Under the Massachusetts Tips Act, employees are afforded the protection to receive the benefit of tips or gratuities paid to them by customers during the course of their employment. The statute also helps by ensuring customers that any tip or gratuity will be for the benefit of the employee to whom it is given.

In a case heard by the United States District Court for the District of Massachusetts, a Domino’s employee raised the issue as to whether notice provided to customers of a pizza delivery service was sufficiently clear and unambiguous that no reasonable customer would think that a “delivery charge” was a tip for the driver, for purposes of the Massachusetts Tips Act. The Domino’s pizza delivery driver alleged his employer unlawfully retained the service charges in violation of Massachusetts Tips Act and Massachusetts Minimum Fair Wage Act.

The delivery driver was paid a “tipped minimum wage” of about $3 per hour, plus tips. For every pizza delivery, Domino’s imposes a $2.50 “delivery charge” in which Domino’s retains the entire delivery charge and the drivers receive no portion as part of their tipped wages. The $2.50 is within the range of what an average customer would typically tip a pizza delivery driver.

The plaintiff delivery driver argued that the “delivery charge” is a service charge under the Tips Act and Domino’s violated the Tips Act by withholding the proceeds of that fee. Under the statute a service charge is:

“A fee charged by an employer to a patron in lieu of a tip to any wait staff employee, service employee, or service bartender, including any fee designated as a service charge, tip, gratuity, or a fee that a patron or other consumer would reasonably expect to be given to a wait staff employee, service employee, or service bartender in lieu of, or in addition to, a tip.”

Under the statute an employer may retain the service charge “if the employer provides a designation or written description of that house or administrative fee, which informs the patron that the fee does not represent a tip or service charge for wait staff employees, service employees, or service bartenders.”

In cases where the employer provided notice to the patron stating that a certain fee did not constitute a tip or service charge, courts have focused on whether a reasonable customer would understand that the employer did not distribute the fee amongst employees.

Likewise, the court here held that the question whether the notice Domino’s provided to its customers about the delivery charge and tips was sufficiently clear and unambiguous so that no reasonable customer would think it was a tip for the driver ought here be answered by a jury.

Employers in Massachusetts who collect service charges or delivery charges, may not avoid paying their employee’s a portion or the entirety of these collected fees simply because they provided notice to their customers. The notice must be sufficient for customers to understand that the charge is not going to be distributed amongst the employees. If you believe your employer is improperly withholding service fees or delivery charges in which you are entitled please contact Adam Shafran.