The trials and tribulations of Jason Zink

It has been almost two years since former bartenders and employees of Don’t Know / No Idea Tavern filed a lawsuit against owner/operator Jason Zink, a civil suit that has devolved into little more than a mexican standoff during that period of time, until recently when federal judge Richard Bennett issued a first-of-its-kind 22-page opinion on the case. An opinion, which, depending on how you view it could change the way owner operators of bars and restaurants conduct their business.

FROM THE TOP

In case you’re unaware of the development up to this point, here’s the immensely short version: Zink, who does not award himself a salary as manager or owner of Don’t Know or No Idea Taverns (will now be referred to as DKNI), would often work shifts as a bartender at Don’t Know and participate in pool tipping with his other employees as a means of income. A practice which, up until now, is illegal in and of itself if the owner/operator is acting in a managerial fashion. The remaining three plaintiffs of the civil suit – Tara Gionfriddo, Eric Gilbert, and Aaron Zetzer – argue that it is impossible for him to operate solely as a bartender when he is the sole proprietor, and are suing him for lost wages in violation of Federal and State Fair Wages laws as a result, as he was never entitled to pooled tips. In other words, their claim is that by taking his cut Zink in effect lowers their wage to below minimum which violates tip credit law AND tip pooling regulations, as the sole proprietor. Their initial claim was for $250,000 in damages.

THE LEGALITY

Zink fully admits that he engaged in tip pooling, but defends his position that he functions as an “employee” while acting as bartender, a question which has never been brought before a court of law before. While addressing that issue, the question of whether he was illegally engaging in tip pooling “willfully” – that is, he knew it was illegal and still went through with it – has to be answered and is nearly impossible to prove. Not surprisingly the plaintiffs claim he did so willfully, while Zink claims he did not, but misunderstood the FLSA guidelines for tip pooling. This issue will greatly affect the total amount of damages awarded in addition to liability.

One odd thing regarding the opinion is that in order to be protected by the FLSA, an employee must be, well, employed by a business. Part of that legal definition includes gross revenues in excess of $500,000, which Don’t Know Tavern cannot claim. However, since DKNI are owned by Zink under separate LLCs, the judge deems them a single enterprise which does book revenues over $500k. So essentially, revenues from No Idea are legally linked to Don’t Know despite the fact that they are legally owned separately. (e: this says to me “go ahead and violate FLSA as long as your bar doesn’t book over $500k)

Getting back to the FLSA, it states clearly:

An Employer-Owner May Not Share In An Employee Tip Pool Under The Fair Labor Standards Act […] to eliminate labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.

In other words, so they can earn minimum wage. Again, Zink asserts that he was not acting as an Employer-Owner but rather an “Employer-Employee,” a designation which does not legally exist, but soon may be rendered completely illegal altogether. Again, this is the most important aspect of the lawsuit, as it has never been dealt with in any court of law – and essentially every bar owner everywhere on Earth does it.

THE PLAINTIFFS

Just a few observations here, which rather than going into a long-winded tl;dr, I’ll provide as a bullet list (and believe me, none of this is personal gang):

  • Initially, the civil suit was filed after the five employees involved left their employment (for whatever reason) or were let go (fired), yet no one raised any eyebrows as to the tip pooling *while* employed.
  • Any bartender that can claim with a straight face that they make less than minimum wage after tips at a successful bar – even with another bartender diluting the tip pool – probably uses the same straight face to claim their tips on their tax form.
  • At this point, the legal fees are probably so high they *have* to go to trial and go for $250,000 in damages, as they’re 2 years pot committed.
  • Really? $250,000? Claim something easy like $50,000 and they 110% could have walked away really happily two years ago.
  • This is America.

SO WHAT NOW?

As it would seem, a trial has been set for September. No doubt as a result of over two years of legal drain this entire case more than likely will cost in the upper range of a gajillion dollars, taking into account the ongoing legal fees, court time, etc. – when it could have just as been easily settled out of court for a fraction. The plaintiffs have their right to a trial and whether or not they truly feel as though their rights as employees had been violated or it’s a personal vendetta against an ex-employer, doesn’t really matter.

So here now we’re presented with a bunch of scenarios in which this law is increasingly hard to contextualize, most of which have been presented to me while conversing with bar owners around town:

  • “What about family owned establishments where the husband is the owner, the wife is the chef and the daughter is the bartender?”
  • “What if you decide to bartend as an owner on an incredibly busy evening and you’re earning tips for the rest of your employees – they end up making more on your effort?”
  • “If you’re an owner/employer/employee currently engaging in tip pooling, it looks as if as long as you’re not booking $500k in revenue and you don’t have pissed off ex-employees, you’re probably ok. Otherwise, just sit on your ass and tell them what to do and they can’t sue you!”
  • “Which would piss off the other bartenders more – earning a salary that could be twice as much as they make just as a bartender, or earning the same as them while not taking a salary?”

And the judge provides no solutions for these matters yet, legally or otherwise. Looks like it’s up to the court decide in September.

27 thoughts on “The trials and tribulations of Jason Zink

  1. There is a line in the opinion that says “mere negligence on the part of the employer with regard to compliance with the FLSA is not sufficient to prove negligence” i think they meant to say willfulness but i thought that was funny.

  2. While i don’t doubt this is a vindictive lawsuit, and that most small bars do exactly the same thing Jason did. I can’t fault the judge for (seeming to) taking the side of the plaintiffs. i wonder if him paying them up to minimum wage out of the tip pool, and then splitting it would have won him this case. Oh well. hindsight is 20/20 and all. I still don’t see how their complaints could possibly add up to $250k though. i guess punitive stuff?

    22 pages is not so bad of an opinion considering 10 of them is him severing 2 parties from the suit.

    1. In a very cut and dry legal sense, the judge did an excellent job. If it were my call, I’d award the plaintiffs their “due” which Daily Record reported as being $10,000 among the three of them altogether, toss out the punitives (the remaining $240,000) based on the difficulty to prove willingness and all that, and start modifying the FLSA to address this issue directly.

      1. FLSA has been around since 1938. They will never modify it. Its the staple of labor law. However, if the judge does throw this out then it becomes “case law” and will be used to help future bar owners from getting sued.

        1. if there is a positive side, I should be able to keep both bars as well as my houses and get set up on a payment plan which is hopefully affordable for the next 5 years. I have always been against bankruptcy and I am very comfortable with my 100k+ credit card debt, but the 100+lawyer debt is out of my league. I will know more tomorrow. I am still very ignorant on the whole process, so I don’t want to say the wrong thing and then have a lawyer twist my words around. I will keep you posted.

          1. Good luck man, definitely a good plan to keep mum on the details until everything is ironed out.

  3. I will start out by saying this is wrong and I would never have done this to Jason in a million years. I’ve had my differences with him but at the end of the day he tries to do what is right. However Evan you have some facts wrong.

    1. Regardless of how much money the bar makes individual coverage would apply. Companies are subject to FLSA either in 1 of 2 ways. Enterprise coverage (over 500k and engaged in interstate commerce) or Individual Coverage (person in question is engaged in interstate commerce) Therefore because the bartenders run credit cards (yes this is interstate commerce) they are covered under the FLSA regardless of what the bar makes in a year.

    2. A tipped employee is a minimum wage employee. In the eyes of the Department of Labor (not the IRS though) a tipped employee is considered making $7.25 per hour no matter how much they make in tips because tips are not wages they are tips. Crazy I know. But the reason is because an owner taking a tip credit means they are not paying the difference between a tip minimum wage (federal 2.13 and MD state is 3.65) and the $7.25 therefore not being permitted to take deductions that are considered illegal.

    http://www.dol.gov/whd/regs/compliance/whdfs15.pdf

    Like I said this is crazy and should have been settled by taking what Jason made in tips over the 2 years only when he worked with these people and giving them their split of his tips. He shouldn’t even have had to give them the share of the people not suing. They honestly should be ashamed of themselves.

    1. That’s some right helpful info, thanks. Not being an expert on FLSA coverage myself it’s difficult to digest the judge’s opinion without knowing the full-fledged ins and outs of the policy.

  4. I’m sort of torn on this. As a former bartender, I think I’d get a pretty “icky” feeling having to share tips with the owner- especially an owner that owns more than one bar. As a friend to several bar owners, I would understand their needing to bartend to make money if they weren’t paying themselves a salary. If he was that short on cash, though, I can’t even begin to understand why he would open a second bar and be working on opening a 3rd (before the lawsuit, of course.) There is no way to make enough money from bartending alone to own and operate 3 bars and own more than one house. There’s just not. It seems shady.

    1. I’m not saying that in an accusatory voice at all, I just don’t get it. There’s more than likely something I don’t understand about the situation.

      1. @jfarrell984- The second bar came to me at a very good price, it was free, all I had to do is pay rent, unfortunately both places are money pits. I don’t take a salary because there isn’t enough money too. The third place that I was looking at was the same type of deal, the landlord was going to build it out for me and I was just going to open it on a shoestring budget, supply liquor and food and open. The bars support themselves but not me. I have two houses, one in Pigtown, in which I have a roommate and I have one in Annapolis that I rent out to 3 people, who pay the mortgage. I bought the first bar on credit cards and I just live off of my tips to support my collegiate lifestyle. They weren’t just sharing the tips with the owner, they were sharing the tips with another bartender who was working. I have been on the schedule from day 1, 6+ years ago, i just didn’t make up when I wanted to work and only on the busy days. There really isn’t anything shady, I offered full disclosure of my financials to the lawyers and gave them a copy of my credit report showing over 100k in debt, not including the houses. Feel free to email me anytime and I will discuss things in greater detail, I haven’t hid anything from anybody.

      1. Thanks Jason. I can’t believe this crap is happening, I am so sorry. You are a great bar owner and person and it is ashame they decided to do this to you. I can’t tell ya how much I miss No Idea and Don’t know!!! I wish you the best in everything!

  5. Jason is one of the best owners of any bar that I’ve ever had the pleasure of meeting. It sucks to see people go after a technicality, that in my opinion shouldn’t even be applied in this case. The law was meant to prevent managers/owners just swooping in at the end of the night and taking their “share” of a pot. If Jason worked just as many hours as the other bartenders on the shift, performing the same tasks, then he deserves his share of the tips. If Jason didn’t work, a different bartender would be taking his place. Either way, the tips would be shared between three people (Jason, employee 1 and 2) or (employee 1, 2 and 3). This seems like a case of a disgrusted ex-employee discovering a technicality and exploiting it unfairly ($250,000 in lost wages!? Man I need to start bartending…)

  6. “no one raised any eyebrows as to the tip pooling *while* employed.”

    How the hell do you know that? Perhaps that’s why they quit/were fired. Or maybe they had the good sense to not sue the owner until they found a new job. In any case, I’m sure they were peeved about it, as they FILED A LAWSUIT two years ago and are still pursuing it.

  7. Jason Zink is a popular well liked part of the community. Upon opening his establishments, he attracted customers to come to those locations solely on his marketing skills. I don’t believe without Jason’s presence anyone could make money. Those bartenders should have been happy to have him there behind the bar. He’s a money maker. Give him his cut.

    1. Just another reason to not try to open a small business . Everything seems to be against business owners/risk takers who offer jobs and services to a community. The fees, taxes, permits, insurance etc. that are required are staggering.
      If a manager/owner/partner needs to work the bar to maintain the bottom line, that should not be an issue. We all know how it works. Bartenders will pour and give the house away for tips. Jason was shurely working as the face of the businees that he had built, marketed and paid for in addition to keeping the bartenders in check.
      Good for him! What is wrong for busting your ass and wathcing your money?

  8. This should be an easy decision for the judge. Quite simply, the existing law is and always was designed to protect tipped employees from having their tips “taken” from an owner or manager on duty WHO’S NOT DOING ANY WORK BEHIND THE BAR! Jason and every other bar owner on the planet that bartends also of course pools tips for the bar shift they are working. Regardless of owner/employee bad relations that Zink had with his staff, this lawsuit is a total joke brought forward by bitter ex-employees who found an ambulance chaser. The law was never specifically clarified in the language because a lawsuit this ridiculous was never envisioned. I don’t know these plaintiffs personally, and they may be good folks. But the ramifications of their suit could be financially devastating for great bar owners all over MD.

  9. Attorneys’ fees in FLSA case could put Baltimore bar owner out of business
    Posted: 6:00 pm Sun, April 24, 2011
    By Brendan Kearney
    Daily Record Legal Affairs Writer

    Pooling tips with bartenders at his two South Baltimore taverns might well put Jason Zink out of business.

    No, the recession has not made those shared gratuities too few to sustain him, and no, it’s not because the Don’t Know and No Idea taverns hold themselves out to be gathering places for Boston Red Sox or Penn State football fans on game day.

    Rather, Zink, a 38-year-old Baltimore native who opened the Federal Hill watering holes in 2005 and 2007, is on the brink because it turns out federal labor law prohibits a bar or restaurant owner from participating in a tip pool with his employees.

    U.S. District Judge Richard D. Bennett laid down the law last month in the first decision of its kind anywhere in this federal appellate circuit.

    So, now Zink and every other owner who has tended bar knows that’s a no-no. It may be too late for Zink — he could be facing a big judgment and has hired bankruptcy counsel — but what about all the other small-time bar owners who put their dollars in the bucket and take their share at the end of the night?

    Zink and others say tip-pooling is common practice and that the impact of Bennett’s ruling will be far and wide. He can rattle off the names of a half-dozen bars just in South Baltimore where the owner also tends bar.

    “I wanted to fight it for the other bar owners,” Zink said of his expensive tour in federal court. “I don’t want the same thing happening to them.”

    Visits to bars around Baltimore this month revealed many owners and bartenders had not heard of Judge Bennett’s ruling and did not know the law on the subject. Several denied any owner-involved tip-pooling occurred at their establishments, while those who acknowledged that it had happened weren’t keen to identify themselves for fear of inviting wage litigation.

    “I would say nobody’s aware of [the prohibition],” said a longtime local bartender, who admitted the owner of his bar sometimes participates in a tip pool while they tend together. “And I would say that nobody that does it has an option.”

    One corner-bar owner in East Baltimore who has participated in tip pools was “shocked” to hear of Bennett’s decision and called its implications “terrifying.”

    “It’s not something you think of because you’re not taking their money,” that bar owner said.

    Tip pools exist so that bartenders who are away from customers while they restock the shelves or get more ice won’t miss out on their share of gratuities during that time. In other words, they encourage teamwork and better overall customer service.

    “That’s not taking money from them. That’s giving them money,” the East Baltimore owner said. “I don’t understand it at all.”

    Damages yet to be determined

    Under the Fair Labor Standards Act, proprietors can pay their bartenders or waiters less than minimum wage on the assumption that the employees will make up the difference in tips. However, owners cannot benefit from that “tip credit” and also share in the tips earned, at least in part, by those employees.

    The question in Zink’s case was whether the prohibition applied when the owner was, essentially, working as a bartender.

    The litigation began when Zink fired Tara Gionfriddo. She thought she was the victim of sexual discrimination and went to Philip Zipin, a Silver Spring employment lawyer who also has sued strip clubs on behalf of dancers.

    When Gionfriddo told Zipin about the tip-pooling practices at Zink’s bars, Zipin pursued it as a collective action. (While the specific issue had not been tested in Maryland or elsewhere in the 4th Circuit, similar cases have been filed by restaurant workers in Manhattan’s Chinatown against their managers.)

    According to Zipin, his three tip-pooling plaintiffs — former bartenders Gionfriddo, Eric Gilbert and Aaron Zetzer — are together owed almost $10,000, with another $35,000 owed to two additional workers whose cases have been severed or dismissed.

    Then there are the plaintiffs’ attorneys’ fees, which could exceed the damages. Zink said he believes they will exceed $100,000.

    “When you’re foolish and you break the law and you get caught, you get nailed,” Zipin said, saying that Zink made $26,000 from the tip pool over the two or three years in question. “It’s just a question of how much more it’s going to cost him.”

    Bennett’s March ruling dealt only with the question of whether the law applied to Zink. Trial on the question of the employees’ damages is scheduled to begin May 31, and will address whether Zink knew his actions violated the law or recklessly disregarded the possibility that they would.

    In the meantime, Zink’s East Baltimore colleague said, other people are learning about the decision over time but mostly just keeping quiet.

    “Everyone sits around with their mouth shut,” the corner-bar owner said. “I feel bad for Jason. It could’ve been any one of us.”

    Others in the business, such as the owners of Claddaugh Pub on Canton Square and Little Havana’s across the Inner Harbor on Key Highway, say they don’t do it. Michael Clarke, who owns Claddaugh, said the proprietors of bigger, busier bars have too many other things to manage and keep track of to also tend bar.

    ‘Gotcha’ litigation

    But Zink’s lawyer, Howard Hoffman of Rockville, said the case is “gotcha litigation at its finest” and that Zink and his ilk are “caught between a rock and a hard place.”

    They tend to be younger entrepreneurs without much money who are just trying to get a bar off the ground, he said; they provide good employment opportunities for neighborhood people or students but don’t end up making that much profit.

    “If you don’t have a tip pool, you have morale issues,” said Hoffman, suggesting that bartenders might not pitch in with chores that aren’t “tip-productive.”

    Bar owners like Zink have to work somewhere, he added.

    “It would be silly for him to find a job somewhere else,” Hoffman said. “What is he supposed to do?”

    One option is to pay bartenders minimum wage, $7.25 per hour, which is what Zink says he does now when he works alongside an employee.

    Zipin suggests Zink just take his own tips.

    “How complicated would that be? It wouldn’t be complicated. It’d be easy.” Zipin said. “That’s the part that baffles me.”

    “I’d love to take my own tips,” Zink said. “It’s just easier to do a tip pool.”

    Still not sure

    While Judge Bennett clearly found the law applied to Zink, Hoffman said the ruling also cracked open a window for other owners.

    “In some close circumstances,” Bennett wrote, “this Court believes that it may be, at least theoretically, possible to be an employer under the FLSA and at the same time share in a tip pool.”

    Hoffman said that statement “muddies everything.” He’d like to appeal the case to the 4th U.S. Circuit Court of Appeals but he’s not sure Zink can afford it. Either way, there will likely be another test case.

    “We do not think that this issue is going to go away because it is a trap for the unwary,” he said.

    Zink’s fellow bar-owner in East Baltimore asked a friend who’s in law school to explain the finer points of the law after hearing about Zink’s troubles — and still isn’t sure whether it applies.

    “I’m not a lawyer,” that owner said. “I’m a freaking bartender! … Could these people really come in and sue every small bar in Baltimore?”

    Zipin said he has no intention of doing that, especially as he has received no calls from prospective tip-pooling clients since Bennett’s decision.

    U.S. Sen. Barbara Mikulski’s office is aware of the issue but is holding off on taking any action until Zink’s case is over.

    A spokesman for Maryland’s Department of Labor, Licensing and Regulation said the agency doesn’t have the manpower to proactively enforce Bennett’s decision, but will investigate any complaint of a violation.

    “[I]f there are bartenders out there whose employers are taking a cut of their tips, we encourage them to alert our Division of Labor and Industry and talk with the folks in the wage and hour branch and allow an investigation to take forth,” said Mike Raia, the spokesman.

    Regardless of the legalities, Zipin said all of this could have been and can be avoided by simply treating employees respectfully. If they feel like they are being well-compensated, they won’t come to a lawyer.

    “People are not going to come see me unless they feel like they’ve been treated poorly,” Zipin said.

    The one “longtime local bartender” who admitted splitting tips with his bar’s owner would seem to be a case in point. He said he was fine with sharing, even though he now knows it’s technically illegal.

    “If they work for it, sure,” he said.

    However, he seemed less contented about who really makes the money when bartenders take their employers to court.

    “In the end, the only ones who win in this is the lawyers,” he said.

    1. “In the end, the only ones who win in this is the lawyers,” he said.

      This is true of almost every legal action, imho.

Leave a Reply to jj6 Cancel reply

Your email address will not be published. Required fields are marked *