
Under Minnesota’s wage and hour law, “any gratuity received by an employee or deposited in or
about a place of business for personal services rendered by an employee is the
sole property of the employee.” The court in the Surly class action noted
that the clear language of the Minnesota tip pooling statute requires that each
[tipped] employee’s participation in a tip pool be by voluntary agreement. Because
each tipped employee has a separate individual right to control his or her
tips, this right is not subject to majority rule by a group that includes
non-tipped employees such as wait assistants, barbacks, and buspersons who may
be part of the service team. “One employee is not allowed to bind any other
employee to participate in sharing gratuities.”
If agreement about the tip pooling
system is made with employer coercion or even participation (beyond the minimal
participation permitted under the statute) the system violates the law. Ultimately,
this court held that Surly improperly participated in the development of the
tip pool and required bartenders and servers to contribute their gratuities to
the pool. The following employer actions were each violations:
- Arranging and calling a mandatory employee meeting at which a vote was taken on the tip pooling question
- Selecting employee representatives to speak about the tip pool at the meeting
- Having a high level manager express her preferences about the tip pool to the employees at the meeting
- Determining that indirect service employees would be present at the meeting and vote on the proposals
- Preparing the questions on the ballot and participating in presentation of the ballots and tabulation of the votes
- Preparing and presenting Acknowledgment forms for employees to sign indicating their agreement to follow the majority vote regardless of their personal views and that they understood the tip pooling applied to them.
Surly argued that the court should find no violation, by applying an
exception in the statute allowing employer participation “to, upon the request
of employees, safeguard gratuities to be shared by employees and disburse
shared gratuities to employees participating in the agreement.” The court
rejected this, saying that the statute’s exception:
- Does not allow the employer to go beyond acting to facilitate collection and disbursements for participating employees . . . or to set a mandatory tip pool meeting, to require employees to pick representatives for making decisions about tip pooling
- Does not allow Surly to direct how employees should go about making a tip pool arrangement.
- Does not allow senior management to weigh in with their opinions or preferences as to what any independent employee agreement should look like, or to require that all employees abide by a single method for agreeing to share gratuities.
The court acknowledged that the alternative required
by the statute is for an employer to “say nothing, do nothing and wait for
[tipped employees] to address the issue themselves.”
It is plain from the court’s decision that the meaning and effect of the
statute critically depend on the issue of what exactly constitutes receiving of a gratuity. This decision,
unfortunately, does not address what this means in modern practice when, for
example, a gratuity is included on a credit card charge signed by a customer
without a specific indication for whom the gratuity is intended. The court
acknowledged that the statute’s language “may not reflect potentially desirable
models for modern food service employers” and that Surly had “articulated its
vision of a ‘fairer’ distribution of income from customers with all of the
staff that contribute directly and indirectly to the customer’s experience.” But
the court indicated that the proper forum to raise such public policy issues is
before the Legislature, not in a judicial forum. “If the statute has become a
poor fit for modern employment practices, these issues must be presented in a
legislative rather than a judicial forum.”
Until there is legislative change to the statute, employers with employees who
receive tips will be well-advised to examine any system that may be in use for
pooling or sharing of tips.
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