The Massachusetts Wage Act – Independent Contractor’s Employees & Service Charges

The Massachusetts Wage Act – Independent Contractor’s Employees & Service Charges

The Massachusetts Wage Act prohibits employer’s from requesting or accepting from any wait staff employee, service employee, or service bartender any payment or deduction from a tip or service charge given to such wait staff employee, service employee, or service bartender by a patron. When an employer charges a patron or other person and imposes a service charge or tip, the total proceeds must be paid to the employee.

A Supreme Judicial Court decided an issue certified by the District Court as to the statutory definition of “service charge” and whether the protections of the Massachusetts Wage Act flowed to employee’s of independent contractors. In a case brought to the Massachusetts District Court, plaintiffs who worked as skycaps at Logan International Airport claimed a violation of the Wage Act protecting wages and tips, arising from American Airline’s imposing a $2.00 per bag “service charge” for curbside baggage service. The District Court certified to the Supreme Judicial Court the question of American’s liability under the statute to those skycaps who are employed not by American but by independent contractors.

The Supreme Judicial Court concluded that a “service charge” need not be a charge by an employer, but may be imposed by any person or entity. Therefore an employer may not avoid the mandate of the Wage Act to remit all service charges to service employees by outsourcing the services of service employees and contractually requiring the outsource employer to remit the service charges to the original employer.

The Court declared that “an airline or restaurant may not escape the prohibition in [the Wage Act] of the Act by entering into a contract with a service entity,… under which the service entity would employ the service employees, waitstaff employees, and service bartenders, and agree to pay to or share with the airline or restaurant the service charge billed to customers. This would be precisely the type of special contract prohibited by [The Wage Act], because it would provide a means to exempt the airline or restaurant from its obligations under the Act.”

The significance of this decision is that employee’s hired by independent contractors are also afforded the protections of the Wage Act from service charges collected by the contracting entity.

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