State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: April 16, 2015 519470 

________________________________

In the Matter of NICOLA

MARZOVILLA et al.,

Petitioners,

v MEMORANDUM AND JUDGMENT

NEW YORK STATE INDUSTRIAL 

BOARD OF APPEALS et al.,

Respondents.

________________________________

Calendar Date: February 9, 2015

Before: Lahtinen, J.P., McCarthy, Egan Jr. and Clark, JJ.

__________

Office of Daniel Silverman, LLP, New York City (Daniel

Silverman of counsel), for petitioners.

Eric T. Schneiderman, Attorney General, New York City (C.

Michael Higgins of counsel), for respondents.

__________

Lahtinen, J.P.

Proceeding pursuant to CPLR article 78 (transferred to this

Court by order of the Supreme Court, entered in Albany County) to

review a determination of respondent Industrial Board of Appeals

which found that petitioners violated Labor Law § 196-d by

misappropriating tips.

Petitioner Nicola Marzovilla is the owner of petitioner

Valodome, Inc., which, during the time period at issue here,

owned and operated an Italian restaurant in New York City known

as iTrulli. Tips at iTrulli were subject to mandatory "tip

pooling" (12 NYCRR 146-2.16 [b]), with each waiter receiving a

full share, and busboys, runners, the wine steward and head
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waiter receiving a half share. This proceeding centers on

petitioners' challenge to a finding by respondent Industrial

Board of Appeals (hereinafter IBA) that from January 2001 to

September 2005 petitioners misappropriated the tips, in violation

of Labor Law § 196-d, by distributing them to Gianni Linardic and

Alex Steidl, senior employees of iTrulli and described by

Marzovilla as the head waiter and wine steward, respectively. 

Several servers filed complaints in 2006 alleging that 

portions of iTrulli's tip pool were misappropriated by Marzovilla

and paid to Linardic and Steidl. The Department of Labor

(hereinafter DOL) ultimately found that petitioners owed

approximately $221,000 for misappropriated tips, plus interest

and a civil penalty, for a total of approximately $407,000 and

issued an order to comply. Following a hearing, the IBA modified

that wage order to reflect the correct date that the improper tip

distribution ceased and suspended interest for a five-month

period due to unreasonable delay attributable to DOL, and

otherwise affirmed. Petitioners then commenced this proceeding.

We confirm. The governing statute, Labor Law § 196-d,

provides that "[n]o employer or his [or her] agent . . . 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. . . . Nothing in this subdivision shall be construed

as affecting . . . the sharing of tips by a waiter with a busboy

or similar employee." Recently, the Court of Appeals clarified

that eligibility to participate in a tip pool "'shall be based

upon duties and not titles'" (Barenboim v Starbucks Corp., 21

NY3d 460, 471 [2013], quoting 12 NYCRR 146-2.14 [e]), and the

Court held that "employer-mandated tip splitting should be

limited to employees who, like waiters and busboys, are

ordinarily engaged in personal customer service, a rule that

comports with the 'expectation[s] of the reasonable customer'"

(Barenboim v Starbucks Corp., 21 NY3d at 471-472, quoting

Samiento v World Yacht Inc., 10 NY3d 70, 79 [2008]; see 12 NYCRR

146-2.16 [b]; 146-3.4 [a]). Consistent with longstanding DOL

policy, the Court further observed that "employees who regularly

provide direct service to patrons remain tip-pool eligible even

if they exercise a limited degree of supervisory responsibility"
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(Barenboim v Starbucks Corp., 21 NY3d at 472). The Court

concluded, however, "that there comes a point at which the degree

of managerial responsibility becomes so substantial that the

individual can no longer fairly be characterized as an employee

similar to general wait staff within the meaning of Labor Law

§ 196-d" (id. at 473). The Court determined that "the line

should be drawn at meaningful or significant authority or control

over subordinates" (id.). The Court explained that "[m]eaningful

authority might include the ability to discipline subordinates,

assist in performance evaluations or participate in the process

of hiring or terminating employees, as well as having input in

the creation of employee work schedules, thereby directly

influencing the number and timing of hours worked by staff as

well as their compensation" (id.).

Here, the IBA's determination is supported by the testimony

of waiters that, despite their complaints, Linardic sometimes

told them that they had to give him a full share of the tip pool

when a large amount of money had been collected. Two waiters,

Alex Burgos and Enrique Arias, further explained that, when he

served customers, Linardic received personal tips that were not

shared with any other waiters. This testimony was credited by

the IBA and is sufficient under Barenboim v Starbucks Corp.

(supra) to establish meaningful authority because it established

that Linardic "directly influenc[ed] . . . the[] compensation"

received by other waiters, in addition to his own (id. at 473). 

In addition, seven servers claimed that Linardic was a manager

who gave orders, supervised and instructed them while they were

working, and two servers indicated that he introduced himself as

a manager. Linardic also extensively "participate[d] in the

process of hiring . . . employees" (id.) and had input in the

creation of employee work schedules. While petitioners assert

that Linardic was required to check with Marzovilla to see if

jobs were open before interviewing an employee, and petitioners'

witnesses testified that either Marzovilla or his sister had

final authority to make hiring decisions, the Court of Appeals

emphasized in Barenboim that "final authority" is not the

standard, and that "the power to hire and fire is not the

exclusive test" (id.). Given the foregoing, the IBA properly

concluded that Linardic exercised "meaningful authority" over

other servers under the test set forth in Barenboim, and
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testimony to the contrary presented a credibility issue for the

IBA to resolve (see Matter of Garcia v Heady, 46 AD3d 1088, 1090

[2007], lv denied 10 NY3d 705 [2008]).

The IBA's determination that Steidl was ineligible to

participate in the tip pool was based on its conclusion that

Steidl was not a food service worker in the first instance and

his personal service to patrons was not a principal and regular

part of his duties (see 12 NYCRR 146-2.14 [e]; 146-2.16 [b]). As

the IBA noted, Steidl's own description of his job revealed that

much of his work involved initially programming – and then

maintaining and improving – the restaurant's computer system, as

well as maintaining and updating the restaurant's massive wine

list and wine cellar. Moreover, the IBA credited the testimony

of servers that Steidl was rarely on the floor during lunch

shifts and, during dinner, his service duties were limited – he

sometimes discussed wine with customers, but rarely opened and

poured wine unless the bottle was expensive or the customer was

high-profile or a regular. While Steidl did testify that he was

employed primarily as a service worker and the majority of his

time was spent on the floor during dinner shifts helping

customers with the extensive wine list, and inasmuch as the

resolution of conflicting evidence and credibility questions is

within the sole province of the IBA (see Matter of Garcia v

Heady, 46 AD3d at 1090; see also Matter of CNP Mech., Inc. v

Angello, 31 AD3d 925, 927 n [2006], lv denied 8 NY3d 802 [2007]),

substantial evidence supports the determination that Steidl's

service duties were occasional or incidental to his functions at

the restaurant and, thus, he was not a food service worker "whose

personal service to patrons [was] a principal or regular part of

his . . . duties" (Barenboim v Starbucks Corp., 21 NY3d at 473).

Petitioners' remaining arguments do not require extended

discussion. Contrary to petitioners' assertion, "DOL is

obligated to impose interest at the statutory rate" (Matter of

Garcia v Heady, 46 AD3d at 1090; see Matter of Marchionda v

Industrial Bd. of Appeals of State of N.Y., Dept. of Labor, 119

AD3d 1342, 1343 [2014]; see also Matter of CNP Mech., Inc. v

Angello, 31 AD3d at 928). With respect to their contention that

interest should be suspended for certain additional periods,

petitioners have not met their burden of making "a showing of
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unreasonable delay" on the part of DOL (Matter of Pascazi v

Gardner, 106 AD3d 1143, 1145 [2013], appeal dismissed 21 NY3d

1057 [2013], lv denied 22 NY3d 857 [2013]). Finally, the civil

penalty of 25% of wages due was not "so disproportionate to the

underlying offense as to be shocking to one's sense of fairness"

(Matter of Garcia v Heady, 46 AD3d at 1090 [internal quotation

marks and citation omitted]), given the existence of a previous

violation, the size of the employer and the gravity of the

violation.

Petitioners' remaining argument is not properly before us.

McCarthy, Egan Jr. and Clark, JJ., concur.

ADJUDGED that the determination is confirmed, without

costs, and petition dismissed.

ENTER:

Robert D. Mayberger

Clerk of the Court