Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

128 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP In 2020, the legislature amended the law again to expand the definition of “wait staff employee” and to broaden the scope of individuals who can share tips. 727 Over the last decade, Tip Statute litigation has increased dramatically, and a 2008 statute that imposed mandatory treble damages for certain wage and hour violations (discussed in Section XVIII.G) has prompted even more litigation. While the 2004 amendments and recent decisions have attempted to clarify the definitions of tips and service charges and who may receive them, there remain significant areas of dispute among employees and employers regarding the Tip Statute. A. Definition of a Tip or Service Charge Prior to the 2004 amendments, the Tip Statute governed both “tips” and “service charges,” but it did not define either term. 728 As a result, litigation over what constitutes a tip or service charge increased. Because these terms were undefined, courts examined how an amount in question was labeled to determine its status. For instance, in a case applying the pre-2004 statute, the Massachusetts Appeals Court held that the Tip Statute governed any fee labeled a “service charge” regardless of the employer’s intentions or its representations to customers that the charge is not a tip. 729 Conversely, another court ruled that if an employer charged an administrative fee that was not labeled a service charge, gratuity, or tip, then the Tip Statute did not govern the fee. 730 The current Tip Statute defines a “tip” as “a sum of money, . . . a gift or a gratuity, given as an acknowledgment of any service performed by a wait staff employee, service employee, or service bartender.” 731 Tips include cash and amounts designated on credit card receipts, with no distinction made between the two under the statute. 732 A “service charge” is defined as “a fee charged by an employer to a patron in lieu of a tip to any [covered employee], including any fee designated as a service charge, tip, gratuity, or a fee that a patron or other consumer would reasonably expect to be given to [a covered employee] in lieu of, or in addition to, a tip.” 733 727 St . 2020, ch. 358, § 77. 728 See M.G.L. ch. 149, § 152A. 729 Cooney v. Compass Grp. Foodservice , 69 Mass. App. Ct . 632, 634 (2007) (finding employer liability for failing to t reat service charges as t ips, where charges were used to preserve an historic building, even though employees never expected to take a share and inquiring customers were informed of how fee was used). See also Michalak v. Boston Palm Corp. , 18 Mass. L. Rpt r. 460, 2004 WL 2915452, at *1 (Mass. Super. Ct . Sept . 17, 2004) (finding employer liability for failing to dist ribute amount labeled on bill as service charge to employees whose primary duty was service of food and beverage, although both cont ract language and servers informed customers that service charges were not fully remit ted to service employees). 730 Williamson v. DT Mgmt., Inc. , 17 Mass. L. Rpt r. 606, 2004 WL 1050582, at *11 (Mass. Super. Ct . Mar. 10, 2004) (finding that a fee labeled “administ rat ive fee” was not a service charge under the statute). 731 M.G.L. ch. 149, § 152A(a). 732 Id . 733 Id. (emphasis added). While the T ip Statute defines a service charge as “a fee charged by an employer to a pat ron in lieu of a t ip,” the SJC has held that a company can be liable for retaining service charges even if the company was not the “employer” of