Dunkin’ Donuts franchisees seek to change state tip law

Lawmakers consider who can put their hands in the jar

Luis Cruz, Jevon Smith-Gomez, and Daniel Glynn waited on John DiCamandrea at a Dunkin’ Donuts in Saugus.Charlie Mahoney for the Globe/Boston Globe

For thousands of customers who stop at a Dunkin’ Donuts during the course of the day, dropping a little extra change into a jar next to the cash register is a gesture barely worth noting.

But the money that accumulates in those jars has been a point of confusion and heated debate reverberating through courts and the Massachusetts State House. Dunkin’ Donuts franchisees testified before a legislative committee this week, trying for the second time in three years to change a state law that limits who can put their hands in the tip jar.

Currently, the Massachusetts tip pooling law forbids anyone with “managerial responsibility” to share in pooling of tips by counter staff. Dunkin’ franchisees say their stores and other “quick-service restaurants,” employ some people who may open or close the store, or handle cash when the register becomes full, but spend most of their workdays serving customers from behind the counter. Franchisees want to change the law so those employees are explicitly allowed to share in tip pools.

“Don’t have this law stand between customers and the low-level supervisors for whom tips are often intended,” said Dan Field, a lawyer at Boston law firm Morgan, Brown & Joy who represents employers in labor and employment lawsuits. Field was also a former chief of the fair labor division in the attorney general’s office.

Advocates for employees complain that the addition of supervisors to the list of workers eligible to share tips would dilute the total compensation for crew members, allowing restaurant owners to pay supervisors less by offsetting lower salaries with tips.

“It seems like every couple of years they try to challenge this law, but it hasn’t succeeded yet,” said Shannon Liss-Riordan, a labor lawyer who also spoke this week before the Legislature’s Joint Committee on Labor and Workforce Development. She has also represented Dunkin’ Donuts employees in lawsuits against the chain claiming violations of the tip pooling law.

Some Dunkin’ Donuts locations can rake in between $50 and $100 an hour in the tip jars, according to Ed Shanahan, executive director of the DD Independent Franchise Owners Inc., a Bellingham-based trade group that represents owners of Dunkin’ Donuts locations. Using Shanahan’s calculations, workers could perhaps take home an extra $100 per shift.

Liss-Riordan estimates the tip jar profits to be more modest. But she notes that for employees earning close to the minimum wage, taking home a few dollars a day extra makes a difference. Those counter workers, she said, make more when not sharing with supervisors.

“It’s employee versus employer, the question is who pays for it,” said Liss-Riordan. “It could come out of the pocket of the employer, if they pay the shift supervisors more, or the pocket of the lowest wage worker at the coffee shops.”

Some Dunkin’ franchise owners said the current law on tips is confusing when they try to apply it to the daily operation of their coffee shops.

“I want a law I know how to comply with,” said Robert Branca, who owns Dunkin’ Donuts franchises in Massachusetts, as well as in New York, Ohio, and Florida. He said he does not want to be in the position of telling an employee, “You worked five minutes on the sandwich station, then you were five minutes counting the drawer. Which of those five minutes do you get tips on?’”

Dunkin’ Donuts franchisees also believe a clearer law will reduce their exposure to lawsuits. Confusion about who is eligible to split tips has led many franchisees to avoid putting a tip cup on the counter or to post signs explicitly asking customers not to tip, Shanahan said.

“I get calls each and every day from my members, franchisees of Dunkin’ Donuts, who ask me what they should do with the tip jar,” he said.

The issue of tip pooling got national attention in 2008, when a California court ruled that Starbucks owed baristas $100 million in tips, because they had been forced to share their tips with shift supervisors and other employees who were not baristas. A year later, an appeals court sided with Starbucks, allowing shift supervisors to split tips.

The California case led to similar cases in states across the country, including in Massachusetts. Last November, a federal appeals court in Boston upheld a lower court ruling that Starbucks violated the tip pooling law and owed Bay State baristas $14 million. Liss-Riordan represented the workers.

After this week’s State House hearing, the cochairman of the joint labor panel said those representing both sides of the issue made persuasive arguments.

“We’d like to have more meetings on both sides and look at specific potential remedies,” said state Senator Daniel Wolf, a Harwich Democrat. “I do think there’s an opportunity here for a win-win situation.”