Massachusetts courts recently clarified two issues of great interest to employers in the hospitality and restaurant industries. On the one hand, the Massachusetts Supreme Judicial Court held that Massachusetts law does not prohibit employers from adopting a no-tipping policy. On the other hand, the federal district court in Massachusetts held that the “restaurant employee” exemption to the state overtime law does not apply to maintenance technicians who travel between restaurants.
The first case, Meshna v. Scrivanos, was brought by employees at Dunkin’ Donuts stores in Massachusetts. The employees claimed that their employer violated the Massachusetts Tips Law, Mass. Gen. Laws ch. 149, § 152A by, among other things, implementing a “no tipping” policy. Under this policy, any money left by a customer was either placed in the cash register or in an “abandoned change” cup. After the trial court ruled that this policy did not violate the Tips Law, the employees appealed.
On appeal, the Massachusetts Supreme Judicial Court held that the Tips Law permits employers to maintain a no-tipping policy. The Court found that, although the Tips Law prohibits employers from making a deduction from a tip given to an employee, it does not prohibit an employer from maintaining a no-tipping policy. Significantly, the Court held that “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.” If the no-tipping policy has not been “clearly communicated” to customers, however, the money left by customers is considered to be a tip that belongs to the service employees and may not be retained by the employer. According to the Court, an employer may “clearly communicate” a no-tipping policy by (1) posting signs informing patrons that employees may not accept tips; and (2) instructing wait staff employees to inform customers orally of the no-tipping policy and providing training to those employees regarding the content and timing of that communication.
The second case, Parham v. The Wendy’s Company, involved the application of the Massachusetts Overtime Law, Mass. Gen. Laws ch. 151, § 1A, to restaurant employees. Unlike the federal Fair Labor Standards Act, the Massachusetts Overtime Law contains an exemption for “any employee who is employed . . . in a restaurant.” In Parham, the employer moved to dismiss the plaintiff’s overtime claim on the basis of this exemption.
Judge Burroughs of the U.S. District Court for the District of Massachusetts denied the employer’s motion to dismiss. The Court began by noting that, according to the complaint, the plaintiff “was not employed in a traditional restaurant occupation, such as a host, cashier, server, cook, or dishwasher.” Instead, plaintiff “was not limited to a particular restaurant” but instead worked as a maintenance technician and, as such, traveled among to and from different restaurants. In this job, he performed maintenance and repair work both inside and outside the restaurants. He also performed “numerous other duties not tied to a particular restaurant, such as taking inventory of truck stock, purchasing parts from suppliers, managing truck maintenance, and other tasks.” According to the Court, the fact that the plaintiff worked in some aspect of restaurant operations was not sufficient to bring him within the scope of the exemption, at least for purposes of a motion to dismiss. The Court, however, denied the employer’s motion without prejudice to the employer’s right to renew this argument at summary judgment or trial.