Rules Relating to Tips in the Livery Industry

Do you know the rules relating to tips in the livery service industry? As the owner of a fleet, you should know who can get them and who can’t, if sharing is okay or not, and about fee charge backs if the payment is made on a credit card.

Employers with tipped employees should take the time to review the Massachusetts Tip Pooling Law. This can ensure you are in compliance with the Massachusetts Tip Pooling Law and minimize your exposure to the lawsuits under this statute. Here are some of the most important rules we believe you should be aware of:

The Tip Pooling Law ensures that service employees receive all monies that customers intend to leave as a tip.
Employers with tipped employees cannot take a payment or deduction from a tip given to an employee by a patron.
Employers cannot maintain a tip pool in which any portion of the pooled tips are distributed to any person who is not a service employee.
Employers cannot charge a tip to a patron and then fail to give the tip to the employee who provided service in the first place.
If the employer operates a livery vehicle, he/she cannot accept a tip from a patron. As the owner of a service business in a position of management, he/she is not supposed to accept a service charge.
According to “The Act”, employees who receive at least $20 per month in gratuities may be paid $2.63 per hour, provided that their gratuities and hourly pay rate when added together are equal to or greater than the state minimum wage of $6.75.
Though employers are prohibited from retaining employees’ tips’, the employer may distribute tips that have been properly pooled. The Act eliminates any distinction between cash and credit card tips.
If an employer chooses to add a service charge to the bill, it must distribute the proceeds in “proportion to the services provided by those employees.”
Tips or service charges must be paid to the employee at the end of the day the tip was given.
As the owner of a livery company, the responsibility may fall on you to operate the vehicles from time to time. If a customer wants to give you a tip, you can accept it and then donate it to a charity cause. This way, you are not going against the law and also helping out the community. Since you are an owner, you must be aware of the rules of tipping and never keep a tip as an employer. If you want to avoid liability issues or lawsuits against your livery service, you should not only have livery insurance from us, but also implement a clear tip pooling policy in writing. In addition, you can train managers and employees to ensure compliance with the laws and policies. Even a minor violation of the law could cause serious financial damages to your business. Don’t let this happen. Follow the rules and stay protected!

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