Hillary LeBeau
Tue, 09/28/2021
Massachusetts is seeing an increase in Tips Act claims, and the Massachusetts Supreme Judicial Court just reinforced that a lack of clarity in fee- and tip-related documentation may result in employer liability, including mandatory triple damages and attorney’s fees.
The Massachusetts Tips Act requires that an employer or person who collects “service charges” or “tips” (as those terms are defined under the act) pay the proceeds of those charges to service employees and waitstaff in proportion to the services the employees provided to the employer. Massachusetts has a long history of protecting service employees’ ability to collect tips and service charges, and the recent decision handed down by Massachusetts’s highest court in Hovagimian v. Concert Blue Hill, LLC serves as a reminder to employees that their employers may not be paying them properly under the law.
Former service employees at the Blue Hill Country Club, sued the club and some members of the club’s managerial staff claiming the club violated the Tips Act because it did not pay the employees all the “service charges” to tip-eligible employees. Blue Hill prevailed at the trial and appellate levels.
The Supreme Judicial Court reversed the appellate court’s decision, holding that the club’s event contracts with clients “clearly listed the disputed fees as a ‘service charge’ ” that belonged to the waitstaff and service employees.
The Supreme Judicial Court’s holding confirms that the best practice for restaurants, hotels, and other hospitality industry employers is to ensure that event contracts, and all other related documents presented to patrons, consistently, accurately, and specifically describe any administrative fees that the employer intends to both assess and retain. Employees should be aware of these contracts and ensure that if they identify a “service charge,” that the employer pays it to the employee.
