The Equal Employment Opportunity Commission (”EEOC”) has targeted the restaurant industry as the “single largest” source of sexual harassment claims. With all the media attention on the subject lately, the number of sexual harassment cases filed each year against restaurants and their owners are escalating at an all too rapid pace. Restaurant owners must now take a pro-active stance to keep such complaints from damaging their operation. All employees, male and female, need to be formally informed as to what types of conduct are unlawful. Assuming that your managers and employees know how to behave without explicit guidelines could be your ticket to the courthouse. A series of Supreme Court decisions have defined what “sexual harassment” means. Those cases, and the interpretive guidelines of the Equal Employment Opportunity (EEOC), define two distinct types of sexual harassment:

• quid pro quo (a legal term meaning “this for that”), in which a supervisor demands sexual favors from an employee and threatens to fire the employee if the conditions are not met; and

• hostile environment, in which a supervisor or employee creates a work environment through verbal or physical conduct that interferes with another co-worker’s job performance or creates an intimidating work environment. A hostile environment is created when unwelcome sexual behavior is repeated. For example, an employee keeps telling off-color jokes after another staff member says they are offensive, or one employee keeps asking another employee for dates after being refused.

GENERAL RULE: An employer’s obligation with regard to sexual harassment arises before any act of harassment even occurs. As such, most lawyers practicing in this field strongly urge their employer-clients to distribute a clear and explicit sexual harassment prohibition policy and reporting procedure. Additionally, Anti-harassment training should occur on a regular basis which should educate managers and other employees as to what conduct is specifically prohibited (including a presentation of hypothetical harassment scenarios) and what to do if the employee believes they have been/are being harassed.

This policy and training is critical because under federal case law, an employer can fulfill its obligation if it takes all reasonable steps to prevent harassment before it occurs and takes effective steps to promptly remedy the harassment after it takes place. If these general principles are consistently and carefully applied, the employer can go a long way towards limiting its exposure and liability for sexual harassment.

MUNICIPAL NOTIFICATION CHANGES ‐ Effective immediately there are major changes in the 30 day advance municipal notification requirements. Some changes affect the entire state, others affect licensees in New York City and still others affect licensees outside of the five boroughs of New York City. Here is a breakdown of the changes:

STATEWIDE: Municipal notification for original on‐premises applications remains in place statewide;
All licensees must now pay the same $128.00 corporate change fee. 

OUTSIDE OF NEW YORK CITY: All alteration and license renewal notification requirements for licensees are eliminated outside of the City of New York.

NEW YORK CITY:  Substantial corporate changes (80% ownership interest or more) will now require 30 days prior notification to Community Boards for New York City licensees.  Alteration and license renewal notification requirements remain in place for New York City licensees with the exception of off‐premises licensees who will no longer need to notify Community Boards of alterations.

In anticipation of their upcoming IPO, Groupon requested a declaratory judgment from the New York State Liquor Authority (NYSLA) regarding whether there was any violation involved with having Groupon offer 50% off of alcoholic beverages at various establishments in New York.

After much deliberation, the NYSLA ruled that the 50% off offer was perfectly legal. The NYSLA stated that since customers received no more than 50% off of the retailers’ drink prices, it did not constitute a violation of the “unlimited drinks offering” prohibition.

The New York City Health Department requires that restaurants publicly post A, B, or C letter grade cards that summarize their sanitary inspection scores.  Not posting a grade card – or posting it incorrectly – is a serious violation that may result in large fines or loss of your permit. To avoid penalties, food service operators and their representatives and attorneys should follow these instructions carefully.

1. Where does the grade card have to be posted?
The grade (or grade pending) card must be posted on a front window, door or outside wall where it is easily seen by people passing by. The card must be within 5 feet of the entrance and from 4 to 6 feet off the ground or floor. If there is no direct entrance to the street, the Health Department sets the place to post the card. The Health Department tracks each grade card by its serial number. It may issue a Notice of Violation to any establishment that fails to post the right card, or posts it in the wrong place.

2. When am I required to post the grade or grade pending card?
The restaurant must post the grade or grade pending card as soon as the inspector provides it. If the restaurant receives both a grade card and a grade pending card, the operator has the choice of posting one of these two cards immediately, until it has had the chance for a hearing at the Administrative Tribunal.
3. Are there penalties for failing to post the grade card, or posting it incorrectly?
Yes. Not posting a grade card can result in fines of up to $1000. Posting the grade card incorrectly can result in a $200 fine. Repeated violations may result in loss of your permit.
4. How do I get a hearing at the Administrative Tribunal?
Everyone who receives a Notice of Violation has the right to a hearing at the Administrative Tribunal. Your scheduled hearing date is printed on the front of the Notice. Directions for how to respond to the Notice are on the back.
5. I had my hearing, and I was given a new grade card. What should I do with it?
When a restaurant receives a grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision changed the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card issued by the Tribunal, and
• DESTROY the letter grade card and grade pending card that the inspector gave you
at the inspection.
6. I had my hearing, but I was not given a new grade card. Which card do I post now?
If you did not receive a new grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision did not change the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
7. My restaurant accepted a settlement offer. Which card do I post now?
If you accepted a settlement, your inspection score and grade did not change.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
8. What if I miss my hearing date at the Administrative Tribunal?
If you do not respond to your Notice of Violation by 1) accepting a settlement offer;
2) appearing at the Tribunal on your hearing date; 3) writing to the Tribunal for a hearing by mail; or 4) asking on or before your hearing date for an adjournment:
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
9. I asked for a new hearing date (“adjournment”). What card do I post in the meantime?
If this is the first adjournment you requested, you can continue to post your grade card, or grade pending card. If you ask for another adjournment or miss your second hearing date, you must post the letter grade card the inspector gave you at the inspection.
10. What if I receive a default decision?
If you received a default decision, it means that you did not respond to your Notice of Violation. You were required to post your grade card on the day you missed the hearing. If your grade card is not posted when you receive a default decision:
You must immediately:
• Post the grade card the inspector gave you at the inspection, and
• DESTROY the grade pending card.
11. Do I have to post the actual grade card? Can I post a photocopy or fax instead?
You must always post the actual letter grade card as required (see Question 1). You cannot substitute a photocopy or fax for the real grade card.
12. How do I replace a lost or damaged card?
You can get a new card at the Health Department’s Bureau of Food Safety and Community Sanitation, 253 Broadway (between Murray and Warren), 12th Floor, in Manhattan.

Restaurant owners and chefs often conflict with regards to who owns the copyright to the recipes created by the Chef for the dishes served at the restaurant. This conflict occurs so frequently because the answer requires inquiry into a number of factors in order to make a proper determination ownership.

Recipes that merely list ingredients are not copyrightable. They become copyrightable when they contain expression beyond the mere listing of ingredients, such as mixing and cooking directions, tips, photos, etc. Once they become copyrightable, they must be put in writing (or in some other tangible form such as a recording) in order to receive copyright protection. They are copyrighted the second they are written down and they do not need registered with the U.S. Copyright Office (although registering them does provide additional advantages such as proof of latest creation date, public record, and registration is required in order to file a copyright infringement lawsuit).

GENERAL RULE: THE COPYRIGHT FOR RECIPES CREATED BY THE CHEF WHILE WORKING AT THE RESTAURANT WILL BELONG TO THE RESTAURANT.

Once they are reduced to writing, the timing and circumstances of such will determine who owns the copyright. For example, if the chef copyrighted the recipes prior to working for the restaurant (eg, created and wrote them down), then the inquiry stops there: the copyright belongs to the Chef.  If the Chef created the recipes on his personal dime and time but during his employment period with the restaurant, then the Chef will own the Copyright.  If the Chef created the recipes while working at the restaurant, then the copyright will belong to the restaurant in accordance with the Work For Hire Doctrine in the Copyright Act.  One simple way to eliminate all of the uncertainty is to execute a written “Work For Hire” agreement specifying that all recipes created during the period of employment shall become the property of the restaurant. There are numerous exceptions and nuances to these general rules and a consultation with a qualified attorney should be had to determine actual copyright ownership of recipes in each particular circumstance.

Since the effective date of the new New York state wage regulations in January of 2011, the rules regarding tip sharing in restaurants and hotels have been the subject of much confusion. This article sets out to clarify the new “tip sharing” rules with hopes that you then will not unwittingly violate them.

GENERAL RULE: The new regulations now specify the job categories that are eligible to share tips from the dining room: food service workers only, including waiters, bartenders and bussers, as well as sommeliers and hosts, provided they are not managers or acting as such.  Excluded are owners, managers and all office and kitchen staff.

The new rules allow restaurants to dictate both the system and the percentage allocated to each job category. Gratuities can be combined in a pool, to be divided by all the staff members according to a set percentage of allocation or individual servers can collect their own tips and give portions, or shares, to members of their specific team.

The Labor Department requires that employers keep records of tip pools and shares; the records could be examined during investigations undertaken by the department on its own or in response to complaints and the Labor Department can compel a restaurant to pay money owed to employees going back six years. In addition, failure to comply with the rules can make a restaurant vulnerable to a lawsuit, something restaurateurs are especially wary of these days, given how aggressively some lawyers are pursuing these cases.

The way restaurants currently share tips varies widely. Some restaurants spread the wealth by percentage at the end of the night while others assign a number of points to each job, calculate the value of each point depending on the total amount of tips and then distribute the money accordingly.

There are also different ways of including the bar; at some restaurants, bartenders collect their own tips as well as a share of those from the dining room, while at others they do not. And some places have waiters tip others based on a percentage of their sales, rather than their gratuities.

Higher-end, full-service restaurants tend to favor the pooling of tips, because it fosters less disputes over stations and shift assignments, provides an incentive for teamwork and encourages the servers to monitor their own performance.

Formerly, a convicted felon could not be employed in a New York State Liquor Authority licensed premise with first obtaining a Certificate of Relief from Disabilities.  Obtaining that Certificate was often a difficult, expensive and time intensive task.  In 2010, the New York State Liquor Authority eased the restriction as follows:  
 

a. Anyone who is convicted of a felony or convicted of:
i. Illegally using, carrying or possessing a pistol or other dangerous weapon;
ii. Making or possessing burglar’s instruments;
iii. Buying or receiving or criminally possessing stolen property;
iv. Unlawful entry of a building;
v. Aiding escape from prison;
vi. Unlawfully possessing or distributing habit forming narcotic drugs;
vii. Jostling (Penal Law §165.25), fraudulent accosting (Penal Law §165.30) or
loitering (Penal Law §240.35);
viii. Vagrancy or prostitution; or
ix. Ownership, operation, possession, custody or control of a still.
b. May work in any of the following licensed premises:

i. Catering establishments (CT);
ii. Hotel (HL);
iii. Restaurant (see “restaurant” definition in §3 of the NY ABC Law);
iv. Club (CL); or
v. Recreational Facility (theatre; concert hall; opera house; bowling establishment;
excursion and sightseeing vessel; facilities for golf, tennis, swimming, skiing or
boating; or accommodation of athletic events, sporting events, expositions and
other similar events or occasions requiring the accommodation of large
gatherings of persons),

c. May not work in the following licensed premises, unless such individual has received and executive pardon removing any civil disabilities, a certificate of good conduct, other relief from disabilities or upon the written approval of the New York State Liquor Authority:
i. Nightclub (OP), if not a “Restaurant”;
ii. Tavern (TL, TW);
iii. Cabaret (CR); or
iv. Bar (OP), if not a “Restaurant”.

Previously, the ABC Law required most license applicants and renewal applicants file notifications via certified mail with their local community boards a minimum of 30 days in advance of filings with the New York State Liquor Authority. Effective January 11, 2011, the types of notice that are considered legally sufficient to satisfy these notice requirements have expanded as follows: overnight delivery or personal service is added to the list of options available for new or renewal applicants for on-premises beer licenses, full on-premises liquor licenses, restaurant-brewer licenses, cabaret licenses, and on-premises wine licenses. In addition, overnight delivery is added to the list of options available for alteration applications [ABCL §99-d(1)].

Starting Jan. 1, the changes to the New York State Department of Labor’s Hospitality Industry wage order include an increase to $5 from $4.65 in the minimum hourly wage rate for tipped food-service employees. Minimum wages for service employees earning tips will rise to $5.65 from $4.90, while tipped service employees working in resort hotels will earn a minimum wage of $4.90 rather than $4.35. Also, if the time elapsed between the start of an hourly restaurant or hotel employee’s work day and the end is more than 10 hours—including off-duty time—the employee must be paid for one extra hour at minimum wage.

In addition to the increase in minimum wage, the DOL will also allow employers to mandate whether tip “sharing” or tip “pooling” takes place within their establishment. Previously, restaurant operators could mandate tip sharing but not tip pooling. The recommendations also relieve restaurant operators from having to pay for laundering of uniforms, providing they are of the “wash and wear” type. Restaurants will also be able to share in the proceeds from Administrative Charges, providing they clearly indicate to customers where the money will go.

On November 17, 2010, the Executive Committee of the New York State Liquor Authority authorized the issuance of a new permit to liquor license applicants. Specifically, the New York State Liquor Authority may now issue a 20 Day Temporary Letter allowing the applicant to serve for 20 days provided that they are only missing the following from their liquor license application:
1) Certificate of Authority;
2) Workers’ Compensation or Disability Insurance;
3) Newspaper Affidavit;
4) Photos showing that the applicant is ready to open; and/or
5) Surrender of the current license in effect for the premise, if any.

Presently, this new 20 Day permit policy will remain in effect until February 17, 2011 at which point it will be revisited by the Authority.