Lenox spa reaches $14.75m settlement over tips
600 Canyon Ranch workers to share it
For 19 years, Canyon Ranch has cultivated an image as a stress-free nirvana for the well-off. Guests of the luxury spa and hotel in the Berkshires plunk down thousands of dollars for weekends of yoga, hydrotherapy, and deep-kneaded body massage. Never did they have to fret over tipping a massage therapist or healing-energy practitioner; an 18 percent service charge, they were told, covered that.
"No additional tipping is necessary or expected," the renowned Lenox spa said on its website.
But very little of the service charge ever found its way into employees' pockets. And when they asked management about the fate of the money, the employees claimed in a lawsuit that they were "met with overt hostility" and told it was "none of their business."
But this week, 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.
Canyon Ranch denied any wrongdoing in a 20-page settlement filed Monday with the US District Court in Springfield, where a federal judge must still approve the agreement. In a statement issued from its corporate headquarters in Tucson, the spa said that the 18 percent charge "was never intended to be a significant part of the employees' compensation plan" and that "any confusion or misunderstanding created by its use of the term 'service charge' was unintentional."
Elated employees, however, saw the settlement as vindication.
"That money was never disbursed to where it was supposed to be," said one, who spoke on the condition of anonymity, citing a confidentiality agreement in the terms of the settlement.
Paul Holtzman, a lawyer for the current and former employees, said he could not discuss the case because of the confidentiality clause. "All I can tell you is that it's been resolved," he said.
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.
Workers alleged in the suit that they "feared that they would lose their jobs if they pursued their inquiries or pressed for payment of the tips."
At the same time, Canyon Ranch went out of its way to discourage guests from giving extra gratuities, enforcing its message that all tips are included in the 18 percent service charge, according to the suit. If guests insisted on tipping extra, employees could accept them only after first declining. Even then, the suit said, employees could not accept the money personally but had to direct guests to a designated area of the spa, where the guests had to complete a form or enclose cash in an envelope - something relatively few ended up doing.
Several Boston lawyers have brought a series of suits in recent years under the obscure 1952 tips law against defendants that include the Four Seasons Hotel, Weston Golf Club, and Orchards Hotel in Williamstown. In 2004, the state Legislature expanded the law to cover employees outside the food and beverage industries, which paved the way for a recent spate of lawsuits by skycaps against airlines.
Shannon Liss-Riordan, a lawyer who has brought at least 40 lawsuits on behalf of waiters, bartenders, skycaps, and other service workers in Massachusetts, said the Canyon Ranch settlement is easily the biggest she has heard of in Massachusetts.
"That's a huge deal," said Liss-Riordan, who added that withholding tips is "pervasive throughout the service industry - hotels, restaurants, country clubs, you name it."
Critics of such litigation say plaintiffs' lawyers are manipulating an obscure and confusing law to reap a windfall for their clients and their firms. They also say such suits imperil fragile businesses and, sometimes, co-workers of plaintiffs.
Ariel D. Cudkowicz, one of the Boston lawyers defending the spa, did not return phone calls. In a Globe article in April, he said that suits alleging violations of the tips statute were "becoming abusive toward employers" and that the prospect of large awards was "very alluring" to plaintiffs and their attorneys. Plaintiffs' lawyers typically keep about a third of the money they obtain for clients.
Canyon Ranch said it has now eliminated the 18 percent service charge and replaced it with a "resort amenities fee" that does not include tips. Canyon Ranch said it makes that clear on guests' bills and its website. The spa said it pays employees generously, has not changed wages or benefits, and will continue to prohibit tipping because it is "consistent with the stress-free environment that Canyon Ranch guests have come to expect."
Still, the settlement shocked one longtime customer of the spa, Holly Safford, who said she knew tipping was prohibited at Canyon Ranch but had no idea that some workers felt their employer was cheating them.
"I have never spoken to an employee at that ranch who has not told me how absolutely thrilled and fortunate they feel to be working there - unsolicited," said Safford, 60, the owner of The Catered Affair, a Rockland catering business.
Safford - who has gone to the spa with friends from Duxbury about a dozen times and considered the advice she got on exercise and diet "life-altering" - said the settlement was "tantamount to an admission of guilt" and was pleased that workers will receive money.
Sonya Bykofsky, who worked as a massage therapist at Canyon Ranch from 1998 to 2001, was delighted by the settlement. She was involved in an employment lawsuit against Canyon Ranch and said the spa is among many in the industry that take advantage of workers with physically demanding jobs.
"It's unfortunate that massage therapists sometimes turn out to be the slave labor of the spa industry," said the Lenox practitioner, 43, who was not a party in the tips claim. "It's just gratifying when - if something unjust has been going on - someone takes notice and, even more importantly, takes action to correct it."
Jonathan Saltzman can be reached at jsaltzman@globe.com 