A former bartender/server for a small, family-owned bar in a small town
in rural Minnesota sued the owners in outstate Minnesota for 1.) requiring
its staff to share gratuities, 2.) conversion, 3.) unjust enrichment,
4.) a Whistleblower Act violation, and 5.) wrongful termination. Faced
with more litigation than they had ever encountered in their lives, the
owners turned to MKT Law and our Minneapolis business litigation attorney
for defense throughout the case. After securing the dismissal of three
of the five claims via summary judgment and by stipulation, the case was
brought to a jury on the tip-sharing and wrongful termination claims in
Little Known Statutes in Minnesota State Law
Minnesota has a state statute that prevents bar and restaurant owners from
requiring servers to share tips with the rest of the staff – see
Minnesota Rules, Part 5200.0080 and Minnesota Statutes, Section 177.24,
subdivision 3. If you haven’t heard of it before, you are not alone..
The statute even applies when the person the tips are shared with is the
only other employee on duty, the one who serves food and drinks, cooks,
does dishes, stocks the bar, greets patrons, etc., as many small bars
do in rural Minnesota and elsewhere throughout the state. The owners of
the bar do not believe the statute is fair or reasonable and should not
apply to situations where a small bar has all workers chip in and help
each other out as a team, then all tips are pooled and shared by all employees
equally. Especially when it is done for legitimate business purposes such
as to boost employee morale, maintain fairness and for economic reasons.
The bar owners felt so stringly about it that they ultimately refused
to offer any significant settlement and wanted the case tried to a jury
from their community. Our team here at MKT Law was proud to serve this
client and represent the integrity of their bar in this way as they opposed
a law they thought unjust.
During closing arguments at the trial, the former bartender/server’s
attorney asked the jury to award her about
$112,000. If the plaintiff’s story was accepted and the jury ruled in their
favor, the gratuity sharing statute would double the amount awarded and
pile on the attorney fees, bringing the total to over $300,000.
Needless to say, if the jury ruled against our client, it would have been
devastating for them. The small family-ran bar would have probably gone
bankrupt or been forced out of business, or both. The owners were also
sued personally, which is allowed under the wording of the current statute,
meaning everything they owned personally was on the line and at risk too.
When Hard Work Pays Off
After a week-long trial, when the jury came back after 8:30 p.m. on a Friday,
they had found that no wrongful termination occurred, meaning the former
bartender/server had not been fired for reporting the tip sharing to the
state, nor for refusing to work if she had to share tips with her co-workers.
This vindicated the bar owners who had steadfastly maintained throughout
the case that the former bartender/server had quit.
The jury did find, however, that the bar violated the tip-sharing statute.
To be fair, the small bar was honest throughout the case and never denied
that they had their employees share tips. Instead they had argued it did
not apply because the restaurant/bar employees worked as a team that shared
work responsibilities and therefore tips. Nonetheless, the jury found
the statute applied. However, the jury awarded the former bartender/server
only about $1,500 because of the bar’s violations of the gratuity-sharing
law. The jury specifically did not award any past or future wages lost
as damages and did not award any of the requested damages for emotional distress.
Although the bar is changing its tip-sharing policy for now to comply with
the statute and rule, the owners are also discussing the law with their
state legislators. The goal is to have it altered, amended, or repealed
so that other small bar and restaurant owners throughout the state, like
our clients, will be allowed to make their own decisions about tip-sharing
among their employees.
For more information about the business litigation services we provide
at MKT Law, feel free to
contact us online at your earliest convenience. You can also call
612.260.5109 to request a
completely confidential consultation.