• August 16, 2013

Skol!Is there anything more fun than an evening with friends at a nice bar or restaurant?  Maybe slipping out the door without paying for it (or sneakily not signing the credit card receipt)?

Seriously, ever stop and wonder who gets stiffed when bars get scammed?  Is it lawful in Minnesota for bars and restaurants to hold the servers responsible, deducting from their tips for dead-beat customers?  (One would have to be naive to not consider that a server could collude with friends and look the other way as his buddies stagger out the door.  Also, if there’s a “register shortage” at closing time, who’s to say whether this was from  dead-beat customers rather than a dishonest employee? Maybe there is no better way to incentivize vigilance (and to deter hard-to-detect theft of cash) than to make employees pony up for the shortfalls in their shifts?)

There’s a law for that (in Minnesota, at least):

No employer shall make any deduction, directly or indirectly, from the wages due or earned by any employee, who is not an independent contractor, for lost or stolen property, damage to property, or to recover any other claimed indebtedness running from employee to employer, unless the employee, after the loss has occurred or the claimed indebtedness has arisen, voluntarily authorizes the employer in writing to make the deduction or unless the employee is held liable in a court of competent jurisdiction for the loss or indebtedness.

But Defendant Uptown Drink, LLC (et al.) successfully argued at the trial court and at the Minnesota Court of Appeals that the focus should be on the word “wages.”  The bars’ policies applied to tips (“gratuities”), not wages, and wages ≠ tips.  Particularly if the wages meet minimum wage standards, the bars argued, the employees’ claims fail.

The Minnesota Supreme Court reversed the decisions of the trial court and the Court of Appeals in favor of the defendant bars.  Gratuities are to be included in the word “wages” as it is used in the Minnesota statute.  Also, nothing in the statute justifies applying the law only when the employer deductions take the employees’ wages under the minimum wage, the Court held.

Cheers to the plaintiffs and their lawyers from Nichols Kaster & Anderson led by Steven Smith.

(Incidentally, Minnesota Litigator covered the case of Jana Karl v. Uptown Drink, LLC some time ago, wondering whether the Minnesota Supreme Court had granted a petition of review out of concern for the proportionality of the recovery and the attorneys’ fees.  Fortunately (in my opinion), I was wrong.)

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