senate Bill S6299B

Requires notice from employers to customers of service charges and administrative fees that are not distributed to employees as gratuities

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 24 / Jan / 2012
    • REFERRED TO LABOR
  • 11 / Apr / 2012
    • AMEND AND RECOMMIT TO LABOR
  • 11 / Apr / 2012
    • PRINT NUMBER 6299A
  • 18 / Apr / 2012
    • 1ST REPORT CAL.530
  • 19 / Apr / 2012
    • 2ND REPORT CAL.
  • 25 / Apr / 2012
    • ADVANCED TO THIRD READING
  • 01 / May / 2012
    • AMENDED ON THIRD READING 6299B
  • 08 / May / 2012
    • PASSED SENATE
  • 08 / May / 2012
    • DELIVERED TO ASSEMBLY
  • 09 / May / 2012
    • REFERRED TO LABOR

Summary

Requires notice from employers to customers of service charges and administrative fees that are not distributed to employees as gratuities.

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Bill Details

Versions:
S6299
S6299A
S6299B
Legislative Cycle:
2011-2012
Current Committee:
Assembly Labor
Law Section:
Labor Law
Laws Affected:
Amd ยง196-d, Lab L

Sponsor Memo

BILL NUMBER:S6299B

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.

EFFECTIVE DATE:


This act shall take effect on the thirtieth day after
it shall have become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 6299--B
    Cal. No. 530

                            I N  S E N A T E

                            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 MUST

 EXPLANATION--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.

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