FLSA/Wages

Minnesota Tip-Sharing Decision Sets Table for More Wrongful Discharge Claims

Recently, a divided Minnesota Supreme Court ruled that a restaurant worker who was fired for refusing to share tips with his coworkers can sue for wrongful discharge even though the Minnesota Fair Labor Standards Act (MFLSA) doesn’t expressly authorize such claims. tips

Fair or Not Fair, Employee Won’t Share

Minnesota’s tip-sharing law bars employers from requiring an employee to share a gratuity he received with other employees or contribute to a tip-sharing pool. Tips can be shared voluntarily as long as it’s done through agreement among the employees without any “employer coercion.”

If an employer violates this provision, the law says the employee may obtain restitution in the amount of the tips wrongfully diverted. The law is silent, however, on whether an employee may be fired for refusing to share tips and then sue for wrongful discharge.

The case involved a bartender who sued Bunny’s Bar & Grill, claiming it fired him after he declined to share his tips with the employees who bus the tables. Among its various defenses, Bunny’s argued that the Minnesota tip-sharing statute doesn’t prohibit an employer from terminating an employee for refusing to share tips, nor does it permit anyone to sue for wrongful discharge in such a situation.

The restaurant asserted that Minnesota is an “at-will” state and that absent express statutory language to the contrary, an employer may terminate an employee for any reason.

Court Adds Wrongful Discharge to Menu

After the trial court ruled for the employer, the terminated employee appealed to the Minnesota Court of Appeals, which reversed the trial court’s decision. The case then went up to the Minnesota Supreme Court, which in a split decision affirmed the previous decision favoring the employee.

The majority of the court first ruled that terminating an employee for refusing to do what the statute prohibits (in this case, requiring an employee to share tips) is tantamount to requiring the employee to share tips, which violates the statute.

The majority then decided that despite the statute’s silence on the issue of wrongful discharge, an employee may indeed sue for wrongful discharge in such a situation. They observed that the MFLSA (which encompasses the tip-sharing statute) contains a clause allowing an employee to “seek damages and other appropriate relief” for all violations of the law.

According to the court, the ability to pursue “damages and other appropriate relief” indicates that the legislature had expressly abrogated the “at will” doctrine in these instances and had created a wrongful discharge claim for any termination accompanying an alleged violation of the MFLSA.

The dissent argued that the legislature clearly had not intended to alter the “at will” doctrine. The dissent noted that the legislature had explicitly created a wrongful discharge claim in many other statutes, so it knew how to do so if it wished.

Since the legislature didn’t do so here, according to the dissent, it must not have intended to create such a claim and alter the “at will” doctrine. Todd Burt v. Rackner, Inc. d/b/a Bunny’s Bar & Grill, A15-2045, 2017 Minn. LEXIS 629 (Minn., Oct. 11, 2017).

What We Learn from This

This decision is likely to be highlighted by every employee claiming to have been fired in violation of any provision of the MFLSA. While the legislature can certainly amend the statute to clarify its intentions, in the meantime, wrongful discharge lawsuits are likely to increase.

Brandon Wheeler, a contributor to Minnesota Employment Law Letter, can be reached at bwheeler@felhaber.com.