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Supreme Judicial Court of Massachusetts
March 1, 2021, Argued; August 23, 2021, Decided
[**730] Georges, J. Under G. L. c. 149, § 152A, commonly known as the Tips Act (act), an employer or other person who collects a [*238] service charge or tip, as defined by the act, is required to remit the total proceeds of that charge to wait staff and service employees in proportion to the services provided. The plaintiffs, Khris Hovagimian, Dilma Silva, [**731] and other individuals (collectively, plaintiffs), worked as service employees for Concert Blue Hill, LLC, doing business as Blue Hill Country Club, and its managerial staff (collectively, Blue Hill or the club).4 The plaintiffs allege that Blue Hill violated [***2] the act by failing to remit to them charges identified as a “service” charge on invoices sent to patrons, but previously described as an “administrative” or “overhead” charge in initial documents. Blue Hill maintains that the term used on the invoices was simply poor drafting and that, pursuant to the “safe harbor” provision of the act, G. L. c. 149, § 152A (d), second par., the club is permitted to retain the disputed charges.
We conclude that the plaintiffs' interpretation is correct and consistent with our rules of statutory interpretation. ] The term “service charge” is a defined term in the act. See G. L. c. 149, § 152A (a). Pursuant to that clear definition, we hold that the disputed charge is properly characterized as a “service charge” and, further, that the safe harbor provision does not apply in these circumstances. Accordingly, the order allowing Blue Hill's motion for judgment on the pleadings and denying the plaintiffs' cross motion must be reversed.
Background. 1. Factual history. Blue Hill owns and operates an establishment that hosts banquets and other events requiring food and beverage services. When a patron hosts an event using Blue Hill's facilities, the transaction is processed through three steps. At the [***3] initial step, patrons are required to execute an “Event Contract” with the club. This threshold contract details, among other things, deposit and payment schedules, event hours, menu selections, and pricing. The contract contains a provision stating that the patron will be charged a ten percent gratuity that is remitted to wait staff employees, as well as an additional ten percent “administrative” or “overhead” charge that is retained by the club, on all food and beverage purchases.5
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
488 Mass. 237 *; 172 N.E.3d 728 **; 2021 Mass. LEXIS 507 ***; 2021 WL 3719367
Khris Hovagimian & another1 vs. Concert Blue Hill, LLC,2 & others.3
Prior History: [***1] Norfolk. Civil action commenced in the Superior Court Department on May 7, 2018.
The case was heard by Elaine M. Buckley, J., on motions for judgment on the pleadings.
After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate review.
Hovagimian v. Concert Blue Hill, LLC, 98 Mass. App. Ct. 69, 2020 Mass. App. LEXIS 100, 152 N.E.3d 139 (July 16, 2020)
service charge, invoices, patron, tip, disputed, employees, service employee, charges, gratuity, proceeds, labeled, remit, safe harbor provision, plaintiffs', designated, staff, pleadings, terms, wait, legislative intent, cross motion, ten percent, drafting, overhead
Labor & Employment Law, Wage & Hour Laws, Assignments & Deductions, Business & Corporate Compliance, Labor & Employment Law, Wage Payments, Civil Procedure, Appeals, Standards of Review, De Novo Review, Governments, Legislation, Interpretation, Judgments, Pretrial Judgments, Judgment on Pleadings, Standards of Review, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem