By Jason M. Scally
A restaurant may require its waiters to share their tips in a "tip pool" with other employees who aid in serving customers, a Superior Court judge has ruled in an apparent case of first impression for the restaurant industry.
The "front line" waiters claimed that the restaurant and its owners violated the Massachusetts wage payment statute, G.L.c. 149, Sect. 152A, by collecting the waiters' tips and reallocating them among other servers pursuant to restaurant policy.
But Judge Patrick F. Brady disagreed and granted the defendants summary judgment.
Although there were no Massachusetts cases on point, the judge cited a California statute with similar wording that found "tip pooling is a policy of common sense and fairness."
While the Massachusetts statute protects employees against "skimming," Brady found that the statute did not prohibit an employer from controlling a "tip pool" where the employer collected the tips before redistributing them to all the wait staff on a pre-determined, proportional formula.
The seven-page decision is Fraser v. Pears Company, Inc., et al., Lawyers Weekly No. 12-116-03.
'Less Than Clear' Statute
Christopher P. Litterio of Boston, the attorney for the defendants, said the decision was important for restaurants and the service industry because "it clarifies that as long as tips are going to the people who provide services, and the house isn't taking anything out of it, then [tip pooling] is OK."
The Massachusetts wage payment statute, he said, is "less than clear" and this decision should act as a "clear guidepost for the industry."
Litterio noted that the plaintiffs in the case were planning to seek class certification for waiters going back to the 1980s, so it was also helpful that the case was dismissed before that could happen.
"Had we not been able to get summary judgment on the underlying claim, this would have been an absolutely earth-shattering case to us and probably to the entire restaurant industry," Litterio said.
Jeffrey S. Brody of Boston, an attorney who is representing the Boston restaurant Locke-Ober in a case involving a similar dispute, agreed that the decision should be persuasive in other cases.
"It makes it clear that the Legislature never intended for a waiter to dictate the compensation system for other wait staff," he said.
Brody added that the judge's decision would not only be significant for restaurants and their owners, but also the "non-waiters that assist in the food service," who also could have been harmed if the case had gone the other way.
Shannon E. Liss-Riordan of Boston, the plaintiffs' attorney, said she was "disappointed" with the ruling.
"The judge's decision is contrary to the language of the statute," she said. "It's [also] contrary to the attorney general's interpretation of the statute, and the attorney general is authorized by law to be the enforcement agency."
Liss-Riordan, who is also representing the plaintiffs in the Locke-Ober case and has about 15 other cases dealing with the wage payment statute, but on other grounds, said that the statute is clear and that she has filed an appeal seeking direct appellate review from the Supreme Judicial Court.
"The [money] left on the table is left to the waiters and belongs to the waiters," she argued. "Management should keep their hands out of it."
Tip In The Pool
At L'Espalier, a French restaurant in Boston, the wait staff shared their tips pursuant to a "tip pool" policy — a "condition of employment" that had been in effect since the early 1980s.
Under the policy, the waiter, or "front waiter" as he or she was known, would share his or her tips from a shift with the other serving staff on duty, which included:
* the maitre'd, who "greets and serves guests, serves drinks and food when necessary, answers questions about food and wine menus and generally does what is necessary to insure smooth and happy running of the restaurant";
* the "back waiters" or bussers who "bring food from the kitchen, polish the silver and glass, serve water and bread [and] reset the table";
* the "sommelier" who "advises on and serves wines"; and
* the bartender.
On June 24, 2001, the restaurant's waiters "rebelled," and refused to submit their tips to the tip pool.
Apparently some of the other wait staff — those who could be adversely affected by the "voluntary 'tip-outs,'" — were upset at the front waiters decision.
When the "ringleaders" refused to "cool it," per McClelland's request, they were fired.
The plaintiffs, four waiters from the Boston restaurant, brought a nine-count claim against the defendant Pears Co., Inc. — the owner of the restaurant — and Frank McClelland, who was the president, a chief shareholder and a chef.
The waiters' claims included counts of retaliation, a violation of G.L.c. 149, Sect. 159A, quantum meruit, intentional interference with contractual relations, breach of contract, breach of the covenant of good faith and fair dealing, conversion and unjust enrichment.
The plaintiffs filed a motion for summary judgment on the retaliation claim with respect to one of the plaintiffs, but also filed a motion for summary judgment on the second count — the wage payment violation — with respect to all of the plaintiffs.
The defendants, in turn, filed a cross motion for summary judgment on all counts.
War Of Words
The plaintiffs argued that when an employer "solicits, demands, requests or accepts any tips for the purpose of reallocating them among servers other than the front waiter," as part of a mandatory business practice, it runs afoul of G.L.c. 149, Sect. 159A.
But the defendants said that because neither the restaurant nor the owner "retained" any of the tips, the statute was not violated.
The judge agreed. Although there were no Massachusetts cases on point, Brady referenced a case from California where a waitress had claimed that her employer's tip pool violated the California Labor Code. In that case, the California appellate court upheld the restaurant's right to use a tip pool.
The judge observed that the verbs used in the California statute — "collect, take or receive" — were similar to the verbs used in the Massachusetts statute which was at issue in this case — "solicit, demand, request or accept."
Despite the fact that both sets of verbs could be read to prohibit restaurant owners from having "any exercise of dominion" over the tips, he noted that the California court ruled otherwise.
"[T]he California appellate court held that employer-mandated tip pooling is a policy of common sense and fairness, and that the legislative intent was to insure that employees, not employers, received the full benefit of gratuities that patrons intended for the sole benefit of those employees who served them," Brady explained. "A close reading of [the Massachusetts wage payment statute] leads me to the same conclusion."
The Massachusetts statute provides, in part: "No employer or other person shall solicit, demand, request or accept from any employee engaged in the serving of food or beverage any payment of any nature from tips or gratuities received by such an employee during the course of his employment, or from wages earned by such employee or retain for himself any tips or gratuities given directly to the employer for the benefit of the employee, as a condition of employment."
The judge explained that the first clause in the Massachusetts wage payment statute dealt with cash tips from a customer and the second clause dealt with the tips left on a credit card receipt, but he found that the plaintiffs' argument did not comport with the second clause.
"The words 'retained for himself' are unambiguous [in the first clause]; they forbid the 'skimming' which defendants contend is at the heart of the statute," said Brady. "But the words 'retain for himself' in the second clause cannot be construed to prohibit the employer from distributing the tips by a proportional formula among the various eligible servers."
The judge said: "It is not reasonable to believe that the Legislature intended to treat the cash on the table situation differently than the credit card tip."
He explained that if the Legislature had wished to treat the situations differently and require that the waiters get directly paid, it would have done so.
Other Servers
The plaintiffs also argued that the statute's wording that included the subject, "or other person," made the employer liable for allowing other servers to "tip-out" as a condition of employment. But again, the judge disagreed.
"In this case the 'other persons' who are accepting portions of tips are the other servers," said Brady. "They are in no position to set conditions of employment; and it would be irrational to concluded that these recipients could violate the statute."
The judge also said he was not persuaded by a document circulated by the state Attorney General's Office entitled, "Commonly Asked Questions About the Massachusetts Wage and Hours Law," which purportedly says that servers cannot be required to pool their tips.
Brady rejected the argument that the attorney general's opinion should be given "substantial deference."
In fact, he added that the attorney general's support for a failed legislative initiative to clarify the statute was evidence that he found the wage payment law ambiguous.
The judge further noted that since the statute carries criminal penalties, any uncertainty in the language should be resolved in favor of the defendants.
Lawyers Weekly Publications, 41 West Street, Boston, Massachusetts, 02111, (800) 444-5297
© 2003 Lawyers Weekly Inc., All Rights Reserved.
|
May 19, 2003
