One of the nation’s premier resort spas has been ordered to pay $14.75 million to about 600 employees, for keeping rather than distributing the 18-percent service fee charged to guests over the past several years, according to news reports.

Guests at Canyon Ranch‘s Lennox, Massachusetts, location were told that an 18-percent service fee would be added to their bill, and were encouraged to not offer any employee a gratuity in addition to that fee, the Boston Globe reported today. However, that fee was not distributed to employees, the newspaper added, and employees then brought a class-action lawsuit against the spa.

“In a settlement believed to be the largest of its kind in Massachusetts, the spa agreed to pay $14.75 million to about 600 massage therapists, yoga teachers, estheticians, hair stylists, waiters, and other employees who worked at Canyon Ranch between April 2004 and October 2007,” the Boston Globe reported. “The suit accused the spa, which is located in a sprawling mansion and complex nestled in the wooded hills of Lenox, of violating a state law that prohibits management at restaurants, bars, and hotels from taking tips reserved for waiters and other service workers.”

A written statement from Canyon Ranch, reported on by the Berkshire Eagle newspaper today, said, “‘The service charge was never intended to be a significant part of the employees’ compensation plan. However, over the years, the wording and interpretation of and changes in the actual Massachusetts Tip Statute have resulted in confusion and misunderstanding among many Massachusetts employers and their employees over the legal effect of using the term “service charge.” Canyon Ranch believes that it has always acted in conformity with the law, and any confusion or misunderstanding created by its use of the term “service charge” was unintentional.'”

Canyon Ranch’s website now includes this statement: “Canyon Ranch is a no-tipping resort … Due to the level of employee compensation, the resort amenities fee does not represent a tip, gratuity or service charge for wait staff employees, service employees or any other employee at Canyon Ranch.”

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