It's also where wage-and-hour lawsuits often begin.
Artisanal Brewing Ventures, the company behind Southern Tier, Victory, and other craft beer brands, is facing a nationwide collective action over its pay practices at 15 taprooms across five states. At the heart of the lawsuit is an issue that too many hospitality employers overlook: compliance with the Fair Labor Standards Act's tip-credit rules.
The allegations should sound familiar to brewery owners. Servers and bartenders allegedly were paid the tipped minimum wage while performing opening and closing duties, cleaning, stocking inventory, moving kegs, taking out trash, and other side work. The lawsuit also claims employees worked off the clock and that the company failed to satisfy the notice requirements necessary to claim a tip credit. Those allegations were enough for a federal judge to conditionally certify a nationwide collective action and authorize notice to be sent to tipped employees throughout the company's operations.
Whether those allegations prove true remains to be seen. What matters is how easily tip-credit issues can turn into expensive litigation.
Many employers mistakenly believe that paying a tipped employee a cash wage and allowing them to keep tips is enough. It isn't.
The FLSA imposes specific requirements before an employer can claim a tip credit. Employees must receive required notice. Tip pools must be structured correctly. Employers must ensure tipped employees are performing tip-producing work when paid at the tipped rate. Certain non-tipped duties can create liability if not handled properly. And every minute worked must be recorded and paid.
Get those rules wrong and the consequences can be severe.
The risk isn't limited to one employee claiming a few dollars in unpaid wages. A defective tip-credit practice often affects every server and bartender in every location. That's why plaintiffs' lawyers target these cases. One alleged policy can become a collective action spanning multiple locations and hundreds of employees. Here, the court found sufficient evidence of an alleged common policy to allow notice to be sent to similarly situated tipped employees nationwide.
For craft breweries, the lesson is simple.
Don't assume your tip-credit practices are compliant because they've always been done that way. Review your onboarding documents, side-work requirements, tip-pooling procedures, and timekeeping practices. Make sure managers understand when tipped employees must be paid the full minimum wage and ensure no one is working before clocking in or after clocking out.
The taproom may be the heart of your brewery. It's also one of your biggest wage-and-hour risks. A proactive audit today costs far less than defending a collective action tomorrow.