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Penny’s Coffee, Dean Phillips Sued for Alleged Wage Theft

The company calls the lawsuit "entirely baseless."

U.S. House of Representatives |

Rep. Dean Phillips

When he discusses his business chops, Rep. Dean Phillips has reliably opted to talk about Penny's Coffee. It's right there in the 3rd District Democrat's current bio: "He is now co-owner of Penny's Coffee, a small business in the Twin Cities." (The previous sentence alludes to "work[ing] his way up" the corporate ladder at Phillips Distilling, the booze empire founded by his great grandfather in 1912.)

On the campaign trail in 2019, Phillips took obvious pride in the wages offered at his Minneapolis and Wayzata cafes: "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," he said while stumping for a $15 federal minimum wage. (A cynic could argue that, for the 21st wealthiest member of congress, it's both right and easy.)

On Thursday, Mariam Karkache took legal action against Penny's, alleging that her employers, Dean Phillips and brother Jay Phillips, "will[fully] fail[ed]" to compensate her for overtime hours worked at both cafes between 2019 and 2022. (Interestingly, as pointed out by a Racket tipster, that same day Phillips voted for the GOP's “Denouncing the Horrors of Socialism” resolution, a bad-faith, largely symbolic motion intended to gin up cred among voters who confuse Elizabeth Warren with Fidel Castro.)

Karkache—a former Penny's barista and cafe manager—is seeking "unpaid wages, liquidated damages," and legal fees, according to the lawsuit. Her lawyer, Phil J. Krzeski, says she's traveling abroad and, given the active litigation, would not speak to Racket. He declined to say how much money his client is seeking.

“Ultimately, this case boils down to: We believe our client did not receive a fair day’s pay for a fair day’s work," Krzeski says. "She worked overtime numerous instances during her employment at Penny’s Coffee, and was not paid time-and-a-half of her hourly rate, thus rendering a violation of the Fair Labor Standards Act.”

Under that act, the employer is personally liable, Krzeski says. When asked whether other Penny's workers might come forward with wage-theft allegations, he stated that Karkache's lawsuit is the only one he's aware of.

"We're not here to say Dean or Jay Phillips are bad guys; we don't think that at all," Krzeski says. "But there are federal rules that need to be followed, and our position is that they didn't follow them—we're just here to say we're owed more than what we got. Wage theft is an epidemic."

When asked for comment, Rep. Phillips's congressional comms staff deferred to Penny's. That company provided the following statement to Racket:

"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."

We asked for clarification about Phillips's exact role at the company, circa 2023, but didn't hear back. Penny's closed both of its locations last November "until further notice."

For more on local wage-theft allegations, revisit the second most-read Racket story ever. (The first? The one about twirling chickens which, miraculously, just ticked past 100,000 views.)

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