Brewing up a tipped wages nightmare

Brewery owners: Let's talk why class-action lawyers are just as interested in your payroll practices as your flagship IPA.

A new lawsuit against a Georgia craft brewery is making the rounds, and it's the same old recipe—alleged FLSA violations in how tipped employees are paid. Don't brew the same legal trouble for yourself. 

Here's what every taproom, brewpub, and brewery owner needs to know to stay out of court in wage and hour lawsuits:

What do dolls have in common with beer?

“Maybe the children will have two dolls instead of 30.”

That was Donald Trump’s response yesterday when asked about the impact of tariffs on imported consumer goods.

Charming.

But here’s the thing—those tariffs aren’t just about dolls. They hit a lot closer to home for small businesses, like the craft breweries I work with.

I spent the past four days at the national Craft Brewers Conference, and tariffs weighed heavily on every single attendee.

Heading to CBC? Let’s connect! 🍻

I’m in Indianapolis this week for the Craft Brewers Conference — the biggest global education and networking event for the craft beer industry.

It’s a massive scene: 10,000+ attendees, 600+ exhibitors, 100+ seminars, and countless networking moments. It’s a blast — and a lot to take in.

If you’re here, find me at the Start A Brewery Lounge (proudly sponsored by Wickens Herzer Panza).

Hate is winning, and it sucks

"We are so thankful for the community we built together. And we’re confident that the connections we've made will continue to have a positive impact in Marysville. Thanks for 3 whimsical and zany years."

That's what Teddy Valinski, owner of Walking Distance Brewing Co., shared on the brewery's Facebook page on Feb. 25, three days before it poured its final pint and closed its doors for good.

Valinski didn't elaborate on the closure, except to tell The Columbus Dispatch, "Without a doubt, our business was slowed down from the slander. ... It's sad that the attacks made even supporters feel unsafe coming."

Taking from your employees' tip pool? It's illegal

It’s Dry January, and brewery owners are feeling the pinch. You might be tempted to supplement your income by dipping into your employees’ tip pool. That would be a huge mistake. It isn’t just bad form to take your employees’ hard-earned tips. It’s also illegal.

Under the FLSA, owners, managers, and supervisors are strictly forbidden from taking any part of pooled tips. There are no excuses.

A tip on employee tips

Here's a tip for management — keep your hands off of your employees' tips.

A recent case filing by class of employees against a cannabis company accusing management of pilfering their tips. The Department of Labor and the Fair Labor Standards Act, however, are crystal clear: tips belong to the workers who earn them, period.

Tipped wages and sexual harassment

"Are you on the dessert menu? Because you look yummy."

First, ick!

 
Secondly, these are the types of comments to which customers expose servers in the hospitality industry on the regular. In fact, the restaurant industry has more sexual harassment claims than any other industry, with as many as 90% of women report experiencing some form of sexual harassment. In large part, I blame tipped wages.

Long live Anchor Brewing! We'll have to wait and see about its labor union. ⚓ 🍻

News broke earlier this month that Hamdi Ulukaya, the billionaire founder of Chobani yogurt, purchased the assets of Anchor Brewing after its former owner, international beer conglomerate Sapporo, had unexpectedly shuttered the brewery nearly a year ago. Anchor was one of the country's few unionized craft breweries. Ulukaya has said that he would hire back as many former employees as possible but didn't know whether the union would be part of his new operations. If he hires enough of the former employees, however, he may not have a choice on the union. That issue will depend on whether Ulukaya's Anchor Brewing is a "successor" of Sapporo's Anchor Brewing.

Cheers to the CHEERS Act! 🍻

If today's dysfunctionally fractured Congress can agree on anything on a bipartisan basis, it must be a good idea.

Raise your glass to the Creating Hospitality Economic Enhancement for Restaurants and Servers (CHEERS) Act, which Reps. Darin LaHood (R) and Steven Horsford (D) recently introduced.

The CHEERS Act would provide tax incentives for bars, restaurants and entertainment venues to install energy-efficient keg and tap systems. The goal is to help stabilize and revitalize hospitality establishments, which are still struggling years after the pandemic.

Bankrupcy, labor unions, and remaining union free

Fair State Brewing, one the nation's first unionized craft breweries, just filed for Chapter 11 bankruptcy protection.

Meanwhile and elsewhere, Aslin Beer Co. just said that it will voluntarily recognize the union petition filed by a group of its taproom employees to join the SEIU.

Evan Sallee, Fair State's founder and CEO, tells Eater than its union has nothing whatsoever to do with the bankruptcy filing.

Join me at this year’s Craft Brewers Conference

If you google “brewery harassment” you’ll polish off an entire six-pack before you finish reading all of the horror stories.

 

🤮 “Breweries named in wave of sexual harassment claims; CEO steps down.”

🤮 “Brewery ownership group ‘steps back’ after sexual harassment claims.”

🤮 “’This behavior should not be endorsed or tolerated’: harassment allegations explored as brewery reportedly closes.”

🤮 “Couple who helped start major brewery accuse owner of sexual harassment.”

🤮 “Brewery founder steps away from operations amid allegations of sexism and racism.”

🤮 “Findings of investigation into toxic brewery workplace are ‘troubling and heartbreaking.’”

And on … and on … and on. It’s an epidemic in our craft beer industry.

Which is precisely why I am so excited to be returning to this year’s Craft Brewers Conference to present, “Crafting a Harassment-Free Craft Brewery.”

Discussing a couple of pay deductions for service-industry employees

Consider the following two policies, which restaurants and bars have implemented to save a few nickels against their tight margins:  

“Effective Jan. 1, we will begin implementing a tip refund for credit card processing fees for all gratuities left on a customer’s credit card; 2.5% will be deducted from your final check-out for each such gratuity paid.” 

 -and- 

“The full value of the check from which a patron flees the facility (‘dines and dashes’) will be deducted from the server’s paycheck.”  

Each of these policies is 100% legal under federal wage and hour laws. (Check your state laws, however, which may differ.) 

Craft beer isn’t facing an apocalypse … but the industry is changing

In addition to running the employment & labor practice at Wickens Herzer Panza, I also run our burgeoning craft beer practice. Which is why a recent article in Paste Magazine — "For Many Craft Breweries, the Apocalypse is Now" — caught my attention.

Here's the author's thesis:

The tragic breaking point for major brewery closures is no longer "coming soon." It's a macabre event that has been framed as something perpetually on the horizon for years, but there's no use in denying it anymore–the great die-off is here. It's now. The culling of the herd is underway in 2023, and simply making great beer is no guarantee of survival.

I wholeheartedly disagree. I do not believe that craft beer is facing an "apocalypse." 

I do believe, however, that a combination of the lingering impact of Covid (staffing shortages, rising inflation, and higher interest rates) plus changing consumer tastes means that craft beer's salad days are over.

So, what does this mean for our industry?

Your business is not a charity

Your customers are not your bank. It’s not their job to bail you out from poor business decisions.

I’ve been thinking a lot about this idea as I’ve been following the recent news from R. Shea Brewing.

Here’s the Cliffs Notes version of what’s happened.

From 2015 - 2019, R. Shea was a small local brewery. In 2019, it opened a much larger, 60,000 square-foot second location, which enabled it to significantly expand its production and operations. That expansion, however, also included a vast expansion of its debt, to the tune of a $2 million SBA loan. A combination of the lingering impacts of Covid, rising wages and production costs, and skyrocketing interest rates have created a situation in which R. Shea in now unable to service that debt.

As a result, it just launched a GoFundMe campaign to raise … wait for it … $2.3 million. Thus far, it’s raised approximately $17,000.

Is this what the future of union organizing looks like?

Last week, the employees of Creature Comforts Brewing Co. voted by a margin of 32-21 to reject the Brewing Union of Georgia as their bargaining representative and for their workplace to remain union-free. The National Labor Relations Board conducted and supervised the secret-ballot election, and the result presumes to reflect the choice of Creature Comforts' employees.

Except maybe that secret-ballot election is not the choice of Creature Comforts' employees?

I fully expect BUG to file a petition with the NLRB seeking a Cemex bargaining order. What is a Cemex bargaining order, you ask? 

Join me tomorrow: Tips on Tips webinar (free)

I spent my Saturday night at 8th Day Brewing Company watching my 17-year-old daughter, Norah, play a killer 3-hour set of music. When we sat down at our table, I was giddy to find the latest issue of The New Brewer, the bi-monthly trade magazine of the Brewers Assocation. That issue features my article on how to legally pay tipped employees.

Since access to the magazine and my article are for BA members only, you won't be able to read it if you're not a BA member (unless you happen to wander into a brewery that has it on display).

I can, however, offer you a great alternative. Tomorrow at 4 pm ET, I'm presenting Tips on Tips: How to Legally Pay Your Tipped Workers, a free webinar for the Craft Beer Professionals Fall Virtual Conference. You can watch live on the Craft Beer Professionals Facebook page or on its YouTube channel. 

NLRB opens the tap for a union election at Creature Comforts Brewing Company … but will it matter?

It took more than seven months, but the NLRB has finally directed a union representation election at Creature Comforts Brewing Company. The NLRB will soon hold a secret ballot election over whether employees wish to be represented for purposes of collective bargaining by the Brewing Union of Georgia. 

The bigger issue for Creature Comforts, however, is that even if it wins the election, the union will almost certainly use its four pending unfair labor practice charges against the employer to seek a bargaining order under the Board's recent Cemex decision (which the Board will apply retroactively).

EEOC busts a quartet of hospitality employers for pervasive sexual harassment

In a press release, the EEOC announced the filing of a series of sexual harassment lawsuits against Las Vegas hospitality employers. 

[The l]awsuits … allege sexual harassment towards employees by owners, supervisors and management, co-workers, and/or customers. The four lawsuits included allegations raised by workers throughout the hospitality industry, from housekeepers in hotels to waitstaff in both high-end and casual restaurants and bars. Allegations included the attempted rape of a young housekeeper, sexual assault, sexual solicitations, sexual comments, inappropriate touching, stalking, and other inappropriate behaviors. 

These lawsuits are consistent with agency's enforcement priorities as outlined in its just-released Strategic Plan, which includes targeting education and enforcement effots to protect vulnerable communities.

Not all reasonable accommodation standards are created equally

Consider this example, and then let's talk.

Lydia works as a cellar person in a brewery. The essential functions of her job include the ability to lift up to 40 lbs. and to move kegs that weigh as much as 160 lbs. She delivers a note from her doctor that says, "No lifting or moving more than 10 pounds."

What are this employer's obligations to offer her a reasonable accommodation for her lifting and moving restrictions? It depends on the medical reason.

A few wage and hour thoughts for beer festival season

As the weather warms up around the country and spring quickly transitions to summer, festival season will begin … including my personal favorite, the beer festival.

Beer festivals, however, raise a few specific wage and hour traps for participating breweries. Here's the 411.