In a case of first impression, a Massachusetts Superior Court judge recently held that an employer may adopt a policy prohibiting employees from accepting tips from customers without violating the Massachusetts Tips Law. Any such policy, however, must clearly and conspicuously be announced to customers, such that a reasonable customer would understand that any money left by the customer would not be given to employees as a tip.

In Meshna v. Scrivanos, a number of employees who worked at Dunkin’ Donuts franchises sued the owner/operator of those franchises, claiming that the stores’ no-tips policy violated Massachusetts law. The policy required employees to return tips to customers. According to the complaint, if the employee was unable to return a tip to a customer, then the employee was required to put the tip in the register to be retained by management.

The defendant moved for judgment on the pleadings, arguing that Massachusetts law permits employers to have a no-tipping policy. The court agreed with the defendant’s argument in principle, holding that the Massachusetts Tips Law does not prohibit “a no-tipping policy that is clearly and conspicuously announced” to customers such that a reasonable customer would understand that any money left by the customer would not be given to employees as a tip.

However, the court denied the defendant’s motion because the complaint alleged that customers routinely left, or attempted to leave, tips. The court reasoned that this practice supported an inference that many customers believed that the money they left would go to employees as a tip for services rendered. This practice, coupled with the allegation that any money left by customers would be retained by management, cast doubt on whether the policy in place had been clearly and conspicuously announced to customers.

The court concluded by noting that if “an employer chooses to prohibit tipping, it must take responsibility for communicating that policy to its customers effectively. If it does, so that customers could not reasonably expect money left on the counter to be treated as tips, the conclusion may follow that such money is not received by or given to employees as tips.” Under these circumstances, a no-tipping policy would not violate the Massachusetts Tips Law.

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