The Law Blog of DiPasquale Law Group

Friday, January 30, 2015

Recommendations for Insuring Your Restaurant

What Insurance Coverage Does a Restaurant Need?

There is tremendous potential liability involved when operating a restaurant.  Liability varies  depending on a number of factors.  Some of these factors include how large your business is, the number of people you employ, the number of customers you serve, whether you serve alcohol and whether you own the property, among other things. Having the right insurance and sufficient coverage can help you avoid major problems for your restaurant.

Like every business, you should have general risk insurance. It could provide you with the ability to repair or replace damage due to fires and weather. This coverage should include exterior signs and landscaping. You should have the option of getting coverage providing replacement value of what is lost or destroyed, or its fair market value. Replacement value provides better coverage but premium costs will usually be higher.

Liability insurance can help protect you from legal claims against your business. This falls into product liability and premises liability insurance. Product liability insurance covers claims connected to the products you sell (such as food poisoning) while premises liability insurance can protect you when there are property issues (such as slip-and-fall injury lawsuits).

There is insurance coverage that may help if you need to close the restaurant temporarily by providing you with replacement income. These policies include lost income, business interruption and food spoilage insurance. Whether your restaurant is open or not, you have bills to pay. This type of insurance can help you pay your bills if you have had to shut down for a covered reason. 

If you serve alcohol, you should also carry liquor liability insurance. In addition an insurer covering liability issues will ask for evidence of liquor sales. Normally if alcohol accounts for at least half of your total sales, your risk of accidents and legal claims (and your premiums) will be higher. 

You are required by law to have workers compensation insurance and pay for unemployment insurance. If you own a vehicle you are also required to carry insurance for that too. You should also consider coverage for theft of property or cash, and damage due to power failures or drainage backups.

If you own or manage a restaurant in New York City and have questions about insurance, or have a coverage dispute with an insurance carrier, contact the restaurant law attorneys at the DiPasquale Law Group today by calling (646) 383-4607 so we can discuss your situation and your options.

Wednesday, January 14, 2015

U.S. Supreme Court Upholds Arbitration Clause in Restaurant Case

What is an Arbitration Clause? It’s the Fine Print You Need to Understand.


A restaurant owner may sign any number of contracts in order to keep the doors open, a roof overhead and obtain supplies that are the lifeblood of the business. If the contract you are signing contains a forced or mandatory arbitration clause, and you fail to read the contract closely and fully understand its meaning, you could lose out on a number of legal rights without knowing it. One of those rights is the ability to go to court to protect your interests in the case that the contract is breached or the other party breaks the law and causes you harm.

Arbitration is an alternate dispute resolution method, which, in and of itself, it not necessarily a bad thing. Instead of going to court to possibly litigate the dispute, it goes to arbitration, which is like a private court process.  Instead of a judge, an arbitrator (normally an attorney or retired judge) or panel of arbitrators decides your case. Proceedings are normally kept confidential and usually cannot be appealed to the court system. While this process is normally faster than the court system, it can have some drawbacks.

Often these clauses not only foreclose your ability to go to court, but also prevent your business from being part of a class action lawsuit, where a representative plaintiff can represent thousands of others dealing with the same situation. These cases can be especially potent when a large company breaks the law affecting many people or businesses, but costs each one a relatively small amount of money. With so little at issue for the individual or business, litigating such a case does not make financial sense.

There have been a number of U.S. Supreme Court decisions supporting these clauses.  In one recent case coming out of Oakland, California a restaurant owner challenged the fees charged by a credit card company.  Italian Colors restaurant, which had about $1.8 million in annual revenue, took on American Express in a class action claim over higher fees connected to a bank issued version of its credit card, which the restaurant was forced to accept (if it wanted customers to use other Amex cards). The restaurant owners signed a contract with an arbitration clause, which included a waiver of the right to bring a class action. The case was filed in state court in violation of the clause and the plaintiff was successful. 

American Express appealed the decision all the way to the Supreme Court. The court, whose majority has a reputation for being pro-business, ruled in favor of the big business and against the small businesses. It ruled that the state court lacked jurisdiction over the matter because the dispute should have gone to arbitration, not to a trial in the court system as a class action.  As a result of this case, a precedent has been set that arbitration clauses will be enforced in situations such as these.

Do not sign a contract you do not understand. If you are in the New York City restaurant business and have been asked to sign a contract (or would like to draft a contract of your own), contact the restaurant law attorneys at the DiPasquale Law Group by calling (646) 383-4607.

Friday, December 26, 2014

Too Much of a Good Thing Can Be Bad

What are ‘Interlocking Interests’?

One aspect of obtaining or renewing a liquor license is the consideration of any liquor related businesses you have an interest in. Earlier this year this issue came up involving Mario Batali and the Bastianich family.

The New York State Liquor Authority (NYSLA) looks at an applicant’s “interlocking interests” with other liquor related businesses when a person or entity is seeking to obtain or renew a liquor license. Applicants are required to disclose any interest, whether it’s direct or indirect, in any premises currently licensed by the NYSLA and/or any business that manufactures alcoholic beverages or transports or sells such beverages at wholesale. The second step has been interpreted broadly by the NYSLA, so any interest in such a business, anywhere, brings up these concerns. 

An investigation by the NYSLA resulted in Mario Batali and Joe Bastianich closing the wine store inside their Italian food emporium Eataly for six months and paying a $500,000 fine to the state.  Batali and Bastianich reached a settlement with the NYSLA after it charged the two with skirting the law prohibiting liquor-license holders from also being producers of wine, locally or internationally (which would be considered “interlocking interests”). Bastianich and his mother own an Italian winery. The NYSLA also charged Batali with "suppressing information" and not fully disclosing his partners' wine business interests. The issue came up in 2012 when the wine store's license was up for renewal. The license could have been revoked if the issue had not settled. 

This case shows that applicants need to consider their interests in liquor related businesses before finalizing NYSLA applications. Because of those interests, a license application or renewal may be rejected and the applicant may need to consider which business is most important and/or whether an interest in one business needs to end in order to obtain or renew a liquor license. There also needs to be full disclosure, especially in the current days of websites and social media. Apparently while Joe Bastianich’s winery interests were not fully disclosed to the NYSLA, Eataly’s own website proclaimed, “that Joe Bastianich ‘returned to his roots in Northeast Italy’ where he is ‘creating wines’ from (Italy’s) Friuli region.”

If you are in New York City and have any questions about liquor licenses and your business interests, contact the liquor license attorneys at the Dipasquale Law Group today by calling (646) 383-4607.

Tuesday, December 16, 2014

NYC Automatic Gratuity Lawsuit Dismissed
If you have ever been to a restaurant with a large group of people, you are probably familiar with the concept of automatic gratuity.  Automatic gratuity is added to the bill so that the customer tips the staff a predetermined amount as opposed to at his or her own discretion.  When a restaurant is going to assess this charge, they usually inform customers in advance by noting the policy on the menu or in another conspicuous place.  This is a common practice, especially in New York City, where dining out is essential to tourism and to the daily life of residents of the five boroughs.   

Recently, a class action suit was brought against the owner of Darden Restaurants as a result of the empires automatic gratuity policy.  The plaintiff brought the lawsuit in the United States District Court claiming that adding automatic gratuity to a bill was an unlawful and deceptive business practice under the laws of New York City.  He also alleged that the restaurants failure to disclose drink prices on the menu fell into the same category.  

While New York City does regulate surcharges assessed by restaurants, these laws do not create a private legal action, even if colored as consumer fraud protection claims.  This concept was reinforced when U.S. District Court Judge Katherine Polk Failla dismissed the case against Darden Restaurants.  The judge found that because the restaurants clearly outlined the policy of the menu and customers who disagreed with the policy could choose not to eat at the establishment, there was no violation.  She also found that since most customers tipped at a higher rate and that because diners could inquire about the cost of drinks before ordering, there was no injury in this case.

While all restaurants should be careful to abide by laws relating to automatic gratuity and other surcharges, they are still allowed in New York City.  If you have a legal matter relating to these policies, contact the restaurant law attorneys at the DiPasquale Law Group today by calling (646)383-4607.

Tuesday, November 25, 2014

Recreational Marijuana Use Law Will Be Pushed Next Year
In 2014, the State of New York legalized the use of medical marijuana.  The possession and private use of minor amounts of the substance has been decriminalized in the state since 1977. Even so, tens of thousands of arrests are made each year in New York City for what is characterized as public use of the drug.  Now, legislators are seeking to put an end to that.

Democratic Senator Liz Krueger is committed to pushing the Marijuana Regulation and Taxation Act in early 2015.  The bill was introduced last year, rejected and has since been amended.  If passes, it would allow marijuana dispensaries regulated by the State Liquor Authority to be launched in New York.  The marijuana would be taxed and individuals would be permitted to possess two ounces and six plants for personal use only.  

Legislators backing this bill hope that the changes made to the tax and employment provisions since its introduction will be enough to gain the support it needs.  Some, like Governor Andrew Cuomo, have not taken a clear stance on the issue, although he has hinted that he does not support legalizing the drug for recreational use.  If the bill gains enough support, the law could be passed and go right into effect.

Senator Krueger’s chief of staff has said that the true inspiration behind the bill is the disproportionate amount of arrests of people of color for marijuana possession and use in places like New York City.  Senator Krueger has said that although she does not use marijuana herself, she believes that it should be considered a matter of public health.  Only two other states, Colorado and Washington, have legalized the recreational use of marijuana. Although a number of states are also considering bills of this kind.

The DiPasquale Law Group deals with all matters relating to the New York State Liquor Authority, including assisting clients in obtaining liquor licenses.   Should the Marijuana Regulation and Taxation Act pass, the firm plans to branch out into this new and exciting practice area.  If you have a question relating to a restaurant, liquor license or any other State Liquor Authority matter, call the New York attorneys at the DiPasquale Law Group at (646)383-4607.

Thursday, October 23, 2014

Brooklyn Bar Challenges Cabaret License Law

In 1926, New York City enacted the Cabaret Law.  This law is meant to regulate nightlife activities in bars, restaurants and other establishments.  The legislation has undergone many challenges and has been amended since, but it still not a popular law.  Even Michael Bloomberg tried to change the law during his term as Mayor.  In a 1988 case, the portion of the law prohibiting live music was found to be unconstitutional.  While the portion of the law prohibiting dancing has been challenged, it still stands.  Now the main effect of the law is essentially to prohibit dancing in any establishment without a City issued cabaret license.

In order to obtain a cabaret license an establishment must meet certain surveillance and security requirements and appear before their local community board.  They are then asked to pay a fee, sometimes as much as $1,000, for a license that lasts two years.  

Now, the owner of Muchmore’s a bar in Williamsburg, Brooklyn, is challenging the law again in Federal court.  The bar has live music almost every evening but does not have a cabaret license so customers are not permitted to dance. Owner, Andrew Muchmore, is claiming that the law is unconstitutional as it is violates Fourteenth Amendment due process and runs counter to the First Amendment freedom of expression provision of the United States Constitution.

As the City really does not enforce it (collecting only $350 in fines in 2012) and most applications for licenses are approved, the law is seen by many as a moot regulation still in place only to make the owners of establishments jump through hoops, sometimes at a great expense.  While the New York City Department of Consumer Affairs maintains the position that the purpose of the license is safety, they also admit that they are looking at a number of laws, including the Cabaret Law, to see if they can be revised.  

If you are a restaurant, bar or nightclub owner and are seeking a cabaret license, contact the New York restaurant lawyers at the DiPasquale Law Group by calling (646) 383-4607 for a consultation.

Thursday, October 09, 2014

Restaurant Workers Plagued With Sexual Harassment

Sexual harassment is defined as unwanted sexual propositions, gestures and language and is a problem in almost every industry.  The restaurant industry is particularly susceptible to these types of problems.  This industry employs a large number of people, many of which are paid at or below minimum wage.  Tipped workers are often paid a fraction of minimum wage as tips are supposed to make up the rest of their salary.  Although many state minimum wage laws dictate payment above these levels, Federal minimum wage for untipped workers is $7.25 while for tipped workers it is $2.13.

There has been a push at the Federal and state level to raise the wages of tipped restaurant workers either by paying them the same as untipped workers or raising the minimum wage altogether. A new study, put out by the Restaurant Opportunities Center United and called "The Glass Floor: Sexual Harassment in the Restaurant Industry", has provided further inspiration for these legislative changes.  The study, done this year, involved almost 700 restaurant workers from 39 states and shows that sexual harassment in the restaurant industry is occurring at a shocking rate. Many of the workers were from states where there was a gap in the minimum wage between tipped and untipped workers.  

While females are affected by sexual harassment more frequently, men are also subjected to it.  Tipped female workers were found to be harassed the most as they are required to do certain things that make them the targets of harassment by customers and other employees.  The study showed that two-thirds of women in the restaurant industry were sexually harassed by their superiors while three quarters of them were harassed by other employees on a monthly basis.  It also showed that one-third of women were harassed by customers on a weekly basis.  High numbers of men and women were sexually harassed by their higher-ups, but, women working for the Federal minimum wage of $2.13 per hour were harassed almost two times as much as those receiving the $7.25 hourly rate.

If you are a restaurant owner or operator and are having issues with sexual harassment at your establishment, you should consult with an experienced attorney today.  Contact the New York restaurant lawyers at the DiPasquale Law Group by calling (646) 383-4607.

Thursday, September 25, 2014

Wage and Hour Lawsuit Brought Against Famous New York City Restaurant

Wage and hour issues are common in the restaurant business.  With the complexity of the wage and overtime laws and spotty enforcement, many restaurant owners do not even know they are committing a violation.  There has been an explosion of wage and hour stories covered by news outlets in recent years.  Due to the enhanced awareness of wage and hour laws, there has been an increase in labor and employment lawsuits focusing on these issues, especially by those in the restaurant business.  An example is a recently filed suit against a famous upscale New York City restaurant.

Le Cirque restaurant caters to royalty, politicians and celebrities of every caliber.  With sky-high prices and white glove service, allegations of cheating employees out of wages may come as a surprise to some.  Former employee, Elvis Pena, claims he worked in various positions at Le Cirque including runner, bus boy and waiter and that during this time, he was not paid minimum wage.  Although he worked well over 40 hours a week, Pena claims that the restaurant did not pay him overtime wages.  He also asserts that he was forced to pool his tips with other employees and share these tips with captains, who are considered management, in violation of state and Federal labor laws.

Pena has filed a class action suit against the restaurant and its owner, Marco Maccioni, in a Federal court in New York City.  His attorney has stated that over 100 former and current employees of Le Cirque may be able to join the lawsuit as plaintiffs.  For now, Pena is seeking monetary damages.

It is unfortunate, but many restaurant owners have to deal with wage and hour lawsuits during their careers.  As the labor laws change, it is important to stay apprised of updates to ensure compliance with the newest regulations.  If you have been accused of a wage and hour violation or would like to discuss compliance with a qualified restaurant law attorney, contact the DiPasquale Law Group by calling (646) 383-4607.

Thursday, September 18, 2014

Changes to the Way NYS Restaurant Workers Are Paid May Be On The Way

Restaurant workers are paid in a number of different ways.   Usually, employees that do not have the opportunity to make tips, such as managers, hostesses and kitchen staff, are paid a salary or an hourly wage that is at or above the required state and Federal minimum wage.  Those that do have the ability to make tips, such as servers, bartenders and sometimes bus boys, are paid at an hourly rate that is below minimum wage.  The thought is that by collecting tips the workers will make at least the minimum wage if not surpassing it.  If the employee does not make at least as much as they would if being paid minimum wage, the employer is required to make up the difference.

Now, New York State service workers might be getting a raise.  Service workers include restaurant workers that make tips.  Various groups, including labor unions and service worker organizations, are pushing for these parties to be paid at least minimum wage, even if they are tipped.  They have submitted their pleas to state officials and it is now up to the state wage board to make a recommendation.  Once the board makes a recommendation, the New York State Labor Commissioner is responsible for making a final decision, which is expected in February of 2015.  

Over the next couple of years the New York State minimum wage will be increasing and will be at a rate of $9 an hour by the last months of 2015.  There have been many local and nationwide efforts to raise state and Federal minimum wages over recent years but localities such as New York City have resisted.

What does this all mean for restaurant owners?  Higher costs!  The requirement that service workers be paid more coupled with the increase in state minimum wage could mean that many restaurants will have to operate with fewer employees who are working fewer hours.  This will surely add to the struggle of owning a restaurant, especially in the extremely expensive New York City area.

The New York City based DiPasquale Law Group represents restaurant owner clients with employee wage and tip issues.  Call us at (646) 383-4607 for a consultation today. 

Saturday, September 13, 2014

Judge Finds For City in Suit Challenging Department of Health Inspections

The relatively new Department of Health restaurant inspection system has been the source of constant anxiety among restaurant owners in New York City.  As a result, a group of restaurateurs has brought suit against the City in the Manhattan Supreme Court.

The group of almost 40 restaurant owners attacked the system in its entirety.  They claimed that instead of making it better for restaurants in the City, being subject to the scheme has been bad for business in general.  The penalty structure, which is widely accessible via the internet, designates fines ranging from $200-$1,000 for listed violations.  The plaintiffs claimed that these fines are assessed arbitrarily and for the sole purpose of raising revenue.  They also alleged that often times, due to the differing experience of inspectors, the fines that were originally assessed were then increased when the site was visited by an supervisor. The plaintiffs also claimed in their suit that the City Council overstepped their authority when passing parts of the charter legalizing the Department of Health regulations.  They asserted that the provisions were unconstitutional as the City Council did not have the authority to pass them in the first place.  The group also sought changes to the appeals process and $150 million in damages.

The City challenged the suit stating that they did not overstep their authority and that there was no problem with the fines and a Supreme Court Judge agreed.   She found that provisions of the charter were not unconstitutional, using the recent overturn of the ban on large soft-drinks as an example.  She also decided that there was no problem with supervisors increasing fines after inspections, as they are supposed to be better at finding violations, and that the fines were not excessive.  The plaintiffs’ attorney stated that he would appeal the decision as the Department of Health inspection system has caused, and will continue to cause, “tremendous injustices” for restaurant owners.  

If you are a restaurant owner and need representation with regard to compliance with the Department of Health, contact the DiPasquale Law Group.  Call us at (646)383-4607 for a consultation today. 

Friday, August 29, 2014

Boozy Brunch Might Lead to Loss of Liquor License

Earlier in the year, there was some controversy regarding the legality of the ever popular bottomless brunch in New York City.  On Saturdays and Sundays a large number of New Yorkers attend all you can eat brunches that also include unlimited alcohol.  Now, one NYC hot spot might be losing its liquor license due to problems resulting from its booze-filled brunch.

Pranna Restaurant on 28th and Madison offers a $45 brunch that includes unlimited alcoholic drinks such as mimosas and sangria.  Residents of the area are claiming that this is causing a major problem in the neighborhood.  They allege that the excessive drinking is resulting in customers leaving the restaurant belligerent or being escorted out because of severe intoxication.  The patrons are unable to walk, throwing up and urinating in the street, lying down on the sidewalk, sitting in the street and fighting.  Residents also say that the restaurant is creating excessive noise and the customers are littering in the area.  Many of the complaints have been documented by residents using photographs and video recordings.  Residents also claim that the restaurant is operating as a nightclub with a club atmosphere and cabaret girls.  If Pranna was a nightclub this might not be such a big problem.  But, the establishment is a restaurant is not authorized to operate as a nightclub.

The local community has had enough and a Community Board meeting was scheduled.  The issue at hand was the renewal of Pranna’s liquor license and community members were given a chance to present their concerns.  The Board decided to give the restaurant three months to clean up their act.  If the situation is remedied during this time the establishment will be able to keep their liquor license.  If the problems continue, their liquor license renewal will be denied and their license will be revoked.  The restaurant owner presented a list of approximately 100 other NYC restaurants that offer a bottomless brunch but stated that he would do whatever it takes to keep his liquor license.

The DiPasquale Law Group has represented many NYC restaurants, bars and other establishments in applying for their liquor license as well as in the appeal of the denial or revocation of such.   If you own an NYC establishment and are having an issue relating to your liquor license, call us at (646)383-4607 for a consultation today. 

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The DiPasquale Law Group is a full service law firm that assists Restaurant and Nightclub Owners in all legal aspects of their business. Serving Manhattan, Brooklyn, Queens, and the Bronx in New York City. Attorney James DiPasquale, Principal.

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