In what appears to be a case of first impression, a Massachusetts Superior Court judge held that the Massachusetts Tip Statute, Mass. Gen. Laws ch. 149, § 152A (Tip Statute), does not bar employers from implementing and enforcing "no-tipping" policies for wait staff and service employees, as long as such policies are communicated effectively to customers.
In Meshna v. Scrivanos, the plaintiffs were wait staff employees at various Dunkin Donuts franchises operated by the defendant, Constantine Scrivanos. They alleged that customers routinely left or attempted to leave tips and that under the defendant's no-tipping policy the plaintiffs were required to return the tips to the customers. The plaintiffs further alleged that if they were unable to return the tips to the customers, the money was retained by the defendant. The plaintiffs claimed that this practice violated the Tip Statute and common law because the purpose of the Tip Statute -- ensuring that employees receive tips that customers intend to leave them -- would be frustrated by allowing employers to implement no-tipping policies. According to the plaintiffs, the Tip Statute requires employers to permit customers to offer, and wait staff to accept, tips.The defendant moved for judgment on the pleadings, arguing that there is nothing in the Tip Statute that prohibits a no-tipping policy, and employers should be permitted to enforce a no-tipping policy by retaining any money left by customers. The defendant also moved to dismiss the common law claims.
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 it determined that the plaintiffs' allegation that customers routinely left or attempted 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 also ruled 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 constitutes a clear violation of the Tip Statute. Although the Court recognized the challenge of effectively enforcing a no-tipping policy, it stated that this challenge did not create an exception to the Tip Statute. The Court left open the possibility that where a no-tipping policy is communicated effectively so that customers could not reasonably expect money left behind would be treated as tips, "the conclusion may follow that such money is not received by or given to employees as tips."
Meshna serves as a reminder that the critical factor in most Tip Statute cases is not an employer's intent or an employee's understanding, but rather the "reasonable belief" of a third party, namely, the customer. Employers who have or intend to implement a no-tipping policy should review the manner in which it is communicated to ensure that it is "clear and conspicuous."