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Policies against Tipping Allowed under Massachusetts Tips Act

The Tips Act protects certain Massachusetts service employees from having to turn over their tips to their employers, but what happens to the money left by customers in spite of an employer's no tipping policy?

This question was recently before the Supreme Judicial Court in the case of Meshna v. Scrivenos. Current and former employees of franchised donut shops filed suit against the franchisee and the management company of the stores.

Donation-Tips 3

The defendants established a no tipping policy that prohibited employees from accepting tips. The defendants informed employees that accepting a tip would "result in disciplinary action, up to and including termination." There were signs in the stores, and employees were required to tell customers who tried to leave tips about the policy. Before the lawsuit, employees were told to put tips in the cash register. After the suit was filed, employees were told to place any tips in "abandoned money" cups. The employees were to tell customers that these cups were not for tips and that money in the cups was used to discount purchases for subsequent customers.

The plaintiffs alleged that the no tipping policy and being required to put the purported tip money in the register violated the Tips Act. They subsequently amended the complaint to allege that the abandoned money policy also violated the Tips Act.

The Superior Court held that the Act did not prohibit employers from instituting no tips policies, but any tips that were left belonged to the employee. After discovery, the defendants' summary judgment motion was denied in part and granted in part. The Superior Court then reported three questions to the Appeals Court. The Supreme Judicial Court granted direct appellate review of questions regarding whether the Tips Act allows an employer to maintain a no tipping policy, whether an employer may be liable if it retains tips after failing to communicate a no tipping policy to customers, and whether the employer may be liable for tips left when it has clearly communicated a no tipping policy to customers. The parties agreed that the plaintiffs qualified as "wait staff employees," making them covered employees under the Act.

The statute states that an employer may not "demand, request or accept from any wait staff employee...any payment or deduction from a tip or service charge given to such wait staff employee...by a patron." Examining the plain meaning of the statutory language, the court found that the Act did not prohibit a no tipping policy, even though a provision specifically stating that no tipping policies were not prohibited was considered by the Legislature but not adopted.

The court compared a no tipping policy to the Act's requirement that employers inform customers that certain fees are not tips or service charges for the employee. In both circumstances, if customers are not informed of the policy, they may believe the money will be given to the staff as a tip. A no tipping policy that is not clearly communicated to customers could allow an employer to get around the intent of the Act and profit from tips intended for the employees. When the employer does not communicate a no tipping policy, the money left by customers is a tip that is protected by the Act, and it is a violation of the Act for the employer to demand, accept, or request those funds.

If the no tipping policy is clearly communicated to customers, however, the customer has no reasonable expectation that those funds will be given to the employee. It is not a violation of the Act for the employer to keep money left by a customer or to put it in an abandoned money jar, as long as the employer has clearly informed the customer of the no tipping policy. The case was remanded back to Superior Court for further proceedings.

This case clarifies that employers may prohibit tipping and informs employers how to handle money received in contravention of such a policy. If the employer ensures that the policy is clearly communicated to the customers, the employer does not have to give the funds to the employee. If, however, the employer fails to or chooses not to communicate the policy, the employee is entitled to the funds.

If you have a legal concern involving tips or the Tips Act, you need the assistance of a skilled Massachusetts employment law attorney. Contact the Law Offices of Richard Mucci at (781) 729-3999.

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