Law Offices of John P. Connell, P.C: In 2004, “An Act Protecting the Wages and Tips of Certain Employees” (the “Act”) was ratified by the State of Massachusetts to improve and further the protection of restaurant service employees and waitstaff. The Act amended several sections of M.G.L. c. 149 and c. 151, making changes to allow employee inspection of payroll records, prohibition of certain tip pooling practices and clarification to existing wage regulations. The amendments intended, among other things, to ensure minimum wages to service employees notwithstanding their receipt of tips. On account of the general overlap between tipping law and wage law in Massachusetts, the Act encompassed the regulations of both, thus revealing that a violation of one may often mean a violation of the other.
The new law emphasized the controversy surrounding the practice of tip pooling between employees. Pursuant to M.G.L. c. 149 s. 152(A)(c), “no employer or person shall cause, require or permit any wait staff employee, service employee, or service bartender to participate in a tip pool…for distribution to any person who is not a wait staff employee, service employee, or service bartender.” So while the sharing of tips may be permitted through a tip pool, the law will only deem the pool valid if it is distributed strictly among employees working in a non-managerial capacity.
Additionally, the law sought to guarantee minimum wages to tipped employees. Under M.G.L. c. 151 s. 1 and s. 7, tipped employees receiving $20 per month or more in tips, may be paid a minimum of $2.63 per hour, as long as the employees receive at least $8.00 per hour total, including tips. The employer is responsible for paying employees any amount shy of that $8.00 (see also 455 CMR 2.02).
By means of statutory interpretation, courts have supplemented these laws to bring further clarification to the food and beverage industry as well. For example, to know whether an employer is in violation of a tipping law, courts have had to discern exactly what constitutes a “tip.” M.G.L. c. 149, s. 152A defines a “tip” as “a sum of money, including any amount designated by a credit card patron, a gift or a gratuity, given as an acknowledgment of any service performed by a wait staff employee, service employee, or service bartender.” Yet the line is often blurred when restaurants create service charges and other surcharges. For this reason, courts have interpreted the law using an objective standard, turning on the expectations of a reasonable customer. Should a customer believe and intend that a restaurant’s charge will go to its waitstaff, the money should in fact be distributed to waitstaff. No distinction may be made between cash tips and tips on credit card.
This confusion was illustrated in the class-action suit brought by servers employed at the Harvard Faculty Club, which was settled tentatively for $4 million in September 2012. The establishment had been adding surcharges of about 17% to customers’ bills and referring to them as service charges instead of tips. The employees’ complaint claimed that customers were told not to tip servers and that the surcharges, rather than being distributed to the servers, were put towards the establishment’s operating expenses. According to the establishment, the employees were paid between $16 to $19 an hour and were told upfront about a no tipping-policy. Attorney for the employees, Shannon Liss-Riordan, stated that “any surcharges that guests perceive to be a tip must go to the wait staff” regardless of the amount of the staff’s base salary. Bertrand v. Harvard Club of Boston, 11-4100, Massachusetts Superior Court, Suffolk County.
Violations of wage and tipping law may cause an employer to be liable to its workers for treble damages and attorney’s fees, as was revealed in the Harvard Faculty Club’s settlement valued at $4 million. Further information concerning violations of wage law can be found in our recent article, “United States Department of Labor Cracks Down on Massachusetts Restaurant Industry.”
CONTRIBUTED BY COURTNEY MCGEE AND LESLIE BUCKLER
© Law Offices of John P. Connell, P.C., 2012.