Karen Kidd Jul. 20, 2016, 10:19am


ST. PAUL, Minn. (Legal Newsline) – A game-changing decision out of the Minnesota Court of Appeals late last month will broaden rights that employees already have in the state and place undue pressure on employers, said an industry attorney during a recent interview.

"The actual number of situations where a plaintiff could make this claim may be limited," said Bruce J. Douglas, a shareholder in the Minneapolis office of Ogletree Deakins, during a Legal Newsline interview.

"Still, it is a judicial expansion of the statute that the legislature has not seen fit to enact. We already have both common law and statutory whistleblower protections. Decisions like this make it more difficult for employers to do business in Minnesota."

Douglas criticized the decision in the case, Burt v. Rackner, saying adequate employee protections already exist under Minnesota Whistleblower Act for grievances of the type.

"There is no reason to allow employees three different paths to redress a grievance," Douglas said. "It drives up the cost of litigation and will, undoubtedly, create higher risks for many employers, particularly smaller employers who may not have the support of experienced in-house employment counsel or human resources professionals."

It isn't only smaller businesses that need to take note of this decision, Douglas said.

"Even large, sophisticated companies, due to their very size and the various levels of experienced possessed by their supervisors and managers, can be at risk for these types of claims," he said.

In its opinion handed down in the case June 27, the Minnesota Court of Appeals ruled an employee fired for not carrying out an employer’s orders, in violation of the state's Whistleblower Act, may sue for damages normally associated with a wrongful discharge cause of action, not simply lost wages.

The plaintiff in the case, Todd Burt, was a waiter at Bunny’s Bar & Grill from January 2007 to July 21, 2014. Burt alleged he'd been ordered to share his tips with buspersons and that there would be consequences if that did not happen. When Burt refused, he was fired, according to court documents.

The Minnesota Fair Labor Standards Act prohibits mandatory tip-pooling or tip-sharing but does allow employees to voluntarily share tips among themselves. The issue in the Burt case is over the plaintiff's former employer's alleged requirement that he share his tips.

Burt sued, alleging his employment was wrongfully terminated and sought damages that included lost wages. Burt's former employer filed a motion for judgment on the pleadings, which was granted by the trial court.

The trial court ruled the Minnesota Fair Labor Standards Act contains no express prohibition on firing an employee who won't participate in an illegal tip-pooling arrangement. The court also ruled there are no private causes of action for wrongful discharge in such a circumstance and, therefore, that the state's at-will doctrine governs.

Burt appealed the court’s decision. The appeals court's three-judge panel reversed and remanded district court’s dismissal of the complaint, ruling Burt had stated a claim after all.

"The MFLSA unambiguously provides for a private cause of action in district court by an employee against his or her employer when the employer violates the act’s provisions," said the opinion, penned by Judge John R. Rodenberg.

Rodenberg then cited specific provisions in the act that the opinion said were relevant in this case and helped establish Burt's claim.

"Appellant’s allegation is not limited to claiming that he was fired July 21, 2014 for not agreeing to share tips after that date," Rodenberg wrote in the court's opinion. "He claims that he was fired for not having shared his tips before that date.

"Therefore, and although appellant does not claim that he specifically lost tip money because of the illegal requirement, he does allege that he was fired and lost money because of his resulting unemployment."

The appeals court decision was a surprise, Douglas said.

"The district court’s decision was consistent with precedent," he said. "The Minnesota Whistleblower Act provides adequate protection for this type of claim."

The decision also will have a direct effect on employers in the state, Douglas said.

"Any employee who objects to a work rule or a pay practice, for example taking a rest break at a time that the employee doesn’t like, or being required to work overtime because the employee thinks it’s unfair or too many hours, or just objects to a pay practice, and later is fired, could bring this type of claim," he added.

The state's Court of Appeals usually is generally neutral when it comes to pro-business rulings at the district court level, Douglas said.

"However, it sometimes takes an expansive view of the law that sometimes has required the Supreme Court to correct it," he said.

"I hope that the Minnesota Supreme Court will reverse this decision if it takes the case because it is an unnecessary and burdensome expansion of the law that is inconsistent with its prior decisions."

He added the decision probably will be appealed.

Meanwhile, the appeals court ruling provides additional avenues for would-be employee litigators, Douglas said.

"Employers may expect employees to include this claim in their complaint in many cases where the employee was discharged and can tie that discharge to a prior complaint about wages or hours or rest breaks or some other topic that is covered by the Minnesota Fair Labor Standards Act," he said.

Organizations in this Story

Ogletree, Deakins, Nash, Smoak & Stewart PC
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New Orleans, LA 70139

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