The Harvard Club of Boston has been called to account on a crooked little practice, the "in lieu of a gratuity" racket.
Food and beverage bills at the clubhouses Downtown and in the Back Bay were marked up with a 17% surcharge. But the Harvard Club paid its waitstaff by the hour, and pocketed the "in lieu of a gratuity" charge for itself.
Is that dishonest? On the one hand, the waitstaff does not have to scrounge for tips. On the other hand, members paying the surcharge may think their money was going to the waitstaff, when it wasn't. The Harvard Club does have a well-known no-tipping policy, which it did not extend to itself.
The racket, of course, is that it would be perfectly permissible for the Harvard Club to mark up the prices on its menu by 17% and keep the entire billed amount for itself. Imposing the "in lieu of a gratuity" fee is simply a marketing gimmick. It works, like many perfectly legal marketing gimmicks, because it creates a false impression.
What exactly is that false impression? Well, in a society where patrons are expected to tip waitstaff, it creates the impression that they have been tipped. But are the waitstaff harmed or is it just the patron who has been fleeced? Presumably you would learn of this practice fairly early in your tenure at the Harvard Club, in the first day training if not in the job interview. If you show up for work the second day, haven't you accepted the practice? Presumably, the Harvard Club has to pay its waitstaff more per hour than if they could expect to also get tips.
Times are apparently tough at the Harvard Club, as the Boston Globe reports it is paying for the $4 million settlement it has reached with the waitstaffs' class action lawyer in part by selling one of its buildings at the clubhouse on Commonwealth Avenue.
If the lawyer gets the customary 33% contingency fee, that's quite a tip. $1.3 million.