According to the Supreme Court of Minnesota, discharging an employee for refusing to share tips is illegal under the Minnesota Fair Labor Standards Act (MFLSA). In Burt v. Rackner, Inc., the plaintiff, who was employed as a bartender, was told that he needed to give more of his tips to the bussers or there would be consequences. He failed or refused to do so and was discharged on the express basis that he was not properly sharing tips with other staff members. The plaintiff sued and his complaint was initially dismissed on the ground that the MFLSA does not provide a private cause of action for wrongful discharge. The court of appeals reversed, concluding that the MFLSA “unambiguously provides that the employee may seek wrongful-discharge damages, including back pay and other appropriate relief” for any violation of the Act, including the tip-sharing provision.
On review, the Supreme Court agreed with the appellate court. The Supreme Court noted that the Act provides that “[n]o employer may require an employee to contribute or share a gratuity” and although an employee may voluntarily agree to share tips, he must do so “without employer coercion or participation.” Threatening to discharge, or actually discharging, an employee for failing to do something – in this case, tip sharing – constitutes coercion, the Court held.
Coverage: Employers with employees in Minnesota.
Effective: The decision was issued on October 11, 2017.
Action Required: You should proceed with caution when implementing a tip-sharing policy and program to ensure that participation in any such program is strictly voluntary and that no employee is pressured into participating or subjected to adverse action for declining to participate.
As always, please contact your HR Business Partner if you have any questions.