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Banquet Service Charge and Section 196-d Labor Law

By Memorandum dated February 19, 2008, we apprised clients of the decision of the New York State Court of Appeals in Samiento v. World Yacht, Inc., which held that Section 196-d of New York State’s Labor law requires the full distribution of the banquet service charge to service staff where it is shown that the employer represented or allowed its customers to believe that the charges were, in fact, gratuities for the service staff. In World Yacht, the plaintiffs alleged, inter alia, that the customers were misled because inquiring customers were told that World Yacht’s 20% service charge is given to the wait staff as the gratuity.

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