News & Analysis as of

Service Charges Employer Liability Issues

Fox Rothschild LLP

D.C. Hospitality Employers Must Disclose Mandatory Service Fees

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The Office of the Attorney General for Washington D.C. (OAG) recently reminded hospitality employers in the city who use mandatory service charges and other fees that they must properly disclose such charges to guests under...more

Fisher Phillips

The Road to Hell is Paved with Good Intentions: Top 7 Wage and Hour Mistakes for Hospitality Employers to Avoid

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Employers in the hospitality industry have been through it all in recent years – from the devastation of the pandemic to ongoing labor shortages to an impending recession. These challenges and dramatic changes have surely...more

Littler

Salt Bae’s Sprinkle of First Impression: Eleventh Circuit Holds Mandatory Service Charges Are Not “Tips” and May Be Used to...

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On March 18, 2022, the U.S. Court of Appeals for the Eleventh Circuit upheld a district court’s decision that an 18% service fee charged at the upscale Miami steakhouse of celebrity chef Nusret Gökçe was not a “tip” and was...more

Bowditch & Dewey

“What’s in a Name?” Potentially, Treble Damages! A Look at the Massachusetts Tips Act

Bowditch & Dewey on

When writing his famous line in Romeo and Juliet, Shakespeare clearly was not thinking of the Massachusetts Tips Act. The Supreme Judicial Court (SJC) recently issued a reminder that, in fact, a name can be critical to...more

Jackson Lewis P.C.

Service Charge Or Administrative Fee? A Distinction With A Difference, The Supreme Judicial Court Of Massachusetts Holds

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Although it may have intended for a customer charge to be treated as an administrative overhead fee separate from gratuities paid to its employees, a country club’s reference to the amount as a “service charge” in some...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Massachusetts Supreme Judicial Court Addresses ‘Service Charges’ Under the Massachusetts Tips Act

Massachusetts is seeing an increase in Tips Act claims, and the Massachusetts Supreme Judicial Court (SJC) just reinforced that a lack of clarity in fee- and tip-related documentation may result in employer liability,...more

Foley Hoag LLP

Massachusetts Supreme Judicial Court Rules Mislabeled Administrative Fee Must Be Paid to Service Employees under Tips Act

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On August 23, 2021, the Massachusetts Supreme Judicial Court ruled in Hovagimian v. Concert Blue Hill, LLC, that the Massachusetts Tips Act requires that an employer pay service employees any “service charge” listed on an...more

Fox Rothschild LLP

Service Charges vs. Gratuities And Why It Matters

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Attention hospitality employers. Is that charge you add to a guest check a service charge (typically a set amount added to a guest check in lieu of a tip)? Or an automatic gratuity (such as a set amount for a party of 8 or...more

Fox Rothschild LLP

Employer Risks That Arise From A Mandatory Service Charge

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A service charge can provide a welcome boost to a business’ bottom line, but employers must manage and mitigate the risk of lawsuits, disgorgement and damages. Recent developments across the nation serve as a reminder that...more

Foster Garvey PC

Tom Douglas Settlement Highlights a $2.4 Million Technicality: Three Steps to Help Avoid Potential Costly Litigation Related to...

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A recent settlement between Seattle chef Tom Douglas and his restaurant employees highlights the potentially costly technical requirements of Washington’s automatic service charge laws for hospitality businesses. ...more

Epstein Becker & Green

California Court Rules That Mandatory Service Charges May Be Gratuities

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Upsetting what many considered settled precedent, a California Court of Appeal has held that a mandatory service charge may qualify as a “gratuity” under California Labor Code Section 351 that must be distributed to the...more

Fisher Phillips

California Court Rules That Food And Beverage Service Charges May Qualify As Gratuities

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A California appellate court just held that mandatory service charges added by banquet facilities to their contracts may need to be paid to banquet service employees essentially as a form of a gratuity. The October 31, 2019...more

Bowditch & Dewey

Getting “Tip”-sy: What Brewers Need To Know About Tip-Pooling Arrangements

Bowditch & Dewey on

Over the summer, news broke that Surly Brewing Co. was found liable by a Minnesota court for violations of the state’s tip-pooling law. The brewery, which operates a large beer hall in Minneapolis, was accused by a former...more

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