U.S. Rep. Dean Phillips was sued in federal court last week for allegedly failing to properly compensate an employee at Penny’s Coffee, one of his businesses that bragged about “voluntarily” paying a $15 minimum wage.
Mariam Karkache worked for Phillips and his brother Jay Phillips as a barista and later a manager from April 2019 to August 2022, according to her lawsuit. As manager, she made schedules, coordinated with vendors, managed inventory at the Wayzata location, and trained employees.
“During the duration of Plaintiff’s employment, she was classified as a non-exempt employee, meaning she was entitled to overtime pay at a rate of one and a half times (1.5×) her regular pay,” the lawsuit states.
The complaint provides the text of Karkache’s “return to work” offer, which clearly stated she was entitled to 1.5 times her regular rate for overtime in accordance with the Fair Labor Standards Act.
“Despite regularly working in excess of 40 hours per workweek, Plaintiff was not properly paid one and a half times her regular rate for time worked in excess of 40 hours per workweek,” the lawsuit says.
During at least nine pay periods named in the lawsuit, Karkache worked between 81 to 95 hours, but her “paystubs show she was not paid 1.5× her regular rate for hours worked in excess of 40 per workweek.”
“Moreover, other paystubs show Plaintiff was paid overtime for hours worked in excess of 40 hours per workweek, thus indicating Defendants’ own belief and acknowledgment that Plaintiff was not exempt from overtime,” the complaint says.
A spokesperson for the congressman said ethics rules prohibit them from commenting on Phillips’ business affairs.
“While Dean Phillips left his operational role at Penny’s in 2017 to run for Congress, he and the other former owners of the business take accusations seriously. While Penny’s believes this claim to be entirely baseless, if a human or software error was made and overtime pay was not fully issued to an employee, it will be remedied immediately,” Penny’s Coffee said in a statement.
As recently as July 2019, Phillips said on Facebook, “At Penny’s coffee, we pay a $15 minimum wage not because it’s the easy thing to do, but the right thing to do.”
“This suggests that Defendant Dean Phillips has the right to hire and fire employees, set rates of pay, and have control over Defendants’ operations,” the lawsuit argues.
With a net worth of $123 million, Phillips is one of the wealthiest members of Congress.
The lawsuit doesn’t provide a dollar amount but asks for all unpaid overtime pay and an “additional and equal amount” as damages.
Penny’s said it closed in December 2022 after “trying its best to survive the COVID era.”
“Penny’s Coffee … earned a reputation for providing outstanding food and beverages to its customers and livable wages, support, and flexibility to its wonderful employees,” the company said. “In fact, Penny’s was the first coffee shop in the Twin Cities to offer all staff a $15 minimum wage, which inspired countless other cafes to also do better by their employees.”