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'Tip Pooling' and Wage and Hour Laws
In 2003, a Massachusetts Superior Court ruled that a restaurant may require its wait staff to share tips with other employees in a tip pool without violating the Massachusetts Payment of Wages statute. It was one of only a handful of reported cases in the United States that had dealt with this issue at that time. Since then, there have been numerous cases involving various challenges to employer 'tip-pooling' policies, particularly in Massachusetts and California, with wait staff and other restaurant employees claiming that such policies violate state wage and hour laws. This article describes this recent line of cases, which are of particular interest to employers and employees in the restaurant or hospitality industries, but which have extended to other industries as well. The article also suggests guidelines for employers in the restaurant and hospitality industries to adopt so that their tip pooling policies do not run afoul of state wage and hour laws.
Fraser v. Pears Co., Inc.
The 2003 Massachusetts case, Fraser v. Pears Co., Inc., 2003 WL 21385384 (Mass. Super. 2003), seems an unlikely precursor to what quickly became a new genre of wage and hour litigation. The case involved the interpretation of a provision of the Massachusetts Payment of Wages statute, which had been on the books since 1952, in various forms, but which had been infrequently invoked in its more than 50-year history. The relevant portion of the statute in effect at the time of Fraser provided:
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 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 employee for the benefit of the employee, as a condition of employment '
See Mass. Gen. Laws ch. 149, ' 152A (1983). The statute further stated: 'If an employer or other person submits a bill or invoice indicating a service charge, the total proceeds of such a charge shall be remitted to the employees in proportion to the service provided by them.' Id.
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