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Murphy, Hesse, Toomey & Lehane attorney, Paul King represented Blue Hill Country Club in Hovagimian et al. v. Concert Blue Hill, LLC. Attorney King used a creative litigation strategy, answered the complaint and included representative copies of the relevant documents and then moved for “judgment on the pleadings” in the Superior Court. This maneuver enabled our team to avoid the expensive and time-consuming discovery process and resulted in considerable savings for Blue Hill.

 

The Massachusetts Appeals Court affirmed the trial court’s decision dismissing a putative class action brought by service employees against their employer under the Tips Act, M.G.L. c. 149,§152A. At issue was whether the so-called “safe harbor” provision in §152A(d) applies in the circumstance where the employer properly delineates in writing which portion of the payment made by the patron goes to the service employees as a gratuity and which is retained by the house, but subsequently uses different and potentially confusing language in characterizing those charges on invoices. After the employer prevailed on cross motions for judgment on the pleadings in Superior Court, the employees appealed and the Appeals Court conducted a de novo review of the statutory interpretation.

 

Under the Tips Act, service employees are entitled to receive all proceeds derived from a “service charge or tip” assessed to a patron. Generally, the safe harbor provision permits an employer to assess a supplemental charge to a patron (typically a “house” or “administrative” fee) that the employer retains in full, so long as it provides a “designation or written description” informing the patron that the fee is not a gratuity for the service employees. In this case, the employer sufficiently informed the country club patrons in the event contracts they signed that a 10% administrative fee for the house and a 10% gratuity for the service staff would be assessed. But on invoices that followed, it used headings including “Service Charges & Gratuities” and “Service & Tax Charges” with respect to both fees. The majority rejected the service employees’ argument that the employer’s choice of wording on the invoices subjected it to automatic liability. On these facts, ignoring the clear and contrary language in the event contract would contravene the legislative intent of the statute, which is that service employees receive those monies that the customers intend them to receive.

 

Murphy, Hesse, Toomey & Lehane LLP is also known throughout New England for its labor and employment practice as well as its extensive business litigation and advising employers on internal reviews and strategic legal approaches when dealing with the government. The firm also has an extensive education law practice representing public, private, and nonprofit educational institutions from pre-K through the college and university level.