Requires notice from employers to customers of service charges and administrative fees that are not distributed to employees as gratuities.
Ayes (38): Addabbo, Alesi, Bonacic, DeFrancisco, Diaz, Dilan, Farley, Flanagan, Fuschillo, Gallivan, Griffo, Grisanti, Hannon, Huntley, Johnson, Krueger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Nozzolio, O'Mara, Ranzenhofer, Ritchie, Robach, Saland, Serrano, Seward, Skelos, Stavisky, Stewart-Cousin, Young, Zeldin
Nays (21): Adams, Avella, Ball, Breslin, Carlucci, Duane, Gianaris, Hassell-Thomps, Kennedy, Klein, Montgomery, Oppenheimer, Parker, Peralta, Perkins, Rivera, Sampson, Savino, Smith, Squadron, Valesky
Abstains (1): Golden Absent (1): Espaillat
TITLE OF BILL: An act to amend the labor law, in relation to requiring notice from employers to customers of service charges and administration fees that are not distributed to employees as gratuities
PURPOSE OF BILL: To codify the past practices of catering hall facilities based on Department of Labor regulations for the imposition of service charges prior to the Court of Appeals decision in Samineto v. World Yacht, Inc.
SUMMARY OF SPECIFIC PROVISIONS: Amends section 196-d of the labor law, as added by chapter 1007 of the laws of 1968 creating a new subsection 1 to allow for employers to add a mandatory gratuity so long as the charge is conspicuously disclosed and the full amount of the gratuity is distributed to the employees. Additionally amends the current labor law section 196-d to explicitly state that written notice shall be given to customers that mandatory service charges or any similar administrative fee, are not part of a gratuity if that charge, or only part of that charge is not to be distributed to any employees as a gratuity. The statement shall be written in ordinary language in no smaller than 12 point font and on the check or invoice in a type size similar to the surrounding text. This bill will also remove any retroactive liability for any fees administered prior to the enactment of this bill that were not explicitly designated as service charges not to be counted as gratuities in writing.
Section two sets the enacting date.
JUSTIFICATION: The Court of Appeals held in Samineto v. World Yacht, Inc., 10 N.Y.3d 70 (2008) that mandatory service charges may be a charge that is purported to be a gratuity if the reasonable customer would understand such a mandatory charge to be a gratuity. Prior to this decision, owners of catering halls reasonably relied on a 1995 state-wide memorandum of the New York State Department of Labor (consistent with federal law) and numerous subsequent Department Opinion Letters, which confirmed that in the cases of banquets or other special functions, a service charge would not be considered a gratuity. The Samiento decision radically altered this paradigm and subjected catering halls to significant retroactive liability, despite their practice having been consistent with the regulations at the time and in compliance with Department guidance and the holdings of lower state and federal courts.
PRIOR LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: None to the state.
This act shall take effect on the thirtieth day after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 6299--B Cal. No. 530 IN SENATE January 24, 2012 ___________Introduced by Sen. MARTINS -- read twice and ordered printed, and when printed to be committed to the Committee on Labor -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the labor law, in relation to requiring notice from employers to customers of service charges and administration fees that are not distributed to employees as gratuities THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 196-d of the labor law, as added by chapter 1007 of the laws of 1968, is amended to read as follows: S 196-d. Gratuities. 1. AN EMPLOYER SHALL NOT BE PROHIBITED FROM ADDING A MANDATORY GRATUITY AS LONG AS: (I) THE CHARGE IS CONSPICUOUSLY DISCLOSED TO THE CUSTOMER BEFORE FOOD OR BEVERAGE IS ORDERED; AND (II) NO EMPLOYER OR HIS AGENT OR AN OFFICER OR AGENT OF ANY CORPORATION, SHALL RETAIN ANY PORTION OF SUCH GRATUITY. THE DISCLOSURE SHALL USE ORDINARY LANGUAGE READILY UNDERSTOOD AND SHALL APPEAR IN A TYPE SIZE SIMILAR TO SURROUNDING TEXT. 2. No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee. This provision shall not apply to the checking of hats, coats or other apparel. Nothing in this subdivision shall be construed as affecting the allowances from the minimum wage for gratuities in the amount determined in accordance with the provisions of article nineteen of this chapter nor as affecting practices in connection with banquets and other special functions where a fixed percentage of the patron's bill is added for gratuities which are distributed to employees, nor to the sharing of tips by a waiter with a busboy or similar employee. AN EMPLOYER THAT IMPOSES A MANDATORY SERVICE CHARGE, ADMINISTRATIVE FEE, OR ANY OTHER SIMILAR CHARGE WHICH IS NOT DISTRIBUTED TO EMPLOYEES AS GRATUITIES MUSTEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14113-06-2 S. 6299--B 2
PROVIDE WRITTEN NOTICE TO CUSTOMERS IN THE CONTRACT OR AGREEMENT FOR SERVICES AND ON THE CHECK OR INVOICE THAT THE CHARGE IS NOT A GRATUITY AND WILL NOT BE DISTRIBUTED TO EMPLOYEES WHO PROVIDED SERVICE TO GUESTS, OR IF ONLY A PORTION OF THE CHARGE IS DISTRIBUTED AS GRATUITIES, THE PORTION DISTRIBUTED AS GRATUITIES MUST BE IDENTIFIED. THE WRITTEN NOTICE TO CUSTOMERS IN THE CONTRACT OR AGREEMENT FOR SERVICES SHALL APPEAR IN A TYPE SIZE NO SMALLER THAN TWELVE POINT TYPE. THE STATEMENTS IN THE CHECK OR INVOICE SHALL USE ORDINARY LANGUAGE READILY UNDERSTOOD AND SHALL APPEAR IN A TYPE SIZE SIMILAR TO SURROUNDING TEXT. NOTWITH- STANDING THE FOREGOING, PRIOR TO THE EFFECTIVE DATE OF A CHAPTER OF THE LAWS OF TWO THOUSAND TWELVE THAT AMENDED THIS SECTION, ANY MANDATORY SERVICE OR ADMINISTRATIVE CHARGE, OR ANY MANDATORY FEE, IMPOSED BY AN EMPLOYER AS PART OF A BANQUET SERVING TWENTY OR MORE GUESTS SHALL NOT BE DEEMED A GRATUITY OR CHARGE PURPORTED TO BE A GRATUITY, AND SHALL NOT FORM THE BASIS OF ANY LIABILITY UNDER THIS SECTION, ANY OTHER PROVISION OF THIS CHAPTER OR ANY REGULATIONS IMPLEMENTED PURSUANT TO THIS CHAPTER DESPITE THE ABSENCE OF SUCH DISCLOSURE OR AS A RESULT OF ANY REPRESEN- TATION MADE BY ANY EMPLOYER OR HIS AGENT UNLESS SUCH MANDATORY SERVICE OR ADMINISTRATIVE CHARGE, OR ANY MANDATORY FEE, WAS SPECIFICALLY REPRES- ENTED IN WRITING TO BE A GRATUITY PAID TO A FOOD SERVICE WORKER, AS DEFINED IN 12 N.Y.C.R.R. 146-3.4, BY THE EMPLOYER OR HIS AGENT. S 2. This act shall take effect on the thirtieth day after it shall have become a law.