The Massachusetts Supreme Judicial Court (SJC) recently granted a request for direct appellate review on the issue of whether the Massachusetts Tip Statute, Mass. Gen. Laws ch. 149, § 152A (Tip Statute), allows employers to maintain "no-tipping" policies. The SJC's decision will impact hospitality and restaurant employers throughout Massachusetts. We are following the case closely and will report further developments.
By way of background, in December 2011 in the case Meshna v. Scrivanos (previously reported here), the Massachusetts Superior Court (Court) held that the Tip Statute does not bar employers from enforcing "no-tipping" policies for wait staff employees, so long as such policies are communicated effectively to customers. The plaintiffs in this case are wait staff employees who claim that they are required to refuse tips from customers, return to customers any tips left to them, or, when returning the money is not possible, to deposit the money in the register, to be retained by the company. The plaintiffs claim that after they filed the lawsuit, the defendant revised its policy and required employees to place money that could not be returned to customers into "abandoned change cups," to be used to discount the purchases of subsequent customers.
In response to the defendant's motion for judgment on the pleadings, the Court held that the Tip Statute does not bar "clearly and conspicuously announced" no-tipping policies, and that employers may require employees to return money to customers pursuant to such policies. However, the Court denied the defendant's motion because the plaintiffs' allegation that customers routinely leave or attempt to leave tips "supports an inference that at least a substantial number of defendant's customers do expect that money they leave will go to employees." The Court held that if customers reasonably believe that the money they leave is provided to employees, the defendant's practice of retaining the money (when employees are unable to return it to the customers) would violate the Tip Statute.
The litigation continued after the Court's ruling. In response to the defendant's motion for summary judgment, a different judge in the Court again held that the Tip Statute does not prohibit no-tipping policies, but certified this question to the Massachusetts Appeals Court. (The Court also certified a second related question.) The SJC granted the plaintiffs' request that it, not the Appeals Court, directly decide the issue. Although the parties have filed their briefs, the SJC has not yet scheduled oral arguments. The SJC has invited third parties to submit amicus briefs.
While the Tip Statute does not expressly prohibit no-tipping policies, employers seeking to implement such policies should seek legal counsel before doing so, and should consider delaying implementation of such policies until after the SJC issues its decision.