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2 Boston restaurants to pay $400K for failure to pay service fees to staff, AGO alleges
The Attorney General's Office alleged that the service fees charged from May 2023 to June 2024 didn't go to service employees. The restaurant owners said it was a point-of-sale system mistake.
Two Boston restaurants will pay more than $422,000 in restitution and penalties after the state Attorney General’s Office said they improperly labeled a fee that should have gone to service staff, according to a press release Friday.
The restaurants were told to pay $422,093 in restitution and civil penalties, some of which they had already begun repaying before a citation was issued, according to the AGO.
The AGO’s Fair Labor Division alleged that Carrie Nation Cocktail Club and The Dubliner, both part of the East Coast Tavern Group, charged customers a 3% “service fee” from May 2023 to June 2024 but did not distribute the money to 84 service employees, including wait staff and bartenders.
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A representative for ECTG claimed that it was a description mistake in its point-of-sale system. The restaurants intended to charge a 3% “hospitality” fee, which they said was posted in both restaurants and used to offset rising business costs following the worst of COVID-19. But their point-of-sale system listed it as a “service” fee.
While the money earned from a service fee must go to service staff and can be used by restaurants instead of traditional gratuity, additional fees — sometimes labeled as a hospitality fee, administrative fee, or kitchen fee — can pay for other things in the restaurant, like operating costs and back-of-house employees.
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The law states that the restaurant employer “must clearly and conspicuously describe the nature, purpose, and amount of the fee on a receipt, bill, invoice, menu, or other means.”
That was the intention, according to a statement from ECTG.
“At The Dubliner/Carrie Nation we worked with our point-of-sale system provider to ensure the fee was implemented correctly,” the group said in a statement. “We also posted signage in the restaurant informing our customers of the new hospitality fees. Nonetheless, for a period of time, our point-of-sale system did not perfectly describe the fee.”
Carrie Nation is responsible for more than $143,000, while The Dubliner faces $278,500 in payments, according to the AGO.
East Coast Tavern Group, which runs other popular downtown and Beacon Hill restaurants like Emmet’s and Roxanne’s, denied that it violated any laws, but called the settlement reached with the AGO “fair and reasonable.”
The press release from the AGO said both restaurants cooperated with the investigation and are now in compliance with state law.
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