Tacking a 15 or 20 percent gratuity charge on a bill is a good way to ensure that your waitstaff isn't stiffed by stingy patrons. It turns out that it's also a way for management to pocket some extra cash while stiffing its waitstaff. Such practices have becoming increasingly common, or at least increasingly prosecuted. The Crowne Plaza Hotel in the Berkshires is now the latest establishment to agree to a massive class-action payout to current and former service employees.
Patrons at all the hotel's banquets are charged a 20 percent service fee. Under state law, only employees directly involved in the service of customers are entitled to that money. But according to the lawsuit, filed in November 2009, the Crowne Plaza kept a third of the tips, reports The Berkshire Eagle. The hotel has agreed to a $1.3 million settlement, but admits no wrongdoing.
One hundred and fifty current and former employees are covered by the lawsuit, and those who served for the longest period will be receiving checks in the tens of thousands of dollars, assuming the settlement receives final approval at a hearing on May 1.
"We only make $2.63 an hour and the waitstaff relies on tips," Anthony Chavarry, the lead plaintiff, told The Berkshire Eagle. "So a substantial portion of our income was being skimmed off the top."
Tip-snatching has become an epidemic in the Berkshires, the touristy highlands of western Massachusetts and Connecticut. There have been three other settlements in the last four years; the largest was $14,750,000, paid out by the Canyon Ranch resort in 2008.
But the issue isn't limited to luxury New England hotels. In 2008, a court forced American Airlines to pay $325,000 to nine current and former skycaps at Logan International Airport. After the airline imposed a $2 curbside baggage fee, the lawsuit claimed, most passengers assumed that the fee went to the skycaps, and they stopped tipping them. The airline contended that the fee was in no way intended to replace tips, but the judge said that's what it was clearly doing regardless.
Right now, there's a lawsuit pending against the Harvard Club of Boston, which levies a surcharge on members "in lieu of gratuity." That money goes to the club's operating expenses, and never the employees. Although the club claims that waitstaff is told that it's a no-tipping establishment, this isn't relevant under Massachusetts law, reports Harvard Magazine.
All that matters is whether the customers know. It's unlawful for a diner to pay that extra money, believing it's a reward for good service, if it actually ends up in the manager's wallet, or toward reupholstering the sofa.
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