A judge has upheld an award of more than $19,000 to a former server at The Keep who alleged the fine-dining restaurant in Missoula’s South Hills operated an illegal tip pool.
In a ruling likely to make other Montana restaurateurs nervous, Missoula County District Court Judge Dusty Deschamps agreed with a state hearing officer that The Keep violated state employment law by requiring its servers to “tip out” a portion of their gratuities to back-of-house staff such as cooks.
“Montana law is clear: an employer does not have any legitimate right to control the tips an employee receives from a customer,” Deschamps wrote in a September ruling. “Once a tip is left behind by the customer, that tip is the property of the employee who receives it.”
The ruling affirms the state Department of Labor and Industry’s longstanding, but not court tested, interpretation of the Montana Wage Protection Act. Employees must file a wage claim with the department to recover withheld tips.
That’s what former Keep server Amy Graham did in 2015, when she was fired from the restaurant the day after questioning its tip pool policy with co-owner Melissa Mooney. A state hearing officer ultimately awarded Graham $12,429 in unpaid wages and another $6,836 in penalties. The Keep objected that the determination could open the company to more than $200,000 in wage claims for a policy enacted by a previous owner in 1993, and appealed to district court.
Now the restaurant owes an additional $7,300 for Graham’s legal fees, according to a Nov. 1 judgment.
The Keep’s tip-pooling practice is thought to be common throughout the state, as the Indy reported earlier this year. The state DLI holds that tip pools are valid only when agreed upon and entered into by staff through voluntary signed agreements.
Nationwide, tipping law has been in flux. An Obama-era rule in 2011 attempted to clarify that the Fair Labor Standards Act prohibits restaurants from controlling tips in states like Montana, where tips don’t count toward minimum wage. Federal courts have since split on the rule’s legality, setting the stage for a U.S. Supreme Court showdown. In October, however, the Trump administration introduced plans to rescind the Obama-era rule and make tip pools legal again.
But the shifting federal legal landscape may not be all that relevant to cases in Montana, if Deschamps’ ruling that state law offers additional worker protections stands.
In an email, Keep attorney David Lighthall, of Carey Law Firm, says the owners are “contemplating” appealing the issue to the Montana Supreme Court. He points out that courts in California have interpreted a similar state law there in favor of tip pools.