Minn. Supreme Court: Bars can’t balance the till from tips

More than 750 ex-nightclub employees are entitled to damages from their former employers for being forced to make up cash register shortages from their tips, the Minnesota Supreme Court has ruled.

The high court’s ruling reverses the state Court of Appeals, which ruled in favor of now-closed party bars Drink and Spin Night Club. Minnesota state law forbids employers for making “any deduction, directly or indirectly, from the wages due or earned by any employee…” But The Appeals Court suggested that “wages” did not include gratuities.

Citing the dictionary, the Supreme Court disagreed:

A gratuity is a means of compensation because it is money “given or received as payment . . . for a service.” The American Heritage Dictionary 385 (3d ed. 1996). A gratuity is paid to an employee for performing a service for an employer, such as serving food and drinks to the employers’ patrons. Gratuities also fall under the definition of “wages” even though the money is paid by “another person.”

The matter is now in the hands of the Hennepin County District Court, where damages will be calculated for the plaintiffs. The Star Tribune reports that the award could surpass “six figures” and sets an important precedent for state labor law.

Related: “I got rid of gratuities at my restaurant, and our service only got better.”

  • I don’t know any of the details so this observation may be covered by the case itself. But this seems to set a prescedent that would make it easier for an employee to forget to put cash in the cash register and instead slip it into the tip jar.

    Also, I happened to read this article earlier this morning. http://jayporter.com/dispatches/observations-from-a-tipless-restaurant-part-1-overview/. Seems like court ruling like this, if they lead to consequences like I stated above, could lead us closer to a tip free society sooner than later.

    • Kassie

      I thought the same thing when I first read this, about it making it easier to forget to put the cash in the register. But I think it only works once or twice. If your register come out wrong a lot, I assume you get fired. So good in the short term for your wallet, bad in the long term.

    • asiljoy

      As a former server, it could also mean that we were forced to cover for people who dined and dashed because our tills were ‘short’ because those customers didn’t pay. Or, just as likely that shift managers, who usually don’t get paid much more than a server, would get sticky fingers in the till.

      • My comment wasn’t meant to imply the ruling was bad. It was just thinking about the possible ramifications of something like this. I am a former server too. I actually agree with the fact that the employees were treated poorly.

        I’m just thinking long term. In a time when legislation never happens, we see more and more court judgements that are shaping the way our world works. And it’s an interesting thing. Judges have to rule on a specific case, but this case could go down the line and be used as a precedent in other cases where maybe the employer wasn’t actually the bad guy. Because employers aren’t always the bad guy.

        It’s not that cut and dried I know. But it’s still an interesting thought experiment.

  • Jack Ungerleider

    [Note: I am working on the quote in the article. I haven’t read the entire ruling.]

    I see this as the court saying to the employers, “You can’t have it both ways.” We often hear in discussions (debates?) over the minimum wage that a lower minimum for restaurant workers is justified because they make additional money in tips. For these restaurateurs to now claim that the tip is not part of the wage because they want to use it to balance the till is somewhat disingenuous.

    • DavidG

      well, the IRS certainly considers tips as part of an employee’s wages.

  • kevinfromminneapolis

    I immediately thought of the ruling’s possible effect on minimum wage as well. If the court deems that gratuities are wages, doesn’t that boost the employer’s argument for a tip credit or tiered-wage structure? Maybe it even clears the way for them to take their case to court. I have no idea, I’m not a lawyer.