Breaking Down the Trickier Aspects of Massachusetts Laws

July 26, 2021

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Some Tips on Tips

Breaking Down the Trickier Aspects of Massachusetts Laws

By Ludwell Chase and Amy B. Royal, Esq.

State and federal laws pertaining to minimum wage, tips, overtime, and employing minors are complicated. As a result, these are areas where mistakes are often made.


Employers, however, cannot afford these errors because the consequences of not complying with these laws can be very costly. In fact, in Massachusetts, there are mandatory treble (triple) damages for violations of wage-and-hour laws relating to minimum wage, tips, and overtime. This means that, if an employer is found in violation of state law, at a minimum, for every dollar an employer does not pay in accordance with wage-and-hour laws, that employer will have to pay three times that amount.


Under Massachusetts and federal law, employers are allowed to pay employees who receive tips an hourly wage that is lower than the minimum wage. This works by allowing employers to take a ‘tip credit’ for a certain amount in tips that the employee earns. The employee must not make less than minimum wage when their tips and hourly wage are combined. Under the federal law, the Federal Labor Standards Act, all hourly workers must be paid the federal minimum wage of $7.25. Tipped workers may be directly paid $2.13 per hour if their tips and hourly wage combined are at least equal to the minimum wage. In other words, employers can claim a ‘tip credit’ of $5.12 per hour.


The U.S. Department of Labor (DOL) recently released new proposed regulations for tipped workers that reinstate the 80/20 rule. This rule limits the amount of time tipped workers can spend performing activities that are related to tip-generating duties, while their employers can still claim the tip credit. Tipped workers must spend at least 80% of their time performing directly tip-generating activities, such as serving customers, and no more than 20% of their time performing not directly tip-generating activities, such as setting tables. This rule was previously in effect but was replaced by DOL guidance in 2018.


The 2018 guidance provided that employers could claim the tip credit if non-tipped duties were performed at the same time as tipped duties, or if the non-tipped duties were performed for a reasonable time before or after tipped duties. This new proposal returns to the 80/20 rule. In addition, the new proposal specifies that, if an employee performs non-tipped activities for 30 minutes in a row, the employer cannot pay the employee the lower tipped hourly wage for that time.


For employers with tipped workers that are subject to federal wage-and-hour law, this proposal is a good reminder that they need to pay attention to these potential changes and their effects on how they compensate employees.


Caution on the Menu

Massachusetts has its own complex laws relating to tips, minimum wage, and overtime. As a result, these are areas where it is easy for employers to make mistakes. Therefore, employers need to pay special attention to ensure they are complying with both state and federal laws. As of Jan. 1, 2021, the minimum wage in Massachusetts is $13.50 per hour. Massachusetts is incrementally increasing the minimum wage in order to reach a $15 minimum wage by 2023. For now, employers may pay workers who make at least $20 a month in tips a tipped hourly wage of $5.55 and take a tip credit of up to $7.95 per hour, for a combined minimum wage of $13.50.


The Massachusetts Tip Law mandates that all tips must be given to employees whose work directly generates tips, and that employers and managers may not keep any portion of their employees’ tips. The law applies to three categories of employees: waitstaff employees, service bartenders, and service employees. Waitstaff employees include waiters, waitresses, busboys, and counter staff who serve beverages or food directly to patrons or clear tables, and do not have any managerial responsibilities. Service bartenders prepare beverages to be served by another employee. Service employees include any other staff providing service directly to customers who customarily receive tips but have no managerial responsibilities. For the purposes of this law, managerial responsibilities are duties such as making or influencing employment decisions, scheduling shifts or work hours of employees, and supervising employees.


Massachusetts law allows for ‘tip-pooling’ arrangements. This means all or a portion of tips earned by waitstaff employees are pooled together and then distributed among those employees. Employers must be cautious when administering a tip pool and ensure that only waitstaff, service bartenders, and service employees are being paid from the pool. This means managers and back-of-house employees like cooks and dishwashers cannot share in tips. Even employees with limited managerial roles who also directly serve patrons are not considered waitstaff employees on days when they perform managerial duties.


When employees do not receive enough in tips to make up the difference between the tipped hourly wage and the minimum wage, employers must pay the difference. Employers are required to calculate tipped employees’ wages at the end of each shift, rather than at the end of the pay period. This requires employers to keep track of how much workers receive in tips for each shift. This may also require employers to pay their tipped employees additional amounts in order to compensate for slow shifts.


Under Massachusetts law, certain businesses, including restaurants, are exempt from paying employees overtime; however, they may not be exempt under federal law. If subject to federal law, employees working in restaurants must be paid one and one-half times the minimum wage (not one and one-half times $5.55 per hour) for all hours worked in excess of 40 hours per week.


Under the Massachusetts Tip Law, if a restaurant includes a service charge, which serves as the functional equivalent of an automatic tip or gratuity, all the proceeds from that service charge must be paid only to waitstaff employees, service employees, or bartenders as a tip. Employers may, however, charge a ‘house fee’ or an ‘administrative fee,’ which they may use or distribute at their discretion, but only if it is clearly stated to customers that the fee is not a tip, gratuity, or service charge for tipped employees. Thus, any fees not intended as gratuities and not paid solely to tipped employees should not be labeled as a service charge.


Food for Thought

These complexities are especially important to Massachusetts employers, given that the consequences of failing to comply with wage-and-hour laws can be costly, and the penalty is the same regardless of whether the employer violated the law willfully or by mistake.


Considering the consequences of violations, businesses with tipped employees should regularly consult with their employment counsel to review their practices and policies to ensure compliance with state and federal law.


Ludwell Chase and Amy B. Royal work at the Royal Law Firm LLP, a woman-owned, boutique, corporate law firm; (413) 586-2288; aroyal@theroyallawfirm.com

This article was published in BusinessWest.

Can I Fire Someone for That? Common Myths That Get Employers Sued

By The Royal Law Firm • August 19, 2025
Employers regularly wonder: “Can I fire someone for that?” You might assume the answer is simple, especially in an at-will state like Massachusetts. But the reality is more complex. Missteps can land your business in court. Here’s how to avoid them and keep your company focused on growth, not litigation. Myth: “At-Will Means Any Reason Goes” At-will employment allows termination without contractual cause. Yet anti-discrimination laws and retaliation protections still apply. Even a valid reason, like poor performance, becomes risky if the employee recently complained about harassment, requested an accommodation, or reported a safety issue. Terminating soon after a complaint invites legal trouble. For example, consider firing Sarah for repeated tardiness. But what if she reported sexual harassment a few weeks earlier? Timing alone can create exposure. Document performance issues as they arise. Also, check if the employee recently returned from Family and Medical Leave (FMLA) or Paid Family and Medical Leave (PFML). A Springfield auto repair shop faced a claim after firing a worker the day after he returned from PFML to care for his newborn. The company blamed tardiness, but the timing triggered months of legal headaches. Myth: “No Documentation Needed” Some employers assume that no paperwork is necessary under at-will rules. That approach creates unnecessary risk. Without records, even lawful firings appear questionable. Weak evidence damages credibility. Imagine Tom, a low performer who never received formal feedback. If you fire him after years of positive reviews, expect scrutiny. Always provide timely written warnings and accurate performance evaluations. Keep emails, attendance records, and coaching notes. Would your records persuade a jury that the termination was justified? Myth: “We Treated Everyone Fairly” Fair treatment requires consistency. If one employee is fired and another is only warned for the same violation, questions follow. Consider two salespeople, Mike and Jose, both caught inflating sales numbers. Mike receives a warning. Jose gets fired. If Jose claims racial bias, inconsistent discipline strengthens his argument. Review prior disciplinary decisions. Can you show a clear record of equal treatment? Myth: “We Can Share the Reason Widely” Managers sometimes explain a termination too broadly, believing transparency protects the company. In reality, public disclosure creates legal risk. An employee fired for theft sued his employer after leadership announced it to the entire staff. Even truthful statements, shared excessively or with ill will, can spark defamation claims. A local example: a Chicopee retailer emailed all employees naming a worker fired for alleged cash shortages. That email became Exhibit A in court. Limit disclosure to those who truly need to know. Avoiding Retaliation Claims Retaliation is the most common EEOC claim. Firing someone after they complain about discrimination, request leave, or raise pay concerns often leads to lawsuits. Subtle actions can count too—cutting hours, assigning undesirable shifts, or excluding them from meetings. Did Lisa report a wage issue last week? If she now gets the worst shifts, her attorney will call it punishment. Train managers to pause and ask: “Does this look like payback?” In one Springfield restaurant, a server who complained about tips was fired days later for “attitude.” The MCAD viewed the timing as retaliation, and the case settled quickly. Managing the Termination Meeting Professionally How you fire someone matters. Keep the meeting short and calm. Speak plainly. Avoid debate. Bring a neutral witness, usually HR. Disable system access and collect company property immediately. For remote workers, coordinate IT to end access during the call. Have you prepared your team to stay composed when an employee gets angry or upset? A concise, professional exit reduces emotion and litigation risk. Reducing Risks Before They Occur You can prevent most legal problems with proactive steps. Train managers to document consistently. Encourage employees to raise concerns early, and respond appropriately when they do. Also, follow Massachusetts requirements: final wages and accrued vacation must be paid promptly, sometimes the same day. Missing or delaying a payment can trigger penalties. Review whether your managers apply standards uniformly. Track disciplinary trends by department or supervisor. In one Holyoke warehouse, inconsistent discipline across shifts led to multiple claims that could have been avoided with routine audits. Quick Pre-Termination Checklist Document the issue in writing. Confirm whether the employee recently exercised protected rights (complaint, FMLA, PFML, workers’ comp). Ensure similar cases were handled consistently. Complete a fair investigation and allow the employee to respond. Prepare final pay and unused vacation in compliance with Massachusetts law. Bottom Line Employee terminations happen. Legal trouble does not have to. Careful documentation, consistent actions, and thoughtful communication protect your business. Before acting, stop and ask: have we done this right? Taking these steps helps you confidently answer, “Can I fire someone for that?” That answer should never rest on guesswork. Michael P. Lewis, is an attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP , a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288. Michael P. Lewis wrote this article which was featured in BusinessWest. Click here to visit their website.

The Royal Law Firm Attorneys Receive Finding of No Reasonable Cause at CHRO.

By The Royal Law Firm • August 18, 2025
Royal attorneys successfully obtained a dismissal at the Connecticut Commission on Human Rights and Opportunities. The Complainant alleged discrimination based on race, color and mental disability. Royal attorneys argued that the Complainant failed to establish a prima facie case of discrimination and complainant could not prove that they experienced an adverse employment action. The CHRO agreed with our argument and dismissed the case against our client due to a lack of reasonable cause.