Facing allegations of withholding service tips from College Catering and Dining Services staff, the College has recently agreed to pay an $86,000 settlement to dozens of workers, who claimed they were denied the service charges collected by the College at catered events from Dec. 2009 to Oct. 2012.
In a settlement approved on Jan. 29 by Berkshire Superior Court Judge Daniel Ford, 58 current and former staff will receive packages ranging from $40-$6000, depending on the individual’s number of hours worked. The plaintiffs hold that although the College had a mandatory 15-percent service charge as part of their catering contracts with patrons, the charge was never received by the wait staff and bartenders and was instead kept by the College’s catering company.
The lead plaintiff, Bruce Pierce of North Adams, filed the original complaint in Dec. 2012. Pierce was a wait staff employee during the summer of 2011, but no longer works for the College. The plaintiffs’ attorney, Paul Holtzman of the Krokidas & Bluestein firm in Boston, mentioned the original complaint was later amended and filed on Sept. 10, 2013.
According to the Sept. 10 court file, the employees contended that the College not only “engaged in a longstanding pattern of wrongfully depriving servers, bartenders and other wait staff employees of service charges, gratuities, tips or service fees,” but also misinformed patrons that the service charge would be given to employees as gratuity.
Under the terms of the settlement, the College denied any legal wrongdoing. Fred Puddester, Vice President for Finance & Administration and Treasurer at the College, stated the allegations that the College was unlawfully withholding tips from its workers were false. Rather the error was in “mislabeling a charge on catering bills,” he said.
Williams College Catering is the College company comprised of Dining Services that also holds non-college affiliated events. According to Puddester, a few years ago, Williams College Catering began adding a 15- percent surcharge to its bill intended to cover overhead fixed costs, such as rentals of linens and equipment for events. “This charge was not related to the wages of the people who worked those events. All catering support staff continued to be paid the same, agreed-upon wage as before the charge was added, including overtime when applicable,” Puddester said. Like many other food service companies, the College did not expect catering staff to rely on gratuities, he said.
“The mistake that the College made had nothing to do with shortchanging employees. The mistake was that we called this surcharge a ‘service charge’ instead of something like an ‘overhead’ or ‘administrative’ fee. State law says that any money collected as a ‘service charge’ must be passed on to staff,” Puddester said.
Although Dining Services changed its billing approach in 2012 and dropped the charge at that time, a suit was filed against the College in 2013 under the state’s “tips” statute, which imposes penalties based on the use of the “service charge” label. Puddester noted that even though the staff members did not expect to receive any additional compensation, the statute still penalized the College’s catering service for mislabeling the overhead expense fee.
The College attested that it responded immediately by providing billing records and that it agreed on the costly settlement only because the laws were explicit in that regard. In the years in which the term “service charge” remained on the bill, the catering company aggregated no more than $25,000 in those charges from patrons. As the law provides for triple damages and attorney fees, the College agreed upon the settlement of $86,000.
This is the fifth case of non-payment of tips and service charge cases Holtzman’s firm has seen at hotels, resorts, casinos and catering companies in the Berkshires since 2008. The settlements paid by local hospitality industries, such as the Cranwell Resort in Lenox, MA and the Orchards Hotel in Williamstown, MA, in the aftermath of these cases totals to over $24 million.
Puddester remarked, “I understand that on the surface this might look like Dining Services was acting in a way that was harmful to its very devoted staff. But that was not at all the case. The error was strictly in the naming of this charge, and we’re happy to have responded quickly and fully to correct our mistake.”