Restaurant Law Blog

As New Year’s Day (January 1, 2012) falls on a Sunday, All Night Permits allowing establishments to stay open until 8:00 a.m. are not being issued by the State Liquor Authority. Section 106(5)(a) prohibits alcoholic beverages to be sold, offered for sale or given away upon any premises licensed to sell alcoholic beverages at retail for on premises consumption on Sunday between 4:00 a.m. and 12:00 noon on Sunday.  The State Liquor Authority has clearly stated that restaurants and bars will be required to adhere to the approved closing hour in the County in which they are located, unless such establishments submitted an application for a New Year’s Eve Permit on or before November 15, 2011 and been notified by the SLA that their permit was approved. 

James DiPasquale

DiPasquale Law Group

Just before Christmas, Community Board 10 in Harlem, considered and then ultimately tabled for further discussion, a proposal by their Economic Development Committee which recommended that new restaurants and bars be required to stop serving alcohol by 2:00 a.m. 

Notably, Community Boards cannot change the hours of operation for existing businesses nor can they require new restaurants and bars to close earlier than 4:00 a.m.  Those decisions aare left to the legislature and the New York State Liquor Authority. 

How long will it be until the Federal Government starts to crack down on New York City restaurant owners for employing illegal aliens?  It may happen soon. 

This past week, the owner of French Gourmet, a restaurant in San Diego, was sentenced in Federal Court and ordered to serve 5 years of probation and pay $396,575 in fines.  The manager was ordered to serve 3 years of probation and pay $2,500 in fines for his role in hiring illegal immigrants. 

“When employers do not comply, we will take vigorous enforcement action to ensure they do not profit from this illegal tactic," said U.S. Attorney Laura Duffy.   This case reflects a new approach by federal authorities as they crack down on the hiring of illegal immigrants. After years of conducting sweeps of undocumented laborers, the federal government is now focusing more on the employers who knowingly hire them.

As noted in my October 2011 newsletter, The New York City Department of Health proposed a significant amendment to the New York City Health Code in an effort to clarify what is required of restaurant owners.  That amendment was opened for public comment on October 27, 2011 and on December 13, 2011 was voted on and approved by the Department of Health.  Three people testified and 12 comments were submitted on October 27^th, and in response several changes were made to the earlier proposal.  Considerable testimony came from Andrew Rigie of the New York State Restaurant Association. 

A friend and client of mine was recently interviewed by Daily News’ reporter Clare Trapasso about his phenomenal product, Beyond Kombucha, which is now set for delivery.   Here is the article:

As a restaurant or bar owner, it is important to remember that you can be held liable for serving alcohol to minors or to someone who is visibly intoxicated.  In essence, if your waitstaff or bartenders serve a minor or someone who is visibly drunk, and that person causes an accident while driving home, your restaurant can be held responsible for the injuries or personal property damage caused by your drunken patron.  So, as holiday parties get into full swing, please keep that in mind. 

James DiPasquale, Attorney at Law

DIPASQUALE LAW GROUP

Employee handbooks are key to standardizing and communicating company policies. It is vital that a handbook is carefully drafted to meet the needs and realities of the particular company. Poorly drafted handbooks can have unintended and unexpected legal consequences. There are several issues that all companies should be aware of when creating and maintaining their handbook.

1. Improperly drafted handbooks can give rise to contractual obligations by a company to its employees. All handbooks should prominently display a disclaimer of contractual intent. The disclaimer should be clear and easily understood so that a reasonable employee could not believe that the handbook represents a contract. The disclaimer should be placed in bold at the beginning of the handbook.

Most restaurants operate as a limited liability company with the expectation that its members will be protected from personal liability.  Despite this many owners never enter into an operating agreement with their business partners, or alternatively enter into a poorly drafted agreement that does nothing to guard their perceived limited liability status. A major reason to have an operating agreement is to ensure that courts will uphold your limited personal liability especially if you are a single member LLC which resembles a sole proprietorship.

The New York State Liquor Authority would prohibits a licensed establishment from transferring the financial interest in its business to an unlicensed third-party.  This is done to prevent those who otherwise would not qualify for a license from benefiting financially under someone else's liquor license. At the request of Groupon, the New York State Liquor Authority issued a declaratory ruling as to whether Groupon’s proposed coupons would be in violation of the Alcohol Beverage Control Law.

The SLA described the proposal as a third-party provider desiring to sell coupons on its website to be redeemed for discounted food and alcohol at bars and restaurants.  The questions before the SLA were: (1) whether the agreement between Groupon and a licensed retailer would be deemed an illegal availing of the license, and (2) whether the promotion constitutes a prohibited unlimited drinks offering.

There is a common misconception among restaurant owners that if you purchase the assets of an existing restaurant (as opposed to purchasing the Corporation itself) you will not inherit the debts or obligations of the seller.  That is not always the case. 

New York State has a bulk sales liability provision which requires the buyer of part or all of the assets of an existing business to complete and file a bulk sales notice with the New York State Division Of Taxation And Finance.  If you fail to provide this notice and/or withhold sufficient funds from the purchase price (pending determination by the Tax Department) the buyer will be held personally liable for the seller’s unpaid sales and use taxes.  More specifically the buyer must, at least 10 days before taking possession or paying for the assets, first notify the Tax Department of the proposed agreement. The Tax Department then has 90 days to notify all parties of the total amount due, if any. If the Tax Department fails to notify the parties within 90 days, then the buyer will be absolved from the seller’s unpaid sales tax liability. Often however, the parties do not want to wait 90 days until they receive notification from the Tax Department to close on their purchase agreement. In that instance an amount sufficient to pay the outstanding tax liability must be held in escrow until the Tax Department responds.

A proposed amendment to the New York City Health Code that was opened for public comment on October 27, 2011 will now be subject to a vote by the full board of the Department of Health on December 13, 2011 at 10 AM.  Assuming the Board will vote to approve the new amendment, there is no indication as to whether the revised health code will go into effect immediately or whether its provisions will apply retroactively. If you would like a copy of the proposed changes, please let me know and I’ll email you a PDF version.