Maldonado v. BTB Events & Celebrations, Inc.
990 F. Supp. 2d 382
S.D.N.Y.2013Background
- Between the Bread imposed an 11% mandatory surcharge on phone-order deliveries, which the company retained part of and distributed the rest to delivery workers; the surcharge was included in gross receipts and subject to sales tax.
- Delivery workers were paid a tip credit-based minimum wage, with base wages below minimum wage and a portion of customer tips considered separately.
- Most customers left voluntary gratuities on invoices, and delivery workers kept 100% of customer gratuities.
- Invoices labeled the 11% charge as a service/processing surcharge and did not clearly explain its purpose; customers were not informed that the surcharge would be retained by the employer.
- This litigation covers August 3, 2006 through September 26, 2012, and centers on whether the 11% surcharge qualified as a gratuity under the FLSA and NYLL, affecting minimum wage calculations and tip credits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 11% surcharge is a FLSA gratuity | Plaintiffs contend the surcharge is a gratuity. | Defendants argue it is a mandatory administrative charge, not a tip. | Not a FLSA tip; surcharge deemed non-gratuity under FLSA. |
| Whether the 11% surcharge is a NYLL gratuity before 2011 | Surcharged amount should be treated as a gratuity under NYLL. | Charge viewed as employer-controlled, not a gratuity. | Not a NYLL gratuity for period through 2010. |
| Whether the 11% surcharge is a NYLL gratuity after the 2011 Regulations | Regulations require treating it as a gratuity or failing safe harbor. | Surcharge could be non-gratuity if properly notified. | For 2011-2012, surcharge deemed a gratuity; plaintiff granted partial summary judgment. |
Key Cases Cited
- World Yacht Inc. v. Samiento, 10 N.Y.3d 70 (N.Y. 2008) (mandatory charges weighed by overall customer expectations of gratuity)
- Copantitla v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253 (S.D.N.Y. 2011) (World Yacht framework; labeling and distribution influence gratuity characterization)
- Barenboim v. Starbucks Corp., 698 F.3d 104 (2d Cir. 2012) (FLSA tip definition excludes mandatory service charges)
- Ramirez v. Mansions Catering, Inc., 74 A.D.3d 490 (1st Dep’t 2010) (state-law interpretation of gratuities under NYLL)