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Diverted tips case is settled for $7m

By Christina Reinwald
Globe Correspondent / October 10, 2011

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Current and former employees of a posh Berkshires resort last week reached a combined $7 million settlement to end a class-action lawsuit accusing management of illegally withholding tips due workers.

Some 700 food, beverage, and spa employees who worked at the Cranwell Resort, Spa, & Golf Club in Lenox between 2001 and 2011 will share in the settlement if it gets final approval from a judge in November. In two cases filed more than four years ago, the employees alleged they were not, as required by state law, paid the full service charges that were added to hotel bills.

“We think this case sends a strong message of the importance of passing tips on to employees that earned them,’’ said Paul Holtzman, the Boston lawyer who represented the workers. “These are mandatory tips, and it’s a widespread issue in catering companies, restaurants, and resorts. This sends a strong message to other employers to comply with the law.’’

In court files, Cranwell Management Corp., the owner of the resort, denied any wrongdoing. Carl Pratt, general manager at Cranwell Resort, declined to comment.

The Cranwell settlement follows by about three years a similar case involving another Lenox resort, Canyon Ranch. In 2008, Canyon Ranch agreed to pay $14.75 million to about 600 employees who worked at the spa between April 2004 and October 2007 to settle charges that it improperly withheld service charges intended for workers. Like Cranwell, Canyon Ranch did not admit any wrongdoing.

“The trend shows that there are more and more of these cases involving catering companies and restaurants, and employees are concerned,’’ said Holtzman, who also represented the Canyon Ranch workers. “Fortunately, Cranwell decided to settle. We were pleased they were willing to work with us, and we commend them for that.’’

Cranwell spa employees filed suit in April 2007, and the food and beverage workers followed the next month after employees did not receive the entire 20 percent service charge customers pay instead of tipping workers individually.

Settlement negotiations began about two years ago. The parties agreed to a $2.7 million settlement in the food and beverage workers’ case, and $4.3 million for spa workers. The proposed settlement will go to a judge in November.

The amount workers receive will depend on how long they worked at the resort. Each will receive a minimum of $25, but employees with long tenures could be awarded thousands.

Hanna Harbour, 29, of Sandisfield, worked as a server at Cranwell from 2002 to 2006, earning $2.63 an hour, plus some tips, to help her pay for college. She expects to receive a “couple thousand dollars’’ from the settlement.

“You do feel the range of emotions,’’ said Harbour, now a state trooper. “Yay, I’m happy I’m getting some money, but really it was my money to begin with.’’

Harbour said she received tips from working at banquets, but not the full 20 percent the resort charged customers. She typically received no more than 15 percent, she said.

She estimated the award would cover the tips she should have earned at the resort.

“I feel like everything worked out fairly for everyone,’’ Harbour said. “But it’s not right for a corporation to skim off the top of people who work hard for it. That $2.63 an hour is some people’s livelihood.’’

Christina Reinwald can be reached at