"The AGO's Fair Labor Division alleged that Carrie Nation Cocktail Club and The Dubliner, both part of the East Coast Tavern Group, charged customers a 3% 'service fee' from May 2023 to June 2024 but did not distribute the money to 84 service employees, including wait staff and bartenders."
"While the money earned from a service fee must go to service staff and can be used by restaurants instead of traditional gratuity, additional fees - sometimes labeled as a hospitality fee, administrative fee, or kitchen fee - can pay for other things in the restaurant, like operating costs and back-of-house employees."
"The law states that the restaurant employer 'must clearly and conspicuously describe the nature, purpose, and amount of the fee on a receipt, bill, invoice, menu, or other means.' A representative for ECTG claimed that it was a description mistake in its point-of-sale system."
Carrie Nation Cocktail Club and The Dubliner, both operated by East Coast Tavern Group, charged customers a 3% fee labeled as a 'service fee' but failed to distribute the collected funds to 84 service employees including wait staff and bartenders. The Attorney General's Fair Labor Division determined this violated state law requiring clear fee descriptions. The restaurant group claimed the mislabeling resulted from a point-of-sale system error, stating they intended to charge a 'hospitality fee' to offset rising business costs post-COVID. Under Massachusetts law, service fees must go to service staff, while hospitality or administrative fees can fund other operational expenses. The restaurants were ordered to pay $422,093 in restitution and civil penalties, with some payments already initiated before the citation.
#restaurant-labor-violations #service-fee-misclassification #attorney-general-enforcement #wage-and-hour-compliance
Read at Boston.com
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