Tip Pooling
Posted in Class Action & Litigation, Wage & Hour
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The new amendment changes the FLSA regulations so that they no longer prohibit an employer from tip pooling when the employer is not taking a tip credit. The amendment does not change the rule that managers or supervisors cannot be in a tip pool; but does affect the available penalties and enforcement authority for the recovery of all tips unlawfully kept by the employer. The amended federal law also provides for doubling of damages and civil money penalties up to $1,100 when employers unlawfully keep employee tips.
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The Surly court held that under the state law if an employee does not want to participate in tip pooling, the employee cannot be required to do so and must be free from pressure and coercion by colleagues or management to participate. The court recognized that each individual employee has a right to control his or her tips. This individual right cannot be usurped by a majority rule voting procedure such as the one Surly had used.
Surly Brewing Company settled the class-action suit for $2.5 million on April 2, 2018. The settlement proceeds will be split among 140 Surly bartenders and servers.
To avoid liability under Minnesota law, employers must not require any employee to participate in a tip pool against his or her will. Each tipped employee must be given a free choice.
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