Restaurant, Bar, Tavern, Nightclub Law

Why Can’t the Employee Screening Process Be Simplified?

A National Restaurant Association (NRA) representative told members of Congress that the increasing number of local and state employment verification laws and regulations have complicated the screening process for potential employees and exposed restaurant owners to increased legal liability. NRA senior vice president of labor and workforce policy, Angelo Amador, spoke at a February hearing of the House Judiciary Committee Subcommittee of Immigration and Border Security, saying that the Legal Workforce Act, which the association supports, should preempt local laws and create a more streamlined system for verifying job candidates’ immigration status.

The proposed law would change the existing Immigration and Nationality Act to make mandatory and permanent the use of the federal electronic employment eligibility verification system, E-Verify. Amador testified:
“In the current system, employers are boxed in by federal regulations that, on one side, require them to conduct the I-9 (employment verification) process on every person they hire and, on the other side, limit their ability to question the validity of authorization and identity documents used during that process…Out of this frustration, and the frustration caused by the federal government’s inability to move forward on the issue, many states and localities have responded with a patchwork of employment verification laws.
Read more . . .

Are my employees affected by the President's executive actions on immigration?

Immigration is a hot button political issue. Despite varying views from political parties and people around the country, the reality is that much of the restaurant industry would cease to function without immigrant labor.

Recent executive action by President Obama expanded some immigration programs.
Read more . . .

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.

This Thursday August 28, 2014 from 5:30 to 7:30 p.m. I’ll be giving a seminar in the Restaurant Management Bootcamp 2.0 Series that is hosted by NYC Small Business Solutions.  The Course Description is copied below:

Restaurant Management Bootcamp 2.0: Legal Considerations when Opening a Bar or Restaurant
An insider look at tips, tricks, and best practices to start your first restaurant in NYC, presented by Restaurant Attorney James D. DiPasquale.  To start and run a successful restaurant you must understand many different legal considerations which make operating in New York City, particularly unique.  Whether you are a new or existing restaurant owner, this special follow-up to the Restaurant Management Bootcamp class will help you gain a deeper understanding of all of the basic requirements to get your business up and running.

If you have opened a new restaurant or bar in the last two years, you have likely noticed that New York City landlords are becoming steadfast in their demand that all new leases contain demolition clauses.  Old office and residential buildings are potential redevelopment opportunities which landlords are no longer willing to overlook.  Landlords, of course, want to maintain a steady income from the property while also maintaining their flexibility to terminate leases and/or relocate tenants if the need arises.  If a landlord has redevelopment in mind, then a right to terminate existing leases so that demolition or substantial renovation can occur may be necessary. However, from a tenant's viewpoint, such a right, without limitation, can be less than satisfactory. Sometimes arriving at an appropriate middle ground can be impossible. Just ask Wylie Dufresne whose restaurant wd~50, is closing because the building is being torn down for renovation.    Similarly, according to Eater NY, P.J. Clarke’s is in the middle of a $40 million dollar lawsuit with its landlord who is allegedly attempting to push them out so as to make room for Pastis.  In short, tenants cannot overlook a landlord’s desire to evict them should an opportunity arise.  For that reason, when negotiating a new lease, Tenants must consider things such as:

1.  Buying the Assets vs. Buying the Company

Buying a business can be structured as an asset sale or as the purchase of an ownership interest in the legal entity that owns the restaurant. There are critical differences between these two options which come into when dealing with the State Liquor Authority, Sales Tax Department and a myriad of vendors.  Generally speaking, if you only buy the assets of a restaurant you will not be responsible for the prior owner’s liabilities unless you specifically agree to assume them.  This is true with the exception of the prior owner’s sales tax liability, if any, for which you must obtain a waiver from the tax department.

Despite this, sometimes it is in your best interest to buy the company itself, even though the seller’s liabilities might remain. This is particularly true when you intend to apply for a liquor license in a difficult community in New York City.   Only by reviewing all of the facts can you best determine how to structure your deal.

2.  What Assets are Included

Every restaurant and bar has a myriad of assets, both tangible and intangible. Some assets are owned outright while others are frequently leased (e.g. dishwashers, soda machines, POS systems).  Be sure to identify each and every asset you are acquiring in the purchase and which assets the Seller has no right to transfer.  If the Seller is leasing equipment, does he/she expect you to assume his lease agreement and if so, what are the terms of the lease.  No buyer wants to close on a purchase only to discover that the many of the assets have been removed from the restaurant because the seller was under a different impression as to what was  being sold.

I came across this list. “The Top 15 Reasons Why Restaurants Fail”:

1. Lack of experience, 2. Lack of capital, 3. Poor locations, 4. Inventory, 5. Equipment, 6. Poor credit practices, 7. Personal expenses, 8. Premature expansion, 9. Bad attitude, 10. Too many expenses, 11. Poor collections, 12. Low sales, 13. Inventory mismanagement, 14. Competition, and 15. Crime

I’m not sure that I agree with the list entirely. Let me start by saying that I am not a restaurant owner. I am a restaurant attorney. So, I may be wrong (and often am) but many of my clients who have sold their business express different reasons as to why their business failed. This is what I’ve gathered to be their top reasons why restaurants fail:

(1) Lack of Concept. A successful restaurant needs a clear concept. Owners that can’t describe their concept beyond the food that they prepare seem to drift from idea to idea. When an idea fails, they change again. They try to appeal to the greatest audience but in doing so, become too general and possess no identity that lets them stand out from their competitors.

(2) Family. The support of one’s family cannot be underestimated. My clients whose families are supportive of their endeavor tend to succeed. However, this seems to be a double edge sword. Supportive families usually mean a good family structure. I find that many of my clients have difficulty in balancing work/life. They see all that their family is doing to support them, and they in turn, want to be with their family. Running a restaurant is hard and very time consuming and does not leave much time for one’s family. Some owners find this very difficult and when they try to carve out too much time for their family, their business can sometimes suffer. My clients that most often succeed seem to be single or divorced. Now I’m not suggesting that families are bad for business (quite the opposite) but balancing family and work seems more difficult for restaurant owners given the time requirements they want (and need) to dedicate to both.

If you entered a restaurant in NYC prior to 2002, the hostess was quick to ask two questions: “How many?” and “Smoking or non-smoking?” After a major crackdown that banned tobacco in all public places including bars, restaurants, parks, sports venues and subway stations, one question was eliminated from the hostess’ standard repertoire and slowly but surely smoke cleared from all eateries throughout the city. Over the past few years, however, cigarette smoke has been replaced with the vapor of e-cigarettes.

Although e-cigarettes have been hailed as a safe alternative to the tobacco and tar found in traditional cigarettes, many opponents of “vaping” (the act of smoking an e-cigarette) fear the long-term health implications, arguing that these have yet to be studied. In response to these concerns, on his second to last day in office, former NYC Mayor Michael Bloomberg extended the Smoke Free Air Act to include e-cigarettes, prohibiting the use of these battery powered devices in all public places, including restaurants and bars. This ban goes into effect later this week and violators may be subject to hefty fines.

Celebrity Chef Gordon Ramsay Faces a Lawsuit by a Longtime Partner

Opening a bar or restaurant, or any business for that matter, in New York City has the potential to be expensive and risky, which can sometimes act as a deterrent for individuals who want to start a company of this kind on their own. Instead, partners and investors may be brought in to pool resources and talent. Restaurant partnership agreements vary greatly depending on each individual business, and disputes, misunderstandings and even potential cases of fraud can arise over such contracts. A recently filed lawsuit by an investor against celebrity chef Gordon Ramsay serves as a case in point.

Several years ago, Ramsay opened a Los Angeles restaurant called The Fat Cow with financial backing by Rowen Seibel, who had already worked with Ramsay on the opening of several other restaurants, including Gordon Ramsay Steak, Gordon Ramsay Pub & Grill and BurGR, all in Nevada. Seibel likely had little cause to anticipate a conflict, but quickly realized he wanted to pursue legal action.

As of April 1, New York City restaurant workers have a financial safety net if they have to miss work because they're sick or have to care for a sick family member.

This is great for the employees receiving this type of compensation for the first time, but, how will the new sick leave law affect NYC restaurant owners?

Shiv Puri, owner of Manhattan's Bombay Sandwich Company, was concerned about the cost when he first heard about the law. However, after calculating costs and receiving more information, he is now confident about this new measure ,The New York Times reported. Puri said his eight employees were excited about this news, he said "It’s the law and it’s the right thing to do. It won’t bust the bank. It won’t put us (the business) in jeopardy.”

Puri pays his workers $10 an hour, which is $2 more than the state minimum wage rate, and considers himself a progressive employer, but as we stated, he was worried that the newly enacted regulation would negatively affect his business.

Some important things to note about NYC sick leave law:

Many media outlets jumped on a (false) report that brunch deals which include unlimited drinks within a certain time period are illegal in New York City. This news shocked New York's die-hard brunch fans, but the panic quickly ceased when the media noted shortly thereafter that the deals aren't actually illegal. So, New York City brunch-goers are free to have their fill of weekend afternoon mimosas after all. More importantly, the city's restaurants aren't in violation of state law when they host brunch specials that include alcoholic beverages.

What caused this so-called panic? The New York Hospitality Alliance posted a reminder on its website recently that simply read: “NYC restaurant and nightlife operators should familiarize themselves with the law," in reference to N.Y. 117-A, which prohibits “selling, serving, delivering or offering to patrons an unlimited number of drinks during any set period of time for a fixed price.”

This law was created more than five years ago in response to complaints that restaurants and bars were over-serving patrons, leading to extreme intoxication, Business Insider reports.