Tips, Tip Distribution, Tip Pools, and Service Charges Under the Massachusetts Tips Act
The Massachusetts Tips Act
The Massachusetts Tips Act is a statute unique to Massachusetts that heavily regulates what an employer can and cannot do with tips and service charges paid by its customers/guests. The following highlights some of the Tips Act’s prohibitions and requirements.
WHAT TYPES OF EMPLOYEES CAN PARTICIPATE IN A TIP POOL IN MASSACHUSETTS?
The Massachusetts Tips Act heavily regulates the use of tip pools by providing that only three categories of employees may share tips: (1) wait staff employees, (2) service employees, and (3) service bartenders. “Wait staff” includes waiters, waitresses, bussers, and counter staff who serve food or beverages (or bus tables) in a restaurant or banquet facility. “Service employees” includes any employees who provide services directly to customers and who customarily receive tips, including hairdressers, taxicab drivers, baggage handlers, and bellhops. “Service bartenders” are employees who prepare beverages to be served to customers by other employees. Employees who do not fit into one of these three categories cannot participate in tip pools. Similarly, employers cannot require or permit employees who do fit into these categories to pay a portion of their tips to employees that do not. Employers violate this portion of the statute in a number of ways, including by allowing hosts, hostesses, dishwashers, and kitchen staff to participate in tip pools or requiring that they be tipped out at the end of a shift.
In 2021, Massachusetts expanded the definition of “wait staff employees” to include employees in a quick service restaurant who prepare food or beverages as part of a team of counter staff or any other counter employee.
CAN AN EMPLOYER KEEP SERVICE CHARGES IN MASSACHUSETTS OR MUST THEY BE DISTRIBUTED TO EMPLOYEES?
The Massachusetts Tips Act heavily regulates the use of service charges by employers. According to the Act, a service charge is a fee imposed on a patron or customer by an employer, as opposed to a discretionary tip or gratuity. In that sense, the employer, and not the customer, determines the amount of the service charge. Employers that charge service charges must distribute those charges only to wait staff employees, service employees, or service bartenders in proportion to the services provided by those employees. Employers have far more discretion relative to administrative fees or house fees, so long as it’s clear to those paying those fees that they are not a gratuity, tip, or service charge. Simply put, it is a violation of the Tips Act to require or allow wait staff employees, service employees, or service bartenders to remit any portion of a service charge to anyone other than a wait staff employee, service employee, or service bartender.
CAN A MANAGER PARTICIPATE IN A TIP POOL OR RECEIVE SERVICE CHARGES IN MASSACHUSETTS?
Employees with any degree of managerial responsibility cannot participate in a tip pool and cannot receive service charges. Employers frequently try to avoid this issue by arguing that it is permissible for an employee with limited managerial responsibility to participate in tip pools or receive service charges. That simply is not the case: no means no.
WHAT DAMAGES MAY AN EMPLOYER BE LIABLE FOR IF THEY VIOLATE THE MASSACHUSETTS TIPS ACT?
Employers who violate the Massachusetts Tips Act are liable to their tipped employees for triple damages for unpaid tips and service charges, attorneys’ fees, interest, and costs. M.G.L. ch. 149 §152A(f).
At Steffans Legal, our employment lawyers have represented employees across the state in claims arising under the Massachusetts Tips Act.
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