Employers Get Another Reason to Carefully Review and Comply with Wage Laws

It’s no surprise that the reach of Massachusetts’ wage laws is long, and most employers know they need to carefully abide them if they want to avoid potentially dire effects. Still, courts sometimes seem to extend the law’s reach in surprising ways. When that happens, employers to which such rulings apply might first shudder a bit, then step back and review policies to be sure they are doing things properly.

A recent U.S. District Court decision may have such an effect. In Chebotnikov v. LimoLink, the court ruled that a trial was necessary to determine whether limousine drivers are employees or contractors. It went on to also conclude that gratuities charged to customers must be remitted to the drivers under the Massachusetts tips statute. That law requires that service charges or tips from customers “shall be remitted only to the wait staff employees, service employees or service bartenders” who provide the customer service at issue.

What’s interesting here is the award of tips to individuals who may or may not be employees despite the fact that the statute involved appears to apply only to that group. The court seemed moved in large part by the clear intention of the law: to ensure that service workers get the tips that customers intend for them and not their employers to receive. Employers who collect tips or charge costs to customers that might be interpreted as gratuities need not shudder at this ruling, perhaps, but certainly should review their practices to ensure they don’t get caught in the same situation as LimoLink apparently has.