In 2013, New York’s highest state court considered which employees are eligible to participate in sharing tips from a communal tip jar, and even if eligible, whether the employer could nonetheless exclude them from participating. The New York court held an employer may exclude employees from sharing in tips even if they would otherwise be eligible to do so (though noted there might be some limit if only the highest ranking employees were included). Now, considering a related question, the Massachusetts Supreme Judicial Court has ruled that a Dunkin Donuts franchisee may prohibit tipping altogether without violating state law. Meshna v. Scrivanos, 2015 Mass. LEXIS 161 (Mass. Apr. 10, 2015).

In Scrivanos, the franchisee communicated to customers that tipping was not permitted through various measures including placing signs in the stores stating “no tipping” or “thank you for not tipping,” and instructing employees to communicate the policy to inquiring customers. Plaintiffs, whom the court agreed were “wait staff” within the meaning of Massachusetts’ Tips Act, argued that under the Act, a no-tipping policy was tantamount to “retaining” or “deducting” from tips “given” to the workers. The court, accepting direct appellate review from the trial court and skipping intermediate appeals, found that nothing in the Tips Act prohibits an employer from forbidding tips in the first instance, and that the Act only regulated tips given to employees under a policy permitting tipping. Because the employer had taken proper affirmative steps to notify patrons of the policy, the court also concluded the business did not violate the Act by retaining monies left in contravention of the policy.

“This is a welcome decision for Massachusetts employers, particularly given the state’s otherwise fairly restrictive rule concerning the disposition or splitting of tips where tips are permitted,” observed Jackson Lewis Boston Office Counsel Brian Lewis. “More broadly, the opinion demonstrates the importance of being able to establish that an employer has communicated its policy, whatever that policy may be.”

Massachusetts, like New York and many other states, continues to regulate tipping practices through its labor law provisions. Employers must examine their own tipping policies and practices under all applicable state laws.