Bars and restaurants can loose a significant chunk of their profits to customer walk-outs (also known as “dine and dash”) and customers forgetting to sign credit card receipts. However, in Minnesota, they can’t hold their employees financially responsible for the losses.
Last month in Karl v. Uptown Drink, LLC, et al., the Minnesota Supreme Court held that without voluntary, written authorization from the employee, an employer could not deduct losses from an employee’s gratuities.
Roughly 750 servers, bartenders and security guards brought a class action suit against their employer, alleging that the deductions made to cover walk-outs and unsigned receipts violated Minn. Stat. §181.79 (2012), which makes it unlawful for employers to make any deduction “from the wages due or earned by any employee” for “lost or stolen property” or “to recover any other claimed indebtedness running from employee to employer” unless the employee voluntarily authorized the deduction in writing.
The employer argued that the deductions from gratuities should not be considered deductions from “wages” under the statute. However, the Court held that consistent with prior case law, the definition of “wages” in Minn. Stat. §181.79 is “all compensation for performance of service by an employee for an employer, whether paid by the employee or another person”, therefore including gratuities.
The employer also argued that the statute only protects against deductions that take the employee’s wages below the minimum wage. The Court rejected this interpretation, stating that the plain language of the statute does not mention the minimum wage.
If you are a tipped employee and your employer has been making unlawful deductions from your wages, contact a Minneapolis employment law attorney with LeBlanc Law & Mediation at 612-819-9652 to discuss your rights.
