1250 Broadway, 27th Floor New York, NY 10001



Under New York law, an employer may not keep all or part of a tip that is intended for an employee.

Alleging that a hotel wrongfully retained mandatory service charges and failed to advise customers that they weren’t a gratuity, M.V. filed suit in Westchester County Supreme Court on behalf of herself and other similarly situated servers. When the judge denied M.V.’s request for sanctions (triggered by the alleged spoliation of evidence), and also rebuffed the hotel’s cross-motion for summary judgment (i.e., pre-trial relief in its favor), the parties appealed.

To establish a claim under this state statute, M.V. first needed to show that she was a hotel “employee.” And to that end, courts examine whether the “employer” exercised the requisite degree of control over the individual, and whether the latter “`(1) worked at his [or her] own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule.’”

In this instance, the Appellate Division, Second Department, thought the record established M.V. was hired by a different company, known as Interstate Staffing, which sent her to work at the hotel and paid her wages. She did not wear a hotel uniform and was dressed differently from the latter’s employees. Interstate addressed all misbehavior and discipline. And not only was the hotel unable to hire or fire these workers, it also didn’t “determine compensation, hours, or employment schedules and did not maintain employee records.”

Given that absence of control, the AD2 thought M.V.’s case should have been dismissed and the spoliation request denied, as academic.

That certainly didn’t work.

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M.V. v Sunstone Red Oak, LLC