The Harvard Club has reached a tentative $4 million settlement with its waitstaff over a tips dispute, according to a letter the exclusive alumni organization sent members earlier this week.
Employees filed a class-action lawsuit in November, claiming they had been cheated out of potentially hundreds of thousands of dollars in tips because of a misleading 17 percent surcharge on food and beverage bills — 20 percent for banquets — that appeared to be a gratuity. Some club members thought they were effectively paying tips, but workers didn’t receive any of the surcharge money.
The club — which has about 250 employees at its locations in the Back Bay and the Financial District, and 5,000 alumni members from elite schools — has a strict no-tipping policy. Because of the rule, staff members earn higher hourly wages than most hospitality workers, between $16 and $19 an hour.
A Massachusetts law governing tips states that any service charge a customer would “reasonably expect” to be given to a server in lieu of a tip must go to the employee. Dozens of establishments have been sued for violating the regulation, including a Berkshires resort that reached a combined $7 million settlement with about 700 current and former workers, and Dunkin’ Donuts, which is embroiled in a class action over supervisors and managers sharing in tips.
“It will just keep going on because by and large, employers just can’t help themselves,” said Brian Lang, president of Unite Here Local 26, the hospitality workers union that represents the Harvard Club employees. “As many of them end up getting caught, there’s many more that don’t.”
It was unclear how many Harvard Club waitstaff would receive compensation from the settlement, which covers servers, bartenders, and bus staff who have worked at the club over the past three years. The workers would get payments in three annual installments based on the hours they worked.
The settlement, which is subject to approval by the courts, also awards $400,000 to employees entitled to bonuses from a holiday account funded annually by members’ donations. Workers got a portion of that money — $60 for every year of service, according to one member — but the rest went to management, according to the lawsuit.
In a letter to members, Harvard Club president Nicholas Iselin maintains that the club did nothing wrong, but conceded its policies could have been made clearer.
“We did not consistently provide the parties to every transaction with direct written communication reminding them that the Club Charge is not a tip, gratuity, or service charge,” Iselin wrote.
The club, which is unaffiliated with Harvard University, has since updated wording in its written materials to be more specific about theadditional charge.
The settlement will be paid partly with the proceeds of a projected sale of a Harvard Club annex building adjacent the main clubhouse on Commonwealth Avenue, according to the letter.
The Harvard Club and the workers who sued were not allowed to comment due to a confidentiality agreement in the settlement.
Shannon Liss-Riordan, a lawyer representing the employees, filed a nearly identical lawsuit Thursday on behalf of the waitstaff at the Harvard Faculty Club, a dining facility and meeting space that is part of Harvard University.
The suit, filed in Middlesex Superior Court, alleges that the faculty club added an 18 to 22percent surcharge to bills that appears to be a tip, but the money doesn’t go to workers. Like the Harvard Club, the faculty club has a no-tipping policy.
When patrons do leave tips, the suit says, workers are required to turn them over to management.
“I am appalled that my alma mater is taking tips from its workers and being deceptive to its patrons,” said Liss-Riordan, who earned her undergraduate and law degrees at Harvard. “I would expect most of its patrons would not be happy to know that money they thought was going to tip the waitstaff is landing in the coffers of Harvard University.”
Harvard University declined to comment on the lawsuit.