Employer Liable for Terminating Employee for Refusing to Share Tips, Under Minnesota Fair Labor Standards Act

July 2016 

Generally employment in Minnesota is at-will, meaning that either employer or employee can terminate the employment relationship at any time, for any lawful reason.  However, there are limits to at-will employment, including terminations on the basis of unlawful discrimination, retaliation for making a protected complaint, or according to a recent Minnesota case, refusing to share tips. 

The Minnesota Fair Labor Standards Act (MFLSA) makes certain employer actions unlawful.  Most commonly known are those provisions that require that employers pay minimum wage and overtime for most types of employees.  However, the MFLSA also contains several other provisions, including one that “prohibits an employer from requiring an employee to contribute or share a gratuity . . . with the employer or other employees.”  The court determined that an employee who was terminated because his employer felt he wasn’t properly sharing his tips with other staff, was fired illegally, and entitled to backpay. 

This case provides the lesson that employers should make sure that they are not making any illegal requirements a condition of employment.  In this case, the employer presumably thought the employee was being unfair to other employees, and terminated the employee on that basis.  However, under Minnesota law, the employer was not allowed to require the employee to share, and therefore when the employee was terminated because of this requirement, the termination was illegal.  

For assistance in determining whether an action is acceptable under the MFLSA and other state and federal employment laws, contact Attorney James B. Sherman at jasherman@wesselssherman.com or 952-746-1700. You can also find more information on our website at www.wesselssherman.com.