No Tipping Policy Holds Up in Court, Tips Go to Business

How often do you go to your favorite coffee bar or pizza place and see a jar on the counter? Perhaps the jar says “tips appreciated” or “tips for good service.”

You probably drop your change in there as a way to say thank you to the person who gets your morning started or makes your favorite slice. Sometimes, there may not be a cup or collection jar, but you tell the employee to “keep the change,” or you directly give them a dollar or two. Maybe you even add something extra around the holidays.

Dunkin Donuts Franchisee: No Tipping Policy Sustained

Before putting money in a tip jar, have you ever stopped to wonder where that money goes? Probably not. You likely assume it is appreciated and that it goes to the hard working people behind the counter – the cashier, the barista or the line cook, for example. After all, they are the ones you are trying to reward.

However, things are not always as they seem. Consider a recent Massachusetts case where a court ruled that employees do not necessarily have a right to keep their tips and that the tips may legally end up in the hands of an employer. In this case, three former employees sued Constance Scrivanos, the owner of 66 Dunkin Donuts franchises. The employees felt that his no-tipping policy was illegal. Superior Court ruled that the no tipping policy did not violate any state laws and the workers were not entitled to receive that money.

For the Appellate Court, there was another, perhaps more important, issue to consider regarding the no tipping policy. What happens to tips left by customers in violation of the owner’s policy? In this particular case, the strict no-tipping policy was clearly displayed for all customers to see. In many of Mr. Scrivanos’s stores, generous patrons, nonetheless, gave employees extra money. What the customers did not expect was that the employees were putting the tips in the register and, therefore, the pocket of the franchise owner.

The Massachusetts Supreme Court ruled that Mr. Scrivanos was in fact permitted to do whatever he wanted with the tips, including keeping them for himself.

Court Held: Owner Was Not Keeping “Tips”

How is this possible given the existence of a Massachusetts law that forbids managers or owners to take any part of their employees’ tips?

The court stated that as long as signs clearly communicate the no tipping policy to customers, an employer can do whatever he or she likes with any money left in violation of the policy. According to Mr. Scrivanos’s attorney, any customer who left a tip despite the clear policy against it, acted unreasonably. In essence, they were not tips but just extra money paid to the business.

Laws Vary State to State

While laws vary from state to state, what the court may have failed to fully consider is the intent of the customer. It seems unfair to allow a party to keep money that was clearly intended for someone else. Do customers have the right to know where their money is going? Perhaps going forward, if a store owner suspects or knows that customers will tip anyway, and his main concern is enforcing his policy, he should be required to post an additional sign that says “tips left in violation of the no-tipping policy will be retained by the owner?”

Fairness to Consumers as Well as Workers

Consumers, in general, do not like being told what they can and can’t do with their money. It is hard to fathom being unable to reward someone for helping out or going the extra mile. No one should feel pressured or forced to leave a tip, but public policy ought to make it easy for consumers to voluntarily reward good service. The extra money from tips motivates employees to do a better job, which makes customers happy, which in the end benefits the owners and managers.   Even if the company has a no tipping policy, if someone truly wants to give a small token gift to another person, shouldn’t that be allowed?





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