LOUISVILLE, Ky. — Two Louisville coffee chains have had to change their tip-pooling process this fall and issue thousands of dollars in backpay to baristas because of a Department of Labor investigation.
Sunergos Coffee sent checks out to employees on Nov. 14, and Heine Brothers sent checks out at the end of the long Christmas weekend.
"It definitely felt like we're standing in our own power as workers. Because without a union, or without standing together in general, we wouldn't have had an idea of how to do it," Bekah Ryherd said, who has worked at Sunergos for five years.
Ryherd and other employees at Sunergos have been working with the National Conference of Firemen and Oilers, a division of the Service Employees International Union (NCFO Chapter 32, SEIU) to form a union.
The local chapter was successful in forming a union at Heine Bros in September, and a union vote at Sunergos is scheduled for Jan. 11.
While both of these employees groups were unionizing, the employees talked amongst each other and found that their store managers were participating in tip pools.
"The reason why we found out that it was illegal is because we were talking to people at other stores," Ryherd said.
The union sent letters to the Department of Labor regarding both chains. Two separate audits began after that.
In a letter to employees on Nov. 14 that accompanied tip payments, Sunergos co-founder Matthew Huested said managers were eligible for tips when they worked "on bar" but not when they were doing off bar manager duties.
Sunergos repaid baristas the tips while coordinating the amounts with the Department of Labor. Sunergos paid its employees double the tip bonuses they were owed, but Ryherd said she found out that was required by law.
Huested wrote in the letter they had been following the law and were just recently notified of a new law.
"Prior to this new law our approach was a valid way to distribute tips. However, under the new law, this is no longer allowed. As a result you are owed back pay," the letter said.
Ariana Levinson, a law professor at the University of Louisville Brandeis School of Law, says managers have been disallowed from being in tip pools since 1938, but workplaces have changed so much in that time it's hard for smaller operations without a legal department to always remember.
"Over time, we have a flattened workforce. Meaning we have lots more levels of management. And it's much harder to determine who should be classified as a manager in terms of wage and hour, and who shouldn't," Levinson said.
She says the Department of Labor began adding amendments to clarify that managers should be exempt from tip pools in 2020.
She also says this may not be a "trend" of places redoing their tip systems because this is probably driven by union involvement.
"I think the reason we're seeing this in the coffee industry right now in Louisville is because of the union drives, and they're knowledgeable about how the wage and hour laws work, and they're not afraid of retaliation," she said.
Sunergos employees will vote on Jan. 11 on whether or not to approve their union.
"We're all standing together asking for the same things: better working conditions and better pay," Ryherd said.
Huested sent us a statement about the union process, in part reading:
"We have no way of speeding up or slowing down the National Labor Relations Board decision making process...Sunergos baristas make about $17.00 - $22.75 per hour...We do believe that this is a great wage and we are proud of the systems and company we have built," he said.
Ryherd said many pay periods she makes about half of her wages on tips. She says she makes $12.25 per hour base salary without tips.
Huested says every employee makes above minimum wage, but the starting base salary differs based on job title and experience.
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