Massachusetts Voters Reject Proposal to End Tipped Minimum Wage

November 7, 2024

On November 5, 2024, Massachusetts voters decisively rejected Question 5, a ballot initiative that sought to increase the minimum wage for tipped employees, aligning it with the standard minimum wage for all workers in the state. This measure proposed to gradually raise the base wage for tipped workers until it matched the state’s minimum wage, without taking into account tips. By rejecting this proposal, Massachusetts voters have chosen to retain the current two-tiered wage structure, which maintains a lower base wage for tipped employees, provided their total earnings meet or exceed the minimum wage through tips.

 

Background on Question 5 and Its Potential Impact

 

Question 5 was designed to phase out Massachusetts’ separate tipped minimum wage over several years. Currently, Massachusetts General Laws Chapter 151, Section 7 allows employers to pay a lower “service rate” to employees who regularly receive tips, which stands at $6.75 per hour. Under this law, employers are obligated to ensure that tipped employees’ total compensation, combining the service rate and tips, meets the state’s minimum wage, which is $15.00 per hour under Chapter 151, Section 1. If tips fall short, the employer must make up the difference.

 

The proposed law under Question 5 would have gradually raised the hourly wage for tipped workers until it was equal to the general minimum wage, eliminating the current requirement that tips make up the difference. By doing so, it aimed to provide tipped employees with a stable, predictable income without relying on tips to reach the minimum wage.

 

Legal Implications of the Rejection for Employers

 

With Question 5 rejected, Massachusetts employers will continue to follow the current requirements for tipped employees as outlined in Chapter 151, Section 7 and Chapter 149, Section 152A. Key legal implications include:

 

  1. Employers must continue to ensure that tipped employees’ combined wages, including tips, meet or exceed the state minimum wage. If employees’ tips do not reach this threshold, employers are responsible for covering the difference under Chapter 151, Section 7.
  2. Under Chapter 149, Section 152A, tips are strictly the property of employees, and employers must comply with state laws on tip pooling and distribution.
  3. Although Question 5 was rejected, discussions around tipped wages and fair compensation may lead to future legislative initiatives. Employers should remain aware of potential changes to ensure ongoing compliance with evolving wage laws.
  4. For businesses operating in multiple states, Massachusetts’ approach to tipped wages differs from states that mandate a single minimum wage for all employees, such as California. Employers must ensure they meet Massachusetts’ specific tipped wage regulations alongside other state laws.

 

Compliance Recommendations for Massachusetts Employers

 

With the tipped minimum wage system remaining in place, employers should continue to prioritize compliance through practical measures:

 

• Regular Wage and Tip Audits: Conducting audits of tipped employees’ earnings can help verify compliance with Chapter 151, Section 7 and prevent potential wage claims.

• Clear Tip Policies: Transparent policies regarding tip handling, tip pooling, and service charges are essential under Chapter 149, Section 152A to minimize disputes and ensure compliance.

• Management Training: Employers should provide regular training for managers overseeing tipped employees to ensure they understand wage and hour regulations and maintain lawful tip and wage practices.

 

Looking Ahead

 

Massachusetts voters’ choice to reject Question 5 retains the current wage structure for tipped employees, but ongoing discussions around fair compensation may drive future proposals. Employers should monitor legal developments closely and work with legal counsel to ensure compliance with Massachusetts wage laws as the regulatory landscape continues to evolve.

 

If your business has any questions on this topic and would like further guidance on Massachusetts wage compliance, or any other matters please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Royal Law at Thunderbirds Hockey Playoff Game in the Executive Perch

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Friday April 18th: Amy Royal, Fred Royal, and Derek Brown attended the Springfield Thunderbirds playoff game! They enjoyed watching the Thunderbirds play the Charlotte Checkers from the Executive Perch.

Massachusetts Wage Act: Not Even a Single Day Delay

April 18, 2025
Employee's Wage Act Claim Case Overview : In Turgut v. Hitachi Rail STS USA, Inc., Plaintiff filed a putative class action against a company, Defendant, alleging violation of the Wage Act by not paying wages within six days of the pay period's end. Defendant argued that its employees fell under the exception that allowed seven days for payment; however that exception only applies to hourly workers that work all seven days of a work week. The plaintiff is looking to represent a class of employees that received W-2 wages in what he alleges was in an untimely manner. The case was originally filed in state court on February 20, 2025 but was moved to federal court. Reason for Treble Damages: Under Rueter v. City of Methuen, the seminal case regarding the Massachusetts Wage Act (“Wage Act”), the proper measure of damages under the Wage Act is treble damages. Previously employees were only entitled to interest on the unpaid wages if the company paid before proceedings started. It kept noncompliance from being as costly as it is now. Currently any violation can be subjected to treble damages for the total amount of the alleged late payment. It’s expected that we will see more cases pick up by attorneys because the treble damages make it worthwhile for their clients as well as themselves, given this recent ruling. Judge's Ruling : The Judge ruled that the six-day deadline applies. The Judge stated that while the complaint didn’t make it clear if plaintiff is hourly or salary, plaintiff only worked five days a week, meaning that the seven-day exception did not apply as the Wage Act was written. Legal Implications Legislative History : The Wage Act provides different deadlines for an employee’s final pay based on the number of days worked in a week. This case also emphasizes that having salaried workers on staff does not fulfill the requirement of having employees work seven days a week. Significance of One Day : The judge emphasized that even a single day's delay in payment can significantly impact employees living paycheck to paycheck. What Employers need to know Make sure you’re aware of your employees’ pay cycle and make compliance a company priority. It’s more cost effective to pay a day or two earlier than it is to head to court over claims of violations. This ruling expands on the Reuter ruling by clarifying the Wage Act rules in relation to hourly employees. If an hourly employee resigns, ensure that automatic payment systems (as well as the employer’s own internal pay systems) are aligned with the requirements of this ruling. 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.