In a recent decision, the Massachusetts Supreme Judicial Court decided Restaurant owners can implement a no tipping policy if they 1) pay their servers at least minimum wage; and 2) clearly communicate the no tipping policy to their customers. This may strike a blow to the wages protection of servers and give judges wider discretion when deciding whether an employer has violated the TIPS Act G. L. c. 149, § 152A.
The Tips Act “protect[s] the wages and tips of certain employees who fall within the ambit of the statute.” Bednark v. Catania Hospitality Group, Inc., 78 Mass. App. Ct. at 809. An employer whom violates the tips act is liable for treble damages plus attorney fees and cost. Generally speaking waiters, waitresses and bartenders would all be protected under the TIPS act. However, any employee whom has managerial responsibilities is not.
In RON MESHNA & others[ vs. CONSTANTINE SCRIVANOS & another an owner of Dunkin’ Donuts franchises was found not to be liable under the Tips Act because he:
- Paid his employees at least minimum wage and;
- Had signs through out the stores that communicated that tips were not accepted.
The Massachusetts Supreme Judicial Court found that a no tipping policy is permitted under state law as long as that policy is clearly communicated to costumers thereby the employer will not violate G. L. c. 149, § 152A. Further, if a customer still leaves a tip, that money will not be consider a tip under G. L. c. 149, § 152A, even though the customer intended to tip the service worker because the employer clearly communicated the no tipping policy.
In the MESHNA, Plaintiffs brought a class action lawsuit claiming the owner’s policy of having a no tipping policy violated the Massachusetts TIPS Act. The SJC wrote: “we do not construe G. L. c. 149, § 152A, to require that employers of wait staff employees must permit customers to give tips to such employees.”
If a “No Tipping Policy” is not Communicated to Costumers its illegal
If a restaurant owner does not clearly communicate to the customer that there is a no tipping policy, and that customer leaves a tip, the tip belongs to the employee. If employers retain the tips, the employer has violated the Massachusetts TIPS Act which provides for mandatory triple damages plus attorneys fees and cost. This begs the questions, “what constitutes clear communication?”
In MESHNA, the employer communicated the no tipping policy with signs, instructed staff not to accept tips. The employer expressly told its employees the acceptance of tips “will result in disciplinary action, up to and including termination.”
No Tipping Policy is legal if Clearly Communicated to Customers
In MESHNA the SJC found the employer’s policy of no tipping to be explicitly clear enough to costumers to prevent the employer from being liable. The SJC wrote:
“Where the employer has clearly communicated to customers that a no tipping policy is in effect, money left by customers in establishments where service is provided by wait staff is not a tip that was given to wait staff employees, regardless of a customer’s intent.”
The SJC went on to clarify that the funds left by the customer, intended for the wait staff as a tip, actually belongs to the owner of the establishment.
A Set Back for the TIPS act.
Personally, I am afraid that this ruling will lead to abuse by employers. Wait staff work hard for their wages, and by no means is minimum wage sufficient to survive on in Massachusetts. Further, the “clear communication” carve-out of the Massachusetts TIPS acts will give judicial discretion where there was once a bright line. What constitutes clear communication will be fact specific to each case.
What if there is no sign, but employees are instructed to tell customer pursuant to the employee handbook? Is that clear? Personally, I have seen restaurant owners retain tips meant for their employees. It breaks my heart. That money was not meant for them. Now employers may have the cover needed to retain “tips” and not risk the triples damages plus attorney fees and cost as provided by the Massachusetts TIPS act.
The legal damages for violating the TIPS act operates as a punitive measure to stop the abuse or employers of their employees. I am afraid with this decision; the big club created by the TIPS act has been whittled away.
For wait staff: if your employer has implemented a no tipping policy they must pay you at least minimum wage AND clearly communicate to the customer there is a no tipping policy. Clear communication should be in the form a sign, which can be easily observed by the paying customer.
For employers: The SJC has found that putting up signage in the restaurant will provide the employer with the requisite “clear communication”. Employers would also be well advised to inform the customer of the no tipping policy on receipts and invoices for services in order to re-enforce the policy and have documented evidence of their “clear communication”
If you have any questions, about this decision or the TIPS act, get in contact today.