Cannabis Retailer Curaleaf Wrongfully Confiscated Employees’ Tips, Lawsuit Alleges

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Curaleaf Holdings, Inc. faces a proposed class and collective action filed by a former employee who alleges the cannabis retailer failed to properly distribute customer tips among workers.

The 12-page lawsuit alleges Curaleaf, who operates eight cannabis stores in the Chicago area, had a practice of confiscating customer tips and using the money to purchase lunch for its workers. According to the plaintiff, who worked at Curaleaf’s Northbrook, Illinois store from September 2020 to October 2021, the defendant began paying tips to its hourly employees only recently, in January 2022.

The lawsuit claims that Curaleaf’s failure to properly distribute tips to its workers violated the Fair Labor Standards Act (FLSA) and Illinois state law.

The plaintiff says she began working for Curaleaf several months after the defendant acquired its Chicago-area cannabis retail stores from Grassroots Cannabis in July 2020. Per the complaint, each of the company’s retail stores was typically staffed with 25 hourly employees and five managers during peak hours, with workers distributed in the front of the store to help customers and in the back to stock and pack cannabis products.

The lawsuit says that although it is typical in the cannabis industry for customers to leave tips, the plaintiff and other hourly employees were initially told not to accept tips. However, because customers at the Northbrook location left tips in accordance with industry custom, disputes arose between management and employees regarding the acceptance of tips, and a tip jar was eventually placed near the register in October 2020, the case relays. 

Though employees expected that the cash collected in the tip jar would be divided among all hourly workers, including those who were working in the back of the store, the tips were instead confiscated at the end of each day by management, the lawsuit claims. The plaintiff estimates that from October 2020 to the end of her employment in October 2021, Curaleaf managers collected anywhere from $126,000 to $216,000 in cash tips at the Northbrook store.

In order to get rid of the cash, Curaleaf’s management began to use confiscated tips to purchase “excessive and wasteful” amounts of food for workers, according to the case. However, employees who were not working on the days or during the times that lunch was purchased were unable to take part in the food that was bought “with money that was rightfully theirs,” the lawsuit states.

Per the suit, this practice of buying food for employees continued until September 2021, when managers instead began distributing “lunch money” to workers each day in amounts of roughly $20. The case says, however, that this “lunch money” practice lasted only three days before management went back to purchasing food for employees using tip money.

The plaintiff says she learned after her employment ended that Curaleaf began paying out tips to its hourly employees in January 2022, with workers receiving roughly $60 to $100 per week.

According to the case, the defendant’s confiscation of workers’ tips violated the FLSA, which prohibits employers from retaining employee tips “for any purposes,” even if the employer does not take a tip credit.

The plaintiff looks to represent all non-exempt Curaleaf employees who were not fully compensated for every hour worked.

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