Restaurant, Bar, Tavern, Nightclub Law

In association with NYC Business Solutions, the DiPasquale Law Group will be providing a free seminar for restaurant owners on issues relating to the New York City Health Code on December 4, 2013 between 2:00 p.m. and 4:00 p.m. The seminar will focus on (1) preparing for your inspection, (2) monitoring the inspection process, and (3) preparing for and defending yourself before OATH. You can register for the Seminar here.

One of the most important areas of law which restaurant owners have to contend with is labor and employment. In New York City in particular, restaurant owners and operators find it challenging to keep up with the myriad of federal state and city regulations that apply to their establishments. Working with an attorney that has experience and expertise in these issues can help you stay in compliance and out of legal hot water. 

As discussed in a recent NY Times article written by David Steitfeld, a study conduced by Harvard Business School found that restaurants that were able to increase their rankings on Yelp by one star saw an increase in revenues by 5-9%.  It is no surprise that higher ratings on review sites like Yelp have the ability to draw in more crowds, but are some business owners going too far to get that extra star? New York Attorney General Eric Schneiderman thinks so, and he is taking action.

Mr. Scheiderman led a yearlong investigation to track down companies that are paid to create fake reviews (known as “astroturfing”), as well as the business owners who hired these companies. So far, 19 companies have been ordered to pay $350,000 in penalties for these misleading practices.

The process for renewing a liquor license is about to change. New York State Senator Klein and Assemblyman Crespo recently sponsored a bill that passed both houses in the state legislature and is merely awaiting the signature of Governor Cuomo to take effect. The new law will allow the State Liquor Authority to have increased access to New York Police Department records regarding crimes and complaints associated with licensed premises, thus creating a more difficult renewal process for bar and restaurant owners.  

According to the Press Release by Senator Klein’s office, the proposed legislation will allow community boards to recommend that the NYPD provide the SLA with “useable information.” It is unclear what exactly falls into the category of “useable information” and to what extent 311 complaints will be included. Any bar or restaurant owner who has had to deal with crazy neighbors knows that 311 complaints are not always the most reliable source of concerns, and could pose a bigger problem than necessary if taken at face value.

I. All Night Permits

Establishments that currently have an active license to sell alcohol at retail on their premises (“on premise license”) may apply for a special “all night permit.” An all night permit allows licensees to remain open until 8:00 a.m., and is most commonly used for New Year’s Eve parties.  Before the State Liquor Authority will issue this special permit, certain conditions must be met.

Firstly, the State Liquor Authority must receive the application for an all night permit no later than 45 days prior to the date of the event. For New Year’s Eve, the application deadline is quickly approaching on November 16^th.  The applicant must also notify the local police department or county sheriff’s department of their intention to apply for the special permit, and any restrictions or conditions (aside from closing time) that the licensee must adhere to under their normal license will still apply.

The State Liquor Authority will consider any past or pending disciplinary actions against the establishment when deciding whether to grant the all night permit.

On Monday, September 23, 2013 from 3:00 to 5:00 p.m., I’ll be teaching the Restaurant Management Bootcamp 2.0 Series which is hosted by NYC Small Business Solutions.  The Course Description is copied below:

Restaurant Management Bootcamp 2.0: Legal Considerations of Opening a Bar or Restaurant in NYC.

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.

Restaurant goers are always looking for the next new and exciting dining experience. It is no surprise, then, that “underground supper clubs” are becoming increasingly popular – not only in New York City, but throughout the world. An underground supper club allows diners to reserve a spot in someone’s private home where they pay the host for their meal.

Several companies have created websites to facilitate these intimate and unique gatherings. For example, EatWith is a company that was founded in 2012 in Tel Aviv and has quickly expanded in Europe, South America and now the United States. While other countries may be more accepting of this practice, health and sanitation laws in the United States present huge roadblocks for supper club enthusiasts.

With the Mayoral election coming up, City Council speaker Christine Quinn is doing her best to get the votes of restaurant owners throughout New York City. In recent months, Quinn proposed a reduction in fines for health code violations in restaurants, and it seems that she is delivering on her promise. Quinn just struck a deal with the Department of Health that is expected to cut fines by $10 million a year and add some consistency to the restaurant inspection process.

Prior to the recent changes, fines ranged from $200 to $2000 per violation, as determined by a hearing officer. Under the new fine structure, 60% of violations will be set to a $200 fine and the remaining violations will be reduced by 15-50% of the current fines. Additionally, restaurants that receive less than 14 points after the hearing on their initial inspection will not have to pay any fines for that inspection. And finally, if a restaurant gets a violation for a structural irregularity (e.g., an improperly placed sink), but can demonstrate that they had never been cited for the irregularity in the past, that violation will be waived.

Several provisions of the Affordable Care Act (“Obamacare”) will impact small business owners and their employees. Many of our restaurant clients have expressed concerns about the cost of providing health insurance for all of their employees or otherwise being forced to pay a tax penalty. For those who are worried, the Obama Administration’s recent announcement that the mandate will be delayed until 2014 comes as a relief. This extra year will allow business owners needed time to plan for the upcoming changes.

While the mandates for small businesses may be daunting, there are several things that business owners should keep in mind. For starters, not all businesses will be affected. The term “small business” is somewhat misleading; only employers who have 50 full-time (or “full-time equivalent”) employees are mandated to obtain health insurance for their employees. One “full-time equivalent” employee is defined as two part-time employees, for example. Many restaurant owners employ less than 50 full-time employees and therefore will not be affected.

Can I allow customers to “BYOB” while my liquor license application is pending?

NO! Restaurants and bars may not allow customers to “BYOB” (Bring Your Own Bottle) while a license is pending. Although we have all seen establishments advertise that they are “BYOB,” doing so without a license is not legal in New York State and puts you at risk of getting your pending (or future) license application denied by the State Liquor Authority. Establishments that want to allow customers to BYOB must apply to the State Liquor Authority for a “bottle club license.”

Can my establishment host an open bar? Can we serve “bottomless brunches”?

NO! The Alcoholic Beverage and Control Law prohibits open bars. Specifically, the law does not allow patrons to pay a fixed price for an unlimited number of drinks during a set time. For this same reason, “bottomless brunches” where patrons can pay for a brunch meal with unlimited mimosa, bloody marys, etc. is illegal.  The State Liquor Authority does allow, however, “2 for 1” drinks and other similar drink specials as long as the price of a drink is not lower than ½ of the premise’s regular drink price.

I am buying a restaurant that already has a liquor license. Can the seller transfer the liquor license to me?

A case filed in federal court this week brings up some important issues for bar and restaurant owners to consider. Are you legally permitted to play music at your establishment? If you do so without prior approval or licensure (from the Artists themselves), you may face large penalties.  Even if you legally purchase music from iTunes, you are still prohibited from playing your downloaded music without obtaining the appropriate music distribution license; this is because your use of the music is for a “commercial purpose” rather than personal enjoyment. This is also true if you have a cover band play at your establishment. 

“Commercial purpose” or “commercial use” is defined as any use of a copyrighted song that somehow helps a person earn money. It is assumed that restaurant and bar owners play music at their places of business to draw in crowds, and thus, to earn money.