When writing his famous line in Romeo and Juliet, Shakespeare clearly was not thinking of the Massachusetts Tips Act. The Supreme Judicial Court (SJC) recently issued a reminder that, in fact, a name can be critical to imposing liability on employers under the statute.<\/p>\n
The Tips Act requires an employer to remit any \u201cservice\u201d charge to waitstaff, but it also expressly allows an employer to designate a fee as an \u201cadministrative\u201d or \u201chouse\u201d charge and retain the proceeds for itself. In Hovagimian v. Concert Blue Hill, LLC<\/em>, the SJC faced the dilemma of how to apply the Tips Act in the face of conflicting contract documents that used different terms to describe a particular fee.<\/p>\n Blue Hill Country Club hosted private events at its facility. Customers seeking to hold an event at the Club went through a three-step process. First, the customer signed an \u201cEvent Contract,\u201d which set out various details for the event. The Event Contract provided that the Club would charge a 10% gratuity to be distributed to the waitstaff as well as a 10% \u201cadministrative\u201d or \u201coverhead\u201d charge that the Club would retain. The second step consisted of a \u201cBanquet Event Order Invoice,\u201d which designated event charges in three categories: \u201ccharges,\u201d \u201ctaxes,\u201d and \u201cservice charges and gratuities;\u201d the Order Invoice did not, however, explicitly label the \u201cadministrative\u201d or \u201coverhead\u201d fee. The final step was a post-event final bill. This final bill had charges broken down into \u201ctax,\u201d \u201cgratuity,\u201d and \u201cservice,\u201d and the 10% administrative fee was labeled under the \u201cservice\u201d category on this final bill.<\/p>\n Waitstaff employees filed a lawsuit against the Club claiming that the Tips Act requires the Club to remit the \u201cservice\u201d charges to them. The Club responded by asserting that the \u201cservice\u201d charge was in fact the \u201cadministrative\u201d fee that it was entitled to keep, receiving the \u201cservice\u201d label solely through faulty drafting of the final bill. The Club prevailed at the trial court level and at the Appeals Court, but the SJC took a different view.<\/p>\n The SJC reasoned that the language of the Tips Act was clear and unambiguous: any amount listed on a bill as a \u201cservice\u201d charge must be remitted to the waitstaff. The Court noted that the Club drafted all of the event paperwork, and therefore the Club properly bore the burden of using the correct verbiage if it did not wish for a fee to become subject to the Tips Act. The Court noted that the Club actually did use the correct wording to avoid Tips Act liability in the initial Event Contract by labeling the additional 10% fee as \u201cadministrative\u201d or \u201coverhead.\u201d However, because the Club did carry that labeling through the final bill–and, in fact, explicitly designated the charge as a \u201cservice\u201d charge in the final bill–the Tips Act required the Club to distribute the fee to waitstaff. Accordingly, the Court directed a judgment in favor of the plaintiffs.<\/p>\n This case serves as a stark reminder that entities hosting events must take great care when preparing their paperwork. Labels can be decisive under the Tips Act, and even an unwitting use of the term \u201cservice\u201d charge can subject an entity to significant statutory penalties if those amounts are not remitted in full to the waitstaff.<\/p>\n","protected":false},"excerpt":{"rendered":" When writing his famous line in Romeo and Juliet, Shakespeare clearly was not thinking of the Massachusetts Tips Act. The Supreme Judicial Court (SJC) recently issued a reminder that, in fact, a name can be critical to imposing liability on employers under the statute. The Tips Act requires an employer…<\/p>\n","protected":false},"author":1,"featured_media":1316,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false,"_links_to":"","_links_to_target":""},"categories":[64],"tags":[270,166],"class_list":["post-1471","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxes","tag-taxes","tag-tipped-employees"],"acf":[],"yoast_head":"\n