835 N.W.2d 14
Minn.2013Background
- Approximately 750 tipped employees (servers, bartenders, security) sued their employers alleging, among other claims, unlawful deductions under Minn. Stat. § 181.79 for register shortages, customer walkouts, and unsigned credit-card receipts.
- Witnesses (including employer witnesses) testified employees were required to pay these amounts from their gratuities; failure to pay could lead to discipline or termination.
- After close of evidence the employees moved for a directed verdict on the § 181.79 claim; the district court denied the motion and submitted the claim to the jury; the jury found for the employers on § 181.79.
- Employees moved post-verdict for judgment as a matter of law (JMOL); the district court denied JMOL, reasoning § 181.79 applied only if deductions caused wages to fall below the statutory minimum. The court of appeals affirmed.
- The Minnesota Supreme Court reversed: it held (1) gratuities are “wages” under the EPEWL definition applied to § 181.79, (2) § 181.79 does not require proof that deductions reduced compensation below the minimum wage, and (3) the employees were entitled to JMOL on liability; the case was remanded to determine damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether gratuities are "wages" under Minn. Stat. § 181.79 | Gratuities are "all compensation" and thus wages under the EPEWL definition, so § 181.79 protects them | Deductions came from gratuities, not hourly pay, so § 181.79 does not apply | Gratuities are wages under the EPEWL definition and § 181.79 applies |
| Whether § 181.79 requires proof that deductions caused wages to fall below the minimum wage | § 181.79 prohibits deductions from wages regardless of whether compensation stays above minimum wage | § 181.79 should be read in light of MFLSA/minimum-wage rules; employees must show wages fell below minimum | § 181.79 contains no minimum-wage requirement; no showing of sub-minimum pay is required |
| Whether JMOL was appropriate on § 181.79 liability | Evidence was undisputed that employers required unlawful deductions from employees' gratuities — JMOL warranted | Creditor-like offsets were allegedly voluntary and no showing wages fell below minimum — JMOL not warranted | JMOL should have been granted; no legally sufficient basis for jury to find no unlawful deductions |
Key Cases Cited
- Brekke v. THM Biomedical, Inc., 683 N.W.2d 771 (Minn. 2004) (applied EPEWL definition of “wages” to § 181.79; accrued compensation constitutes wages)
- Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826 (Minn. 2012) (prior judicial interpretation becomes part of statute for future cases)
- City of Brainerd v. Brainerd Invs. P’ship, 827 N.W.2d 752 (Minn. 2013) (court will not add statutory requirements omitted by the legislature)
- Milner v. Farmers Ins. Exch., 748 N.W.2d 608 (Minn. 2008) (discussed and distinguished; does not overrule Brekke or control § 181.79 interpretation)
- Wynkoop v. Carpenter, 574 N.W.2d 422 (Minn. 1998) (judicial interpretation may be treated as part of statute when not disturbed)