A resort in Maine did not violate the state’s minimum wage law when it paid wait staff a portion of the standard “service charge” that it added to its banquet customers’ bills and treated that portion as a “tip” under the law, entitling it to a credit against the minimum wage, the state supreme court ruled.
“Because of reports that Maine restaurants were occasionally withholding tips from their wait staffs, particularly when a customer paid by using a credit card, Maine wage laws now require that the entirety of a tip paid by a foodservice customer must be given to the waiter or waitress who waits on that customer,” the high court recounted.
The question on appeal, the court continued, is whether a “service charge” paid directly to a resort as part of the fees charged for a banquet, as distinguished from ordinary, separate seating service, is a “tip” that must be paid entirely to the wait staff at those banquets.
Hayden-Tidd argues, in essence, that because the tip credit statute mandates that a tip that is automatically included in a customer’s bill or charged to a credit card must be given to the service employee, the entire amount of the service charge paid by banquet customers to the Cliff House resort should have been given to the banquet servers.
Because of this violation, she argues, Cliff House was not entitled to the “tip credit” against the minimum wage and was obligated to pay the banquet servers the full minimum wage pursuant to the state’s minimum wage law (setting the minimum wage at $7.50 per hour starting on October 1, 2009).
The court noted, however, that the statute did not define “tip at time in question; the service charge was not called a “tip” in the contract with the customer; and the service charge was not individually paid to the banquet servers by the persons served.
Therefore, nothing in the statute prevented Cliff House from allocating the thirteen percentage points of the service charge to the servers as tips and applying the tip credit on that amount in its arrangement with its servers.
You can read the entire opinion here.
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