Tucson-based Canyon Ranch has agreed to pay $14.7 million to workers who said they were wrongly deprived of tips.
The company's 200-room luxury resort in western Massachusetts, which employs about 800 people, charged customers an 18-percent service fee and told them tipping was unnecessary. But the employees, from massage therapists to waiters, said they received little, if any, of the fee.
A group of workers filed a class-action lawsuit in May 2007, claiming they "feared that they would lose their jobs if they pursued their inquiries or pressed for payment of the tips."
In what is believed to be the largest settlement of its kind in Massachusetts, Canyon Ranch will pay $14.7 million — including interest and attorneys' fees — to about 600 employees who worked there between April 2004 and October 2007. The agreement must be approved by a judge in U.S. District Court in Springfield.
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The company denied any wrongdoing in the settlement filed Monday and said "any confusion or misunderstanding created by its use of the term 'service charge' was unintentional."
Paul Holtzman, a lawyer for the current and former employees, declined to comment because of a confidentiality clause.
Several Boston lawyers have brought a series of similar lawsuits in recent years under an obscure 1952 tips law. In 2004, the state Legislature expanded the law to cover employees outside the food and beverage industries.
Canyon Ranch said it has eliminated the 18 percent service charge and replaced it with a "resort amenities fee" that does not include tips, which is made clear on guests' bills. It continues to prohibit tipping.
Canyon ranch service fees
Know something about "service-fees" or tipping policy at Canyon Ranch? Let us know in the comments below, or by calling reporter Dan Sorenson at 573-4185, or by emailing dsorenson@azstarnet.com