Bill caters to caterers, not staff, some say
Photo credit: Newsday / J. Conrad Williams Jr. | A file photo of State Sen. Jack Martins speaking at an event in Westbury. (Nov. 2, 2010)
A bipartisan effort in the State Legislature that would give catering companies immunity from lawsuits over gratuities has some crying foul. At stake is millions of dollars in service charges or gratuities collected by the companies that can add 20 percent to bills for celebrations and corporate events.
Lawyers for waiters, dishwashers and service staff have filed class-action lawsuits against Long Island catering halls and caterers, seeking money they say customers believed would go to staff.
In 2008, the New York State Court of Appeals, the highest state court, ruled that under state labor law a caterer's service charge had to go to pay staff if a customer had a reasonable expectation that it would. Now caterers are facing dozens of lawsuits.
Sen. Jack Martins (R-Mineola) has introduced a bill that would give immunity to companies unless they had told customers in writing that service charges were gratuities. The bill would also clarify that caterers in the future must tell customers if all the service charges were not going to staff.
Martins said companies had been in compliance with state labor law but now face lawsuits that can stretch back to 2004 -- long before the ruling.
"If you can apply it retroactively, now what you're saying is that a facility who acted legally then now must pass on that 20 percent despite the fact they used it as part of their operating expenses and were complying with the law," Martins said. "These are people who did nothing wrong."
A similar bill has been introduced by Assemb. Phillip Goldfeder (D-Far Rockaway) that would give companies full immunity for past practices regardless of what they told customers.
The proposed legislation has mobilized both sides.
"You advertise that gratuities are being paid, they should be paid," said state Sen. Malcolm Smith (D-Jamaica), who is holding a news conference Sunday to criticize the legislation. Smith said that since the original case -- Samiento v. World Yacht Club -- had survived appeals, "we shouldn't now be legislating around it."
The New York Hotel and Motel Trades Council opposes the legislation, saying in a statement that it "would retroactively protect the bad actors that held out service charges or other automatic charges as tips and then withheld such monies from employees."
The catering industry is fighting back, forming a nonprofit this month called the New York Caterers Association.
According to state records, the association hired two firms -- Park Strategies, which is headed by former Sen. Alfonse D'Amato, and Meara Avella Dickinson -- to lobby on behalf of the bills. Rubenstein Associates was hired to handle public relations.
"Our intent is not so much to back one bill or another as it is to see a bipartisan support for legislation that will protect interests of the catering industry that has followed Labor Department rules, paid millions on sales taxes for service fees and treated their employees with respect and created a significant and positive sector of the economy," Rubenstein executive Gary Lewi said in an email.
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