In a Nichols Kaster Win, the Minnesota Supreme Court Confirms Employers Cannot Take Employee Tips for Cash Register Shortages

In a case handled by Nichols Kaster, PLLP, the Minnesota Supreme Court handed down a ruling yesterday confirming that under Minnesota law, employers cannot require employees to reimburse them from their tips for items such as cash register shortages, unsigned credit card receipts and customer walk outs.  It also found that employees do not have to show that because of the deductions their wages fell below the minimum wage in order to prove a violation of Minn. Stat. §  181.79.

In this case, Nichols Kaster, PLLP represented over 750 employees who worked at the establishments known as the Uptown Drink, Drink and Spin Night Club, which have since been closed.  Uptown Drink filed for Chapter 11 bankruptcy, but has since reopened as Uptown Tavern.  At a jury trial in 2011, the employees prevailed on  their record-keeping and certain minimum wage claims, but lost on the unlawful deductions claims. Nichols Kaster, PLLP appealed the issue of whether the restaurants’ deductions were unlawful as a matter of law.  After the Minnesota Court of Appeals ruled against them, they took this important issue all the way to the Minnesota Supreme Court. The Minnesota Supreme Court agreed with the employees and instructed the lower court to enter judgment on the employees’ behalf for this claim and to conduct further proceedings to determine appropriate damages.

The Minneapolis Star Tribune quoted Nichols Kaster partner Steven Andrew Smith, “This ruling deals with a practice that is sort of the dirty little secret of Twin Cities bars and restaurants—where if the till’s short, you’ve gotta pay if you want to keep your job. . . .”

The attorneys who handled the case through trial and appeal are Steven Andrew Smith, Megan Brennan, and Katherine VanderPol.

If you would like to read the opinion, the case is entitled Karl v. Uptown Drink, LLC, No. A12-0166 (Minn. Aug. 14, 2013).