senate Bill S3109A

2013-2014 Legislative Session

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

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to labor
Apr 25, 2013 print number 3109a
amend and recommit to labor
Jan 30, 2013 referred to labor

Bill Amendments

Original
A (Active)
Original
A (Active)

S3109 - Bill Details

See Assembly Version of this Bill:
A2179E
Current Committee:
Law Section:
Labor Law
Laws Affected:
Amd §196-d, Lab L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S7791, A9439C
2013-2014: S3109A

S3109 - Bill Texts

view summary

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

view sponsor memo
BILL NUMBER:S3109

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 facili-
ties 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 Depart-
ment 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 deci-
sion, 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 signif-
icant retroactive liability, despite their practice having been consist-
ent 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.62995 (2012) - Passed Senate; S.7791 (2012)

FISCAL IMPLICATIONS: None to the state.

EFFECTIVE DATE: This act shall take effect immediately.

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

                                  3109

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 30, 2013
                               ___________

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

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00028-02-3

S. 3109                             2

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.
  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 TWELVE 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.

S3109A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A2179E
Current Committee:
Law Section:
Labor Law
Laws Affected:
Amd §196-d, Lab L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S7791, A9439C
2013-2014: S3109A

S3109A (ACTIVE) - Bill Texts

view summary

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

view sponsor memo
BILL NUMBER:S3109A

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.62995 (2012)Passed Senate; S.7791 (2012)

FISCAL IMPLICATIONS: None to the state.

EFFECTIVE DATE: This act shall take effect immediately.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3109--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 30, 2013
                               ___________

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

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00028-03-3

S. 3109--A                          2

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
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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