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Small Bar Sued for Staff Tip Sharing & Wrongful Termination


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 April 2016.

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.

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