Case Title: Hayden-Tidd v. Cliff House & Motels, Inc.

Citation: 

Docket Number: 

State: maine

Court: Maine Supreme Court

Date: 2012-09-11T00:00:00Z

Document:
MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2012 ME 111 
Docket: 
Yor-11-550 
Argued: 
May 9, 2012 
Decided: 
September 11, 2012 
 
Panel: 
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and 
JABAR, JJ. 
 
 
ALLISON HAYDEN-TIDD 
 
v. 
 
THE CLIFF HOUSE & MOTELS, INC., et al. 
 
 
SAUFLEY, C.J. 
 
[¶1]  This appeal involves the interpretation of Maine’s minimum wage 
laws.  We must determine whether a resort violated the requirement to pay its 
employees the minimum wage when it paid its wait staff a portion of the standard 
“service charge” that it added to its banquet customers’ bills and treated that 
portion as a “tip” that satisfied the minimum wage law by qualifying the resort for 
a tip credit.  See 26 M.R.S. § 664(2) (2010).1 
 
[¶2]  Specifically, Allison Hayden-Tidd appeals from the Superior Court’s 
(York County, Brodrick, J.) entry of summary judgment in favor of The Cliff 
House & Motels, Inc., and its owner, Kathryn M. Weare (collectively, Cliff House) 
and its denial of Hayden-Tidd’s cross-motion for summary judgment.  
                                         
1  Title 26 M.R.S. § 664 (2010) has been amended since the events at issue.  See P.L. 2011, ch. 118, 
§§ 3, 4 (effective Sept. 28, 2011) (codified at 26 M.R.S. § 664 (2011)). 
 
 
2 
Hayden-Tidd contends that the court erred when it rejected her argument that the 
wage laws required Cliff House to treat its entire banquet service charge as a “tip” 
to be paid to the banquet servers for purposes of the tip credit statute.  See id.  
We agree with the court that Cliff House’s compensation arrangement with its 
banquet servers did not violate the tip credit statute and, therefore, did not result in 
a violation of the requirement to pay its employees a minimum wage.2  We affirm 
the judgment. 
I.  BACKGROUND 
[¶3]  Because of reports that Maine restaurants were occasionally 
withholding tips from their wait staffs, particularly when a customer paid by using 
a credit card, Maine wage laws now require that the entirety of a tip paid by a food 
service customer must be given to the waiter or waitress who waits on that 
customer.  26 M.R.S. § 664(2); L.D. 1543, Summary (123rd Legis. 2007); Comm. 
Amend. A to L.D. 1543, No. H-370, Summary (123rd Legis. 2007). 
 
[¶4]  The question presented by this appeal is whether a “service charge” 
paid directly to a resort as part of the fees charged for a banquet, as distinguished 
from ordinary, separate seating service, is a “tip” that must be paid entirely to the 
                                         
2  Hayden-Tidd’s right of action flows ultimately from her claim of unpaid minimum wages, rather 
than a stand-alone claim that the tip credit statute has been violated.  See 26 M.R.S. § 670 (2011) (stating 
that “[a]ny employer shall be liable to the employee or employees for the amount of unpaid minimum 
wages” and additionally for liquidated damages, the cost of suit, and reasonable attorney fees); 26 M.R.S. 
§ 671 (2011). 
 
3 
wait staff at those banquets.  For consistency with the statute, we refer to the 
waiters and waitresses at the banquets as “servers” to distinguish them from other 
Cliff House employees who work at banquets but do not provide direct wait 
service to banquet attendees. 
[¶5]  Hayden-Tidd is a banquet server who worked for Cliff House.  On 
behalf of herself and all banquet servers employed by Cliff House, she filed a 
class-action complaint against Cliff House alleging that it violated Maine’s wage 
laws when it took a tip credit for the portion of its standard nineteen percent 
service charge that it allocated to its servers.  See 26 M.R.S. §§ 621-A, 626-A, 664, 
670 (2010).  After a period of discovery and before any class certification, Cliff 
House moved for summary judgment.  Hayden-Tidd opposed the motion and filed 
a cross-motion for summary judgment.  The court held a hearing on the competing 
motions.  The court granted Cliff House’s motion for summary judgment and 
denied Hayden-Tidd’s cross-motion, holding that, absent a statutory prohibition 
against the practice, Cliff House could apply a standard service charge to a banquet 
bill and allocate only a portion of that service charge to the servers as tips without 
violating Maine’s tip credit statute, 26 M.R.S. § 664(2), because as a matter of law, 
“[a]bsent a statutory command, banquet servers are not entitled to 100% of the 
banquet service charge.” 
 
4 
[¶6]  The material facts presented on summary judgment are not in dispute.3  
Cliff House operates a resort and spa located in Ogunquit.  As part of its business, 
Cliff House offers banquet services to its customers.  Cliff House employed 
Hayden-Tidd as a banquet server beginning sometime in June 2009.   
[¶7]  Although not fully developed in the record, banquet services include 
group events that the resort caters, such as wedding receptions and business 
meetings.  Payment is made in advance of, or separate from, the banquet events.  
As made clear from the billing forms submitted in conjunction with the motion for 
summary judgment, individuals attending a banquet do not pay Cliff House 
directly for the food or beverages served during the event.   
 
[¶8]  Cliff House adds a nineteen percent service charge to the food and 
beverage bill of its banquet customers.  Each banquet bill includes a line item that 
is denoted as a nineteen percent “service charge.”  Each bill also includes a 
separate line item designated for a “gratuity,” although banquet customers rarely 
add a gratuity.  The service charge is mandatory, and a banquet customer does not 
have discretion in paying the charge.  Banquet customers do not receive an 
explanation of the service charge or how it is distributed. 
                                         
3  Although there are ancillary factual disputes, none of the facts material to the application of the law 
at issue here are disputed by the parties. 
 
5 
 
[¶9]  Service charges are customary in the banquet setting; Cliff House set 
its service charge at 19% based on its analysis of its competitors, which it found 
normally levied a service charge between 17% and 22%.  Cliff House uses the term 
“service charge” because it is the customary term for mandatory charges for 
banquets.  However, Cliff House also uses the term “service charge” for an 
automatic gratuity it levies on food and beverages when individual customers 
purchase an all-inclusive package from the resort that includes meals.  In the 
individual service, non-banquet setting, the service charge is added to the cost of 
each meal, and the entire amount of the service charge is treated as a “tip” and is 
paid to the individual server who waits on the customer. 
 
[¶10]  In the banquet setting, Cliff House pools together the service charges 
it collects from different banquets that occur within the same week.  Of the 
nineteen percentage points paid, thirteen of those points, approximately two-thirds, 
are allocated to banquet servers based on the number of hours each server worked 
during that week.  The remaining six percentage points are allocated to non-server 
banquet staff including, but not limited to, the dining room manager, group room 
coordinator, director of group sales, and kitchen employees.  Cliff House does not 
keep any portion of the banquet service charge. 
 
[¶11]  In addition to their share of the banquet service charge for a particular 
week, banquet servers are also paid an hourly wage, which would ordinarily be 
 
6 
required to be a minimum of $7.50 per hour,4 but for the addition of tips.  
Cliff House paid the servers fifty percent of the minimum wage, or $3.75 per hour, 
because the servers receive a portion of the service charge pool, which Cliff House 
considers to be tips.  Pursuant to this compensation arrangement, Hayden-Tidd 
earned, on average, $35.09 per hour from June 2009 through October 2009 and 
$23.92 per hour from April 2010 through June 2010, after receiving her share of 
the service charge pool.  There is no dispute that her average hourly wages far 
exceeded the minimum wage during those months.   
II.  DISCUSSION 
A. 
Standard of Review 
 
[¶12]  Summary judgment provides a procedural mechanism to test the 
application of law to facts that are not in dispute.  See Cach, LLC v. Kulas, 2011 
ME 70, ¶ 8, 21 A.3d 1015.  The matter before us is appropriately presented on the 
competing summary judgment motions because the parties do not dispute the 
operative facts, and the question presented requires the interpretation of a statute 
and its application to the facts at hand.  We review the interpretation of a statute 
de novo to determine whether the successful moving party is entitled to judgment 
as a matter of law.  Thayer Corp. v. Me. Sch. Admin. Dist. 61, 2012 ME 37, ¶ 4, 
                                         
4  Pursuant to 26 M.R.S. § 664(2), employers “may consider tips as part of the wages of a service 
employee, but such a tip credit may not exceed 50% of the minimum hourly wage.”  During the time 
period relevant to this case, the minimum wage was increased from $7.25 per hour to $7.50 per hour.  See 
id. § 664(1). 
 
7 
38 A.3d 1263.  In the matter before us we must determine whether the court 
correctly interpreted 26 M.R.S. § 664(2). 
B. 
Minimum Wage and the Tip Credit 
1. 
Construction of the Statute 
 
[¶13]  Hayden-Tidd argues, in essence, that because the tip credit statute 
mandates that a tip that is automatically included in a customer’s bill or charged to 
a credit card must be given to the service employee, the entire amount of the 
service charge paid by banquet customers to Cliff House should have been given to 
the banquet servers.  See 26 M.R.S. § 664(2).5  In other words, according to 
Hayden-Tidd, the service charge included in all banquet bills is a tip that cannot be 
distributed to any employees other than banquet servers.  She contends that when 
Cliff House allocated a portion of the service charge to employees other than the 
servers, it violated the tip credit statute.  Because of this violation, she argues, Cliff 
House was not entitled to the “tip credit” against the minimum wage and was 
obligated to pay the banquet servers the full minimum wage pursuant to 26 M.R.S. 
§ 664(1) (setting the minimum wage at $7.50 per hour starting on October 1, 
2009).  Accordingly, Hayden-Tidd contends that she and the other banquet servers 
                                         
5  In her complaint, Hayden-Tidd additionally alleged that Cliff House violated the tip credit statute, 
26 M.R.S. § 664(2), because the resort did not comply with its obligation to inform the affected 
employees before taking the tip credit.  However, in her brief on appeal, Hayden-Tidd asserted that the 
only question in this case is whether the nineteen percent service charge constituted a tip that was 
automatically included in the customer’s bill.  Thus, our decision addresses only that narrow issue. 
 
8 
are entitled to an additional $3.75 for every hour that they worked during the 
period complained of, notwithstanding their actual receipt of, on average, $23.92 to 
$35.09 per hour during that time.  
 
[¶14]  At the time of Hayden-Tidd’s employment with Cliff House, Maine’s 
tip credit statute, 26 M.R.S. § 664(2), provided that an employer of servers must 
assure that the servers receive the minimum wage.  The law allowed tips to be 
credited toward that minimum wage, but tips could only account for half of the 
required minimum wage.  Id.  The result, when tips were sufficient, was that the 
employer paid one-half of the required minimum wage and the server’s tips 
covered the remaining half and, hopefully, more.  If the tips did not bring the 
server’s compensation up to the minimum wage, the employer was required to 
make up the difference.6  Id.  To ensure that the server actually received the entire 
tip left by a customer, the law prohibited an employer from retaining any portion of 
the tip, even when the tip was paid by credit card directly to the employer: 
The tips received by a service employee become the property of the 
employee and may not be shared with the employer.  Service 
employees may volunteer to pool their tips to be split among other 
                                         
6  Pursuant to 26 M.R.S. § 664(2): 
 
An employer may consider tips as part of the wages of a service employee, but such a tip 
credit may not exceed 50% of the minimum hourly wage established in this section.  An 
employer who elects to use the tip credit must inform the affected employee in advance and 
must be able to show that the employee receives at least the minimum hourly wage when 
direct wages and the tip credit are combined.  Upon a satisfactory showing by the employee 
or the employee’s representative that the actual tips received were less than the tip credit, the 
employer shall increase the direct wages by the difference. 
 
9 
service employees or may volunteer to share a part of their tips with 
other employees who do not generally receive tips directly from 
customers.  Tips that are automatically included in the customer’s bill 
or that are charged to a credit card must be given to the service 
employee.  A tip that is charged to a credit card must be paid by the 
employer to the employee by the next regular payday and may not be 
held while the employer is awaiting reimbursement from a credit card 
company.   
 
Id. (emphasis added). 
 
[¶15]  It is this provision that Hayden-Tidd relies on, urging us to conclude 
that the service charge must be a tip because it is “automatically included in the 
customer’s bill.”  Id.  The statute at the time, however, did not define the terms 
“tip” or “service charge.”  See 26 M.R.S. §§ 661-672 (2010). 
 
[¶16]  Nothing in the language of the statute expressly precluded Cliff House 
from treating only a portion of its service charge as a “tip.”  The statute did, 
however, require that “[t]ips that are automatically included in the customer’s bill 
or that are charged to a credit card” be given to the service employee.  26 M.R.S. 
§ 664(2).  The service charge could thus be understood to be a tip that is 
automatically included in a banquet customer’s bill and is, therefore, required to be 
given to the banquet servers in full.  Alternatively, it could be considered an 
aggregate charge, only a portion of which would be treated as a tip.  The language 
of the statute does not provide a clear answer.   
 
10 
 
[¶17]  When, as here, the language of the statute is ambiguous, we seek to 
determine the meaning that will best give effect to the intent of the Legislature.  
See Anastos v. Town of Brunswick, 2011 ME 41, ¶ 9, 15 A.3d 1279; Liberty Ins. 
Underwriters, Inc. v. Estate of Faulkner, 2008 ME 149, ¶ 15, 957 A.2d 94.  “We 
also construe the whole statutory scheme of which the section at issue forms a part 
so that a harmonious result, presumably the intent of the Legislature, may be 
achieved.”  Liberty Ins. Underwriters, Inc., 2008 ME 149, ¶ 15, 957 A.2d 94 
(quotation marks omitted).  “If the plain meaning of the text does not resolve an 
interpretative issue raised, then we consider the statute’s history, underlying policy, 
and other extrinsic factors to ascertain legislative intent.”  Burke v. Port Resort 
Realty Corp., 1999 ME 138, ¶ 8, 737 A.2d 1055. 
 
2. 
Recent Changes to the Minimum Wage Laws 
 
[¶18]  The Legislature’s recent amendment to the tip credit statute, enacted 
after the time at issue here but before the court entered its judgment, now explicitly 
provides for compensation arrangements similar to the one utilized by Cliff House.  
See P.L. 2011, ch. 118, § 4 (effective Sept. 28, 2011). 
 
[¶19]  The tip credit statute now provides, 
An employer in a banquet or private club setting that adds a service 
charge shall notify the customer that the service charge does not 
represent a tip for service employees.  The employer in a banquet or 
private club setting may use some or all of any service charge to meet 
 
11 
its obligation to compensate all employees at the rate required by this 
section. 
 
26 M.R.S. § 664(2-B) (2011) (emphasis added). 
 
[¶20]  The definitions section of the minimum wage laws was also amended 
prior to the court’s decision.  See P.L. 2011, ch. 118, § 2 (effective Sept. 28, 2011) 
(codified at 26 M.R.S. § 663 (2011)).  The statute now includes a definition of 
“tip,” stating:  
“Tip” means a sum presented by a customer in recognition of services 
performed by one or more service employees, including a charge 
automatically included in the customer’s bill.  “Tip” does not include 
a service charge added to a customer’s bill in a banquet or private 
club setting by agreement between the customer and employer. 
 
26 M.R.S. § 663(15) (emphasis added). 
 
[¶21]  There is, however, nothing in the recent legislative amendments to the 
minimum wage laws that clearly indicates that the Legislature intended the 
changes to apply retroactively; thus, we do not give retroactive effect to the recent 
changes for the time period complained of here.  See MacImage of Me., LLC v. 
Androscoggin Cnty., 2012 ME 44, ¶¶ 21-23, 40 A.3d 975; cf. Bakala v. Town of 
Stonington, 647 A.2d 85, 87 (Me. 1994) (stating that it may be appropriate to apply 
later legislative “clarifications” that make no substantive changes in the law).  
Therefore, we look to the statute as it existed in 2009 and 2010 when Cliff House 
employed Hayden-Tidd as a banquet server. 
 
12 
 
3. 
The Applicable Statute 
 
[¶22]  The minimum wage statute is meant to protect employees from being 
paid too little.  In re Wage Payment Litigation, 2000 ME 162, ¶ 18, 759 A.2d 217.  
The undisputed facts in this case show that Hayden-Tidd earned substantially more 
than the minimum hourly wage as a banquet server while employed by Cliff 
House.  Thus, Hayden-Tidd cannot argue that Cliff House violated the minimum 
wage statute as to the overall amount of the hourly wages paid to banquet servers 
once they received their portion of the service charge pool; rather she contends that 
Cliff House should have paid the banquet servers the full minimum wage in the 
first instance because the resort’s treatment of the service charge violated the tip 
credit statute’s provisions. 
 
[¶23]  The statutory language at issue, which states that “[t]ips that are 
automatically included in the customer’s bill or that are charged to a credit card 
must be given to the service employee,” 26 M.R.S. § 664(2), was added to the tip 
credit statute, without debate, in 2007.  See P.L. 2007, ch. 367, § 2 
(effective Sept. 20, 2007).  The language was proposed as part of L.D. 1543, which 
aimed to “clarif[y] that tips belong to the employee providing direct service and 
that the entire tip . . . from any credit card payment must go to the employee.”  
L.D. 1543, Summary (123rd Legis. 2007).  The proposed bill was assigned to the 
Legislature’s Joint Standing Committee on Labor, see L.D. 1543 (123rd Legis. 
 
13 
2007), where it received a public hearing.  Proponents of the bill and a 
representative from the Maine Department of Labor submitted written testimony at 
the hearing. 
 
[¶24]  A representative from the Maine Women’s Lobby testified that the 
proposed legislation “clarifies that tips belong to employees and not employers,” 
and that “[p]atrons tip specific employees and certainly don’t intend that money to 
be spent by their employers.”  Another supporter of the legislation, the President of 
the Maine State Employees Association, SEIU Local 1989, testified: “The idea that 
employers skim from these tips is reprehensible, and must be stopped.”  
William A. Peabody, then Director of the Bureau of Labor Standards, testified to 
the committee: “The bureau has occasionally had to deal with cases where service 
employees had tips held by their employer.”  Ultimately, L.D. 1543 was slightly 
amended, but the language at issue here was not changed.  See Comm. Amend. A 
to L.D. 1543, No. H-370 (123rd Legis. 2007). 
 
[¶25]  Although the legislative history of the tip credit statute’s language 
concerning “[t]ips that are automatically included in the customer’s bill” is not 
voluminous, it does suggest that the Legislature’s purpose in enacting that portion 
of the statute was to ensure that employers did not retain tips that were left by 
individual customers for servers, whether the tips were included automatically in a 
customer’s bill or as part of a credit card transaction. 
 
14 
 
[¶26]  Nothing in the legislative history, however, addressed or precluded 
the practice employed in the context of banquet service by Cliff House.  When 
Cliff House collected a standard service charge and allocated that charge among 
various employees who worked in the banquet area, it engaged in a practice that 
was distinct from the practice of calculating a total gratuity on a bill given to 
customers at the time of service.7  The service charge is not, by operation of that 
statute, synonymous with “tip.”  The statute’s discussion of “[t]ips that are 
automatically included in a customer’s bill” cannot be read to mean that any charge 
that is automatically included in the customer’s bill must be a treated as a “tip.”  
The fact that the service charge is automatically included in a banquet customer’s 
bill simply does not alone make it a “tip.” 
 
[¶27]  The court did not err in concluding that the statute did not mandate 
that the entire service charge be treated as a “tip.”  The statute did not define “tip”; 
the service charge was not called a “tip” in the contract with the customer; and the 
service charge was not individually paid to the banquet servers by the persons 
served.  Nothing in the statute prevented Cliff House from allocating the thirteen 
percentage points of the service charge to the servers as tips and applying the tip 
credit on that amount in its arrangement with its servers. 
                                         
7  Indeed, nothing in the statute as it existed at the time of these events would have required that Cliff 
House give any portion of the service charge to the servers.  Of course, Cliff House might have had 
difficulty hiring servers and would have had to pay the full minimum wage to the servers for all hours 
worked. 
 
15 
 
[¶28]  Cliff House allocated approximately two-thirds of its service charge 
to tips for its banquet servers.  It did not violate the law in so doing.  Pursuant to 
this arrangement, Hayden-Tidd earned three to four times the minimum wage and 
therefore does not have a remedy to collect unpaid minimum wages pursuant to 
26 M.R.S. § 670. 
 
[¶29]  Because Cliff House did not violate the minimum wage laws, the 
court properly entered judgment for Cliff House on Hayden-Tidd’s claims for 
damages pursuant to 26 M.R.S. § 621-A and 26 M.R.S. § 626-A. 
The entry is: 
 
 
 
Judgment affirmed. 
 
 
 
 
 
 
On the briefs: 
 
Timothy Belcher, Esq., Maine State Employees Association, SEIU Local 
1989, Augusta, Harold Lichten, Esq., and Hillary Schwab, Esq., Lichten & 
Liss-Riordan, P.C., Boston, Massachusetts, for appellant Allison Hayden-
Tidd 
 
Robert W. Kline, Esq., Kline Law Offices, Portland, for appellees The Cliff 
House & Motels, Inc., and Kathryn M. Weare 
 
At oral argument: 
 
Hillary Schwab, Esq., for appellant Allison Hayden-Tidd 
 
Robert W. Kline, Esq., for appellees The Cliff House & Motels, Inc., and 
Kathryn M. Weare 
 
York County Superior Court docket number CV-2010-213 
FOR CLERK REFERENCE ONLY