NY State Senate Bill 2011-S7791

Senate Bill S7791

2011-2012 Legislative Session

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

download bill text pdf

Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 18, 2012	referred to rules

2011-S7791 (ACTIVE) - Details

Current Committee:: Senate Rules
Law Section:: Labor Law
Laws Affected:: Amd §196-d, Lab L
Versions Introduced in 2013-2014 Legislative Session:: S3109

2011-S7791 (ACTIVE) - Summary

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

2011-S7791 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7791

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 on the
agreement or contract and in a type size similar to the surrounding
text on the check or invoice. Subsection 3 sets forth the requirements

for an affirmative defense for an action stemming from events held
prior to January 1, 2011 (the effective date of the Department of
Labor regulation setting disclosure requirements).

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:
S.6299B (2012) - Passed Senate

FISCAL IMPLICATIONS:
None to the state.

EFFECTIVE DATE:
This act shall take effect immediately.

2011-S7791 (ACTIVE) - Bill Text download pdf

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

                                  7791

                            I N  S E N A T E

                              June 18, 2012
                               ___________

Introduced  by  Sen. MARTINS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

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: (A) THE CHARGE IS CONSPICUOUSLY
DISCLOSED TO THE CUSTOMER BEFORE FOOD OR BEVERAGE IS ORDERED; AND (B) 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
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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD14113-20-2

S. 7791                             2

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.
  3. NOTWITHSTANDING THE FOREGOING, THERE SHALL BE NO LIABILITY  TO  ANY
ACTION  ALLEGING  THAT  ANY  SERVICE  CHARGE, ADMINISTRATIVE FEE, OR ANY
OTHER SIMILAR CHARGE IMPOSED AS PART OF A BANQUET HELD PRIOR TO  JANUARY
FIRST,  TWO THOUSAND ELEVEN WAS A GRATUITY, IF THE EMPLOYER PROVES AS AN
AFFIRMATIVE DEFENSE THAT ALL OF THE FOLLOWING CONDITIONS WERE  MET:  (A)
THE  EMPLOYER  OR  EMPLOYER'S  AGENT  DID NOT EXPRESSLY REPRESENT TO THE
CUSTOMER THAT THE CHARGE WAS A GRATUITY; (B) THE EMPLOYER CHARGED  SALES
TAX  IN  ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE TAX LAW ON THE
CHARGE; (C) THE EMPLOYER INCLUDED  THE  CHARGE  AS  PART  OF  ITS  GROSS
RECEIPTS,  UPON  WHICH  INCOME  TAX WAS CALCULATED; AND (D) THE EMPLOYER
PAID FOOD SERVICE WORKERS WAGES SET FORTH IN SECTION SIX HUNDRED  FIFTY-
TWO OF THIS CHAPTER.
  S 2. This act shall take effect immediately.

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