Country club pocketing 'service' charge violates MA Tips Act

The Supreme Judicial Court recently came down on the side of a group of employees working functions at a country club over whether disputed charges were moneys that should have been given to the employees. The court found the country club violated the Massachusetts Tips Act when it kept money described as a "service" charge on invoices given to its patrons for payment.

Facts

Service employees working at the Blue Hill Country Club alleged it violated Mass. Gen. Laws c. 149, § 152A, commonly known as the Tips Act, when it didn't pay them a "service" charge noted on a patron's invoice.

Specifically, the employees alleged certain charges described as "administrative" or "overhead" in initial contract documents were later described as "service" charges on the subsequent invoices provided to patrons. They contended even though the Tips Act required the club to give the fees to the service employees, it retained them instead.

Notably, the first document given to patrons, the "event contract," clearly delineated between a 10% gratuity that would be given to wait staff, service employees, and service bartenders working the function, and a separate 10% administrative or overheard charge. The subsequent "banquet event order invoice" didn't specifically label or identify the 10% administrative charge described in the event contract, however, and instead organized the charges into three categories: "charges," "taxes," and "service charges and gratuities."