II. Discussion

We review a summary judgment de novo, construing evidence and drawing inferences in favor of the nonmoving 

party. Barefield v. Village of Winnetka, 81 F.3d 704, 708 (7th Cir. 

1996).

The IWPCA prohibits “deductions by employers from 

wages or final compensation” unless certain conditions are 

met. § 115/9. As we’ve explained, the Act’s implementing 

regulations establish requirements for deductions from 

wages pursuant to a “cash advance repayment agreement,” 

one of which is the 15%-per-paycheck limitation. ILL. ADMIN.

CODE tit. 56, § 300.800. In the district court, The Tile Shop 

made two arguments in opposition to Osorio’s reformulated 

IWPCA claim. The first was that the draw reconciliations are 
No. 18-2609 7

not “deductions from wages or compensation” within the 

meaning of the Act. The second was that the draw system 

does not involve “cash advances” within the meaning of the 

regulations. The judge agreed with The Tile Shop’s second 

argument, holding that the draws are not cash advances.

On appeal The Tile Shop reiterates both arguments. We 

find the first inquiry dispositive. The IWPCA is triggered 

only if the draw reconciliations constitute “deductions ...

from wages or final compensation.” The Act broadly defines 

“wages” as “any compensation owed an employee by an 

employer pursuant to an employment contract or agreement 

between the 2 parties.” 820 ILL. COMP. STAT. 115/2 (2018). But

neither the statute nor the implementing regulations define

the term “deductions,” nor has any court defined the term as 

used in the Act. 

The Tile Shop relies on Cohan v. Medline Industries, Inc.,

843 F.3d 660 (7th Cir. 2016), but that case does not inform the 

analysis here. In Cohan two employees claimed that their 

employer, Medline, violated the IWPCA by making illegal 

deductions from their commissions without written authorization. Id. at 661. The plaintiffs challenged two aspects of the 

company’s pay structure. First, Medline calculated a salesperson’s net growth in sales on a month-over-month basis, 

and if a salesperson had negative net growth for an account, 

that resulted in a negative commission. Second, the commission calculation included a “carryover” component such that 

a salesperson with a negative overall territory sales growth 

in one month was required to cover that loss with any 

positive sales growth in subsequent months. Id. at 663–64. 

We rejected the plaintiffs’ claim because Medline’s compensation plan “clearly and unambiguously provided for 
8 No. 18-2609

negative growth being taken into account when calculating

commissions.” Id. at 667 (emphasis added). That final word is 

key—the challenged aspects of the Medline plan dealt with 

calculating the underlying commissions. This case, in contrast, 

does not challenge how The Tile Shop calculates commissions.

We return, then, to the question whether the draw reconciliations are “deductions ... from wages or final compensation.” Although the Act does not define “deduction,” if a 

statutory term has “a settled legal meaning, [Illinois] courts 

will normally infer that the legislature intended to incorporate the established meaning.” People v. Johnson, 995 N.E.2d 

986, 988 (Ill. 2013). In the payroll context, a deduction refers

to “an amount of money that is taken by an employer from 

an employee’s pay, for income tax, insurance, etc.” See Payroll 

Deduction, CAMBRIDGE BUSINESS ENGLISH DICTIONARY, 

https://dictionary.cambridge.org/us/dictionary/english/

payroll-deduction (last visited September 18, 2019). Another 

dictionary similarly defines the term: “[The] amount withheld by an employer from [an] employee’s earnings. It 

typically includes income tax, national insurance or social 

security contributions, and may also include group insurance or pension fund contributions ... .” See Payroll 

Deduction, BusinessDictionary.com, http://www.business 

dictionary.com/definition/payroll-deduction.html last 

visited September 18, 2019). In other words, as used in this 

particular context, the term “deduction” refers to withholdings from an employee’s earnings, not the employer’s method of determining an employee’s earnings.

Related statutory provisions confirm this understanding. 

In Illinois, as elsewhere, a word appearing “more than once 
No. 18-2609 9

in a statute is presumed to have been used by the legislature 

with the same meaning each time, absent an indication that a 

different meaning was intended.” Baker v. Salomon, 

334 N.E.2d 313, 316 (Ill. App. Ct. 1975); see also ANTONIN 

SCALIA & BRIAN A. GARNER, READING LAW: THE 

INTERPRETATION OF LEGAL TEXTS 170–73 (2012). In section 

115/10 of the Act, Illinois requires employers to “furnish 

each employee with an itemized statement of deductions

made from his wages for each pay period.” 820 ILL. COMP.

STAT. 115/10 (2019) (emphasis added). And the implementing 

regulations prohibit deductions for certain expenses, such as

for training or educational courses, ILL. ADMIN. CODE tit. 56, 

§ 300.780 (2019); damaged property, id. § 300.820; and uniforms required by the employer, id. § 300.840, “unless the 

employee’s express written consent is given freely at the time 

the deduction is made.” Under section 115/10 and the regulations, the term “deduction” is used as a term of art to refer 

to expressly stated categories of expenses withheld from an 

employee’s pay.

Considered in context, the term “deductions” as used in 

the Act refers to withholdings from an employee’s gross

wages, not the formula used to calculate an employee’s gross 

wages. This poses an insurmountable obstacle for Osorio.

The draw-reconciliation system is part of The Tile Shop’s 

formula for calculating a sales associate’s semimonthly 

commission earnings. It is not a deduction from the sales 

associate’s wages or final compensation. Osorio’s paystub

confirms this understanding: the draw payments and reconciliations appear as line items under “Earnings,” not under 

“Deductions.” To borrow an accounting phrase, the draw 

reconciliation is made “above the line” to calculate the 
10 No. 18-2609

employee’s gross wages before withholding for taxes and 

other applicable deductions are made.

Because the draw reconciliations are not “deductions ... 

from wages or final compensation” within the meaning of 

section 115/9, The Tile Shop’s compensation system does not 

violate the IWPCA.

AFFIRMED