Remember the short statute of limitations on wage claims.
Minn. Stat. § 541.07(5) (2004) states that the following actions must be commenced within two years: for the recovery of wages or overtime or damages, fees, or penalties accruing under any federal or state law respecting the payment of wages or overtime or damages, fees, or penalties. The term "wages" means all remuneration for services or employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, where the relationship of master and servant exists; the term "damages" means single, double, or treble damages, accorded by any statutory cause of action whatsoever and whether or not the relationship of master and servant exists.
Surcharging Tips of Bar and Restaurant Servers for Credit Card Processing Costs
In Minnesota, bars and restaurants commonly, but quite illegally, dock servers for losses, such as dine-and-dash customers, short tills, and broken plates and glasses. This is against the law in Minnesota. In Minnesota, an employer may not deduct or withhold any part of an employee's wages, unless the employee has voluntarily consented to the deduction after the following events have occurred (or has been held liable in court) for the loss or indebtedness:
- cash shortages,
- lost or stolen property,
- damage to property,
- any other claimed indebtedness running from employee to employer.
While many people in the service industry know the practice is illegal for broken dishes, etc., a less obvious violation of law arises when bars and restaurants deduct the the cost of processing tips from their employees' pay. If the cost of processing a tip is deducted at the time of the “tip out” the legality is debatable. If it occurs after the employees have received their tips, such as at the time paychecks are handed out, it would appear to be illegal. But in Minnesota, if it results if it results in the employee's wage being reduced below the minimum wage, it is clearly illegal.
Where an employer deducts “credit card surcharges” for tips paid by credit card, and the employees have not authorized the deduction of the credit card surcharge from their paycheck after the credit card is processed but before the deduction is assessed (as in being deducted from a pay check), the deduction is illegal. Where the employer is paying its servers minimum wage, such a practice automatically results in a violation of the Federal (FLSA) and State minimum wage rules. Those rules have a sweeping “look back” feature and at least one Federal Circuit Court of Appeals has held that individual managers can be held liable under the FLSA even though the company that employed the plaintiffs had filed for bankruptcy.
The importance of this violation is significant if one realizes that the employer's responsibility for the minimum wage violation will result in the employer having to pay back two years (three in the case of a willful violation) of “back pay” plus lawyers fees and costs. This is on top of a civil penalty of $1100 per violation and possible criminal penalty. When this is multiplied by the number of employees and having a federal agency investigating the bar or restaurant, deducting a small amount from an employee's pay check may have large consequences.
- cash shortages,
- lost or stolen property,
- damage to property,
- any other claimed indebtedness running from employee to employer.
While many people in the service industry know the practice is illegal for broken dishes, etc., a less obvious violation of law arises when bars and restaurants deduct the the cost of processing tips from their employees' pay. If the cost of processing a tip is deducted at the time of the “tip out” the legality is debatable. If it occurs after the employees have received their tips, such as at the time paychecks are handed out, it would appear to be illegal. But in Minnesota, if it results if it results in the employee's wage being reduced below the minimum wage, it is clearly illegal.
Where an employer deducts “credit card surcharges” for tips paid by credit card, and the employees have not authorized the deduction of the credit card surcharge from their paycheck after the credit card is processed but before the deduction is assessed (as in being deducted from a pay check), the deduction is illegal. Where the employer is paying its servers minimum wage, such a practice automatically results in a violation of the Federal (FLSA) and State minimum wage rules. Those rules have a sweeping “look back” feature and at least one Federal Circuit Court of Appeals has held that individual managers can be held liable under the FLSA even though the company that employed the plaintiffs had filed for bankruptcy.
The importance of this violation is significant if one realizes that the employer's responsibility for the minimum wage violation will result in the employer having to pay back two years (three in the case of a willful violation) of “back pay” plus lawyers fees and costs. This is on top of a civil penalty of $1100 per violation and possible criminal penalty. When this is multiplied by the number of employees and having a federal agency investigating the bar or restaurant, deducting a small amount from an employee's pay check may have large consequences.
