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The exterior of McMenamins Edgefield.
McMenamins Edgefield.
McMenamins Edgefield

McMenamins Included Assistant Managers in Its Tip Pool. Can They Do That?

After the U.S. Department of Labor said the chain withheld $800K in tips, we asked a legal expert to weigh in

Brooke Jackson-Glidden is the editor of Eater Portland.

According to an investigation by the U.S. Department of Labor, Pacific Northwestern restaurant, bar, and hotel chain McMenamins may have unlawfully distributed tips to assistant managers and “assistant assistant managers,” similar to shift leads. In January, employees of the chain received letters from the U.S. Department of Labor indicating that those who worked for specific McMenamins locations between May 16, 2019, and “at least” October 26, 2022, may have lost a significant portion of their tips.

Last week, a user on Reddit posted a copy of the letter; a representative from the Department of Labor (DOL) confirmed its veracity with Eater Portland. The letter states that employees of the Cedar Hills and Edgefield McMenamins locations instituted a tip pool that included assistant managers and “assistant assistant managers.” According to the investigation, McMenamins tipped out $800,000 to employees in those roles, which the DOL says belonged to lower-level employees.

According to the letter, the department requested McMenamins reimburse those employees, but the company refused. However, the DOL cannot legally force the chain to pay its employees the amount due from those tips, and “it has been decided that it is not suitable for litigation by the Department.” With no further action being taken by the department, employees hoping to collect tips owed to them may have to pursue civil action independently.

A spokesperson from McMenamins issued a public statement, saying they were “baffled” by the investigation — however, the company is not denying it included assistant managers and “assistant assistant managers” in the tip pool. Rather, McMenamins says those employees had a legal right to tips, as hourly front-of-house employees. “We’ve always complied with Oregon law and fully distributed the tip pool to eligible employees,” the statement reads. “This includes our assistant and assistant assistant managers, who work alongside other front-of-house employees to ensure our guests have a great experience. As hourly, entry-level, non-exempt positions, they’re entitled to overtime and a portion of the tip pool; it’s both legal and appropriate.”

University of Oregon law professor Elizabeth Tippett, who specializes in employment law, says the distinction comes down to the actual work performed by “assistant managers” or “assistant assistant managers,” not just title or hourly employment. “If you look at the federal regulation ... it defines which types of managers can be provided with tips,” Tippett says. “This regulation is saying, if you do the duties of the position, you’re a manager. Is their primary duty management of the enterprise? Is what they’re doing every day managing other people? ... Do they oversee two or more people?”

Something Tippett notes: McMenamins specifically references Oregon law, as opposed to federal law. While tip pools are legal in Oregon, managers should be excluded from tip pools. Definitions remain tricky, however; typically, legal advisors and restaurant-specific organizations treat the federal and state definitions of a manager or supervisor similarly.

“Because managers and supervisors may set working hours, areas of service, days on or off, or other functions related to an employee’s ability to earn tips, to avoid potential lawsuits, fines, penalties, or other consequences, ORLA does not recommend managers and supervisors keep any tips received during service if the establishment has a tip pool system in place,” an August 2023 tip pooling fact-sheet from the Oregon Restaurant & Lodging Association states.

A recent job posting for a McMenamins assistant assistant manager suggests the role involves both serving responsibilities and some management responsibilities. “The primary responsibility is to assist the Assistant Manager and Head Manager oversee all Pub operations under the guidance of the Assistant Manager and Head Manager,” the job posting reads. However, the posting also says that assistant assistant managers “will be expected to be able to perform the responsibilities of each other non-management positions.”

Tippett suggested that, without knowing the specifics of the job responsibilities at McMenamins, it may be possible that the company is intentionally walking the line between manager and tipped employee. “It may be that McMenamins is trying to have its cake and eat it, too,” she says. “‘We’ll call them a manager, but they don’t have the power and we’ll pay them hourly.’ [Alternatively,] maybe these people are more or less managers and they shouldn’t have tips.”

Eater Portland has reached out to the Oregon Bureau of Labor and Industries for more information about the state’s specific tip pooling laws and manager designations. This story will be updated with more information.

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