Workers' internal complaints protected from retaliation

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Restaurant owners could not retaliate against employees who complained internally that the establishment’s tip-pooling policy violated state wage laws, even where the employees never brought their allegations before the state attorney general, the Supreme Judicial Court has ruled.
The defendant restaurant owners argued that G.L.c.149, Sect. 148A, the retaliation provision in the state wage law, only covers employees who make an official complaint to someone involved in the civil or criminal enforcement of wage and hour laws.
But the SJC disagreed.
“The plain language of the first paragraph of Sect. 148A extends the protection of the statute to employees who are penalized for taking ‘any action’ to seek their rights under the laws governing wages and hours,” wrote Justice Robert J. Cordy on behalf of the court, reversing a Superior Court judge’s summary judgment in favor of the defendants.
“A complaint made to an employer (or a manager of the employer) by an employee who reasonably believes that the wages he or she has been paid violate such laws readily qualifies as such an ‘action,'” he said.
The 10-page decision is Smith, et al. v. Winter Place LLC, et al., Lawyers Weekly No. 10-128-06.

The cost of doing business

Boston attorney Shannon Liss-Riordan, who represented the plaintiffs, said the decision is critical to the enforcement of wage laws in Massachusetts.
“It’s important that employees feel comfortable speaking out when they don’t feel like they’ve been paid properly or when they feel their employer hasn’t been complying with wage laws,” said Liss-Riordan. “It’s a very, very important issue for all workers, particularly low-wage workers who depend very heavily on their employer for their livelihoods.”
Liss-Riordan also said the decision ties into an Essex County jury’s July verdict in a different case.
In that case — where Liss-Riordan also served as plaintiffs’ counsel — the jury found that the Hilltop Steak House in Saugus had wrongly fired four waitresses for complaining about a tip-sharing policy that the jury also found illegal.
The legality of the restaurant’s tip-sharing policy in the SJC case, involving the venerable Boston restaurant Locke-Ober, has not yet been determined. But Liss-Riordan said the SJC’s decision validates what the Hilltop case was all about.
“When employees speak out about alleged wage issues or question their employer’s practice with respect to wage issues, the employer’s response should not be to bury its head in sand, pretend it doesn’t know what’s going on and fire employees who are making the waves,” said Liss-Riordan. “Employers should investigate questions and concerns and if indeed the employees have not been paid properly, they should fix it.”
Boston lawyer Andrea Kramer, who, along with Julia J. Carabillo of Boston, submitted a brief for the plaintiffs on behalf of the Women’s Bar Association, said women in particular would feel a positive impact from the ruling.
“Women workers predominate in many of the fields in which wage laws are often violated, like child care, housekeeping and waitressing,” she said. “Under the defendants’ proposed rule, a child care provider, for example, would have to file with a government agency in order to protect her job if she felt she wasn’t being paid in a timely manner or her deductions weren’t right.”
Gordon P. Katz of Boston, who represented the defendants, warned that this decision would “expand the universe” of wage-and-hour retaliation claims, significantly raising the cost of doing business for big organizations and small ones alike.
From an employer’s perspective, he added, “this decision leaves important questions unanswered.”
Most significantly, said Katz, the decision did not define the requirements of an internal complaint that could be the basis of a retaliation claim. “For example, would grumbling to a supervisor at a water cooler be enough?”
To address this uncertainty, Katz advised employers to develop internal procedures that require complaints about wages and hours to be submitted in written form to a designated department or individual.
Katz also emphasized the defendants’ contention that, in this case, some of the servers filing suit were actually dismissed for performance-related issues. “At least one was terminated for not showing up for work,” he said.

Tip pool

After being closed for several months for restoration, Locke-Ober reopened in November 2001 under the ownership of defendants Paul Licari and Lydia Shire.
When it reopened, the restaurant instituted a tip-pooling system that required servers to share their tips with busboys, bartenders and the maitre d’ at each shift according to a point system.
The system created controversy right away. Servers complained that they weren’t receiving all their tips. They also felt that the maitre d’, who devised the tip-pooling system, should not, as a manager, be sharing in the tip pool.
Based on publicity surrounding tip-pooling elsewhere — as well as a pamphlet on Massachusetts wage and hour laws prepared by the Attorney General’s Office — the servers felt that the tipping system violated wage laws.
The servers involved in this case, plaintiffs J. Samantha Smith, Bruce Porter and Charles Kimball, complained about the tip system to the maitre d’, plaintiff Pierre Sosnitsky.
The maitre d’ then advised Licari that the servers were upset about the system because they felt it was illegal. Licari allegedly responded: “We should just get rid of them.” The maitre d’ subsequently fired them.
Shortly thereafter, the maitre d’ was fired as well. He believed it was because Licari was displeased that he brought the servers’ complaints to his attention.
The plaintiffs sued Locke-Ober in Superior Court in March 2002, alleging unlawful retaliation in violation of Section 148A of the state’s wage laws.
Judge Nancy Staffier Holtz granted the defendants’ motion for summary judgment with respect to the maitre d’ and one of the servers because their complaints were made internally to management but not to the Attorney General’s Office.
Holtz denied summary judgment with respect to the other two servers because there was evidence that they had each complained to the AG’s Office before being fired.

Clear statutory language

On appeal, Cordy rejected the defendants’ interpretation of the first paragraph of Section 148A, which states that “[n]o employee shall be penalized by an employer in any way as a result of any action on the part of an employee to seek his or her rights under the wages and hours provisions of this chapter.”
Looking at the clear language of that paragraph, said the judge, the statute protects employees who take “any action” to secure their rights. By definition, employees who make internal complaints to management would be included, he said.
Cordy also declined to adopt the defendants’ interpretation of the second paragraph of Section 148A — which makes it illegal for “any employer” to fire “any employee” for making an official complaint to the attorney general or “any other person” — as protecting only those employees who make an official complaint to a person involved in the civil or criminal enforcement of wage and hour laws.
“While we need not decide whether the Legislature intended this provision to include complaints made to persons unrelated to either the business enterprise or the enforcement of the wage laws, it certainly includes complaints made to the management of the employer,” Cordy stated.
Indeed, if the SJC were to follow the defendants’ interpretation of the statute, it would have very negative effects in the workplace, the judge continued.
“[The defendants’ interpretation] would discourage employees from bringing complaints to their employers’ attention directly and attempting informally and amicably to resolve disputes regarding the wage laws,’ he said, reversing the trial judge’s dismissal of the servers’ claims.
“Rather,” he said, “it would encourage employees immediately to lodge official complaints with the Attorney General’s office and begin adversary proceedings. It would also encourage employers to terminate employees as soon as they caught wind of any internal concerns about potential wage violations.”
The SJC did, however, affirm summary judgment for the defendants with respect to the maitre d’, because his actions — relaying the servers’ complaints to the defendants — did not constitute activity protected by the retaliation statute.
Eric T. Berkman, a former reporter for Massachusetts Lawyers Weekly and Lawyers USA, is a freelance writer.