New York Restaurant LawNew York Restaurant Law - Mark B. Stumer & Associates
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Apr 19 2018

Should my New York based business be a Delaware LLC?

Published by under Uncategorized

 

The answer is very a simple and unequivocal, “NO.”  I decided to write this post because I get asked that question at least once a month and there is a lot of misinformation on the subject.

Despite the correct answer being NO, many lawyers and accountants still advise otherwise based on their lack of understanding about how the NY tax code and jurisdiction laws works. While it is true that Delaware taxes and laws are more beneficial to employers than New York taxes and laws, NY based businesses however don’t get any of that benefit.  In fact, if you form a Delaware LLC for your New York business, you will be required to file tax returns in both states and make additional filings in NY such as an application for authority for a foreign business. You will also be required to maintain a registered agent in DE which will come at an additional cost to you.

If your business is in NY, you will be required to pay NY taxes regardless of where you choose to form your LLC.  Further, if you do form your LLC in Delaware but operate in NY, you will subject to NY jurisdiction and law for any legal claim that arises in NY (absent a contract claim where the contract contains a DE jurisdiction and choice of law provision).

Thus, there is no tax benefit and (in almost every conceivable scenario) there is no legal benefit for forming your New York based business as a Delaware LLC.

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Apr 16 2018

Stop Sexual Harassment in NYC Act Enacted

 

 

On April 11, 2018, the New York City Council enacted a package of legislation referred to as the “Stop Sexual Harassment in NYC Act,” described by the City Council as critical to creating safe workplaces in New York City.

The Stop Sexual Harassment in NYC Act passed one day after New York Gov. Andrew Cuomo signed the Budget Bill, which contains a new state law requiring employers to conduct annual anti-sexual harassment training. New York City employers must comply with both state and city training requirements.

Whereas the NYCHRL generally covers employers with four (4) or more employees, all New York City employers, regardless of the number of individuals they employ, will be subject to the NYCHRL with respect to only sexual harassment. Thus, for sexual harassment claims only, the law expands the definition of “employer” to include all New York City businesses and entities that employ at least one individual within New York City.

The Stop Sexual Harassment in NYC Act also expands the statute of limitations period for sexual harassment claims. Under the NYCHRL, aggrieved individuals have one year from the alleged discriminatory practice to file a complaint with the New York City Commission on Human Rights and three (3) years from the alleged incident to file a claim in court. Effective immediately, the new law allows individuals up to three (3) years to file sexual harassment claims with either the City Commission or in court; the statute of limitations period for all other discrimination or harassment claims remains unchanged.

In addition, within 120-days after the Mayor signs the Stop Sexual Harassment in NYC Act into law, the City Commission must create anti-sexual harassment posters in both English and Spanish. New York City employers will be required to post both the English and Spanish versions of the posters with other workplace postings.

Finally, as of April 1, 2019, all private employers with fifteen (15) or more employees in New York City will be required to conduct annual anti-sexual harassment interactive training. The City Commission is charged with creating interactive training programs. Employers can use the model training programs created by the City Commission to satisfy the training requirements set forth in the Stop Sexual Harassment in NYC Act, or they can implement their own policies and training programs provided that such policies and programs equal or exceed the minimum standards set by City Commission.

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Nov 03 2017

NYC Cabaret Law Will Be Repealed!

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The New York City Council overwhelmingly voted on October 31, 2017, to pass legislation (Int. 1652) that repeals the City’s longstanding Cabaret Law. At the same time, Int. 1652 retains certain security requirements of the old law for large establishments. The legislation has the support of Mayor Bill de Blasio, who is expected to sign Int. 1652 into law shortly.

The existing Cabaret Law, established nearly a century ago during Prohibition, requires any business venue where dancing occurs to obtain a Cabaret license from the New York City Department of Consumer Affairs before operating. The law also prohibits musical entertainment, singing, or other forms of amusement without a Cabaret license at establishments in New York City. Currently, premises required to hold a Cabaret license also must provide a copy of it to the New York State Liquor Authority in order to be licensed to sell or serve alcohol at the premises.

While active enforcement of the Cabaret Law has been on the decline in the past several years, this legislative effort marks the end of decades of strong opposition by venue operators and performers to the law as written.

The legislation will repeal the entire Cabaret Law while retaining certain requirements of the law relating to security measures at large entertainment establishments. Once this legislation becomes law, neither operators nor performers will need to apply for a Cabaret license for any reason. Operators of certain large entertainment establishments (as defined by the New York City zoning laws), however, will need to maintain existing requirements regarding the use of video surveillance cameras and security guards. The requirements will be codified under new section 10-177 in § 2, Title 10 of the Administrative Code of the City of New York.

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Nov 02 2017

TRADE SECRET: Keeping Secrets Secret

Trade secret stamp

In the highly competitive restaurant industry, owners must take steps to protect their proprietary information, such as recipes, techniques, concepts and strategies from theft by former employees. Trade Secrets are any type of information that provides the owner of that information with a competitive advantage as a result of the information not being generally known and readily ascertainable by others.

GENERAL RULE: An owner should protect Trade Secrets with Confidentiality Agreements and take all measures necessary to keep such information secure from disclosure.

Employees who are involved with proprietary information, as well as managers and restaurant executives, should sign confidentiality agreements. In pertinent part, the confidentiality agreement should state the general information that is considered trade secret and should further state that any use or disclosure of this information, other than that specifically allowed by the employer, will be considered a breach of confidentiality and shall subject the employee to legal action and any damages.

As further protection, confidential documents containing recipes, concepts and techniques should be marked “Proprietary and Confidential Information; do not copy or distribute.”

Remind departing employees in writing of their continuing obligation to the confidentiality of the Trade Secrets of your company and have them return all manuals and documents they have in their possession when they leave your employment.

An experienced restaurant employment attorney can draft the appropriate confidentiality Agreement for your specific establishment and can develop a program for you to implement which will maximize your chances that such information will remain confidential and be classified as Trade Secret.

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Nov 02 2017

NEGLIGENCE: SLIP AND FALL LIABILITY

Published by under Insurance,Negligence

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National Safety Council statistics establish that more people are injured in America in slip-and-fall situations than in any other accident scenario.

GENERAL RULE: The owner of a restaurant or bar where such injuries occur is not automatically legally responsible for the consequences of a slip and fall on his/her premises. Proof must be adduced by the plaintiff to establish that: (1) a dangerous condition was created or permitted by the defendant to remain for an unreasonably long time; and (2) the defendant had notice of its existence during such time and failed to take reasonable measures to remove it or to prevent the accident. If you have insurance coverage, notify your carrier immediately upon learning of the incident.

As such, the mere occurrence of the injury does not suffice to impute liability to the restaurant owner. Rather, recent cases have alerted plaintiff’s counsel that in order to prevail in their slip and fall cases, they must prove the specific instrumentality causing the fall, the location and causation of the accident, and specifics of the time frame when the hazard was created; it must also be proven that the defendant had actual or constructive notice of its existence (i.e. that they knew or had reason to know of it). Regardless of the difficulty in successfully bringing forth a slip and fall case, restaurant owners are strongly advised to have this contingency covered via careful periodic inspections of the premises and an insurance policy encompassing this type of liability. The increased insurance premium will be nominal compared to the damages that can, and have been, awarded to successful slip and fall plaintiffs.

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Nov 01 2017

SIDEWALK CAFE LICENSE: Can I get one?

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Having a sidewalk café can greatly enhance the ambience of your restaurant, increase its revenues, and can have a number of other positive affects on your establishment.

GENERAL RULE: To legally operate a portion of a restaurant on a public sidewalk, you must obtain a sidewalk café license and revocable consent to use the sidewalk space from the New York City Department of Consumer Affairs. This license is renewable every two years and the license fee is determined by the size of the café and the location of your establishment.

The three types of sidewalk cafés are the: (i) enclosed café, (ii) unenclosed café, and (iii) small unenclosed café. Only restaurants on the ground floor are allowed to have cafes and design criteria for each type are based on the availability of free space on the sidewalk. Pedestrian traffic is a concern and there are specific measurements that must be met regarding distance from trees, parking meters, fire hydrants and other obstructions.

Regardless of the type of sidewalk café, (i) there must a minimum three foot “Service Aisle” for staff within the café, (ii) waiters are not permitted to serve diners from the public sidewalk, only from the designated wait service aisle, and (iii) all sidewalk cafes must maintain a minimum clear path of eight (8) feet between the outer limit of the café and any other object near the curb.

However, there are certain areas in New York City that are sidewalk café blackout zones where they simply are not permitted regardless of free sidewalk space, zoning, etc. If you are signing a lease with the intention to operate a sidewalk café at the premise, be sure to contact a qualified attorney or the New York City Department of Consumer Affairs Sidewalk Café Unit prior to signing that lease to ensure that you are not within one of these blackout zones and that the premise is otherwise suitable for such a license.

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Nov 01 2017

POST THE SIGN: AVOID THE FINE.

Published by under Posting Requirements

Every year restaurant and bar owners are subjected to harsh fines, both monetary and criminal, as result of failing to post various signs as required by New York State and City laws.

GENERAL RULE: Although the requirements are constantly changing, the following is a list of signs that must be displayed in customer view: Equipment Use Permit; Occupancy Sign (in establishments holding more than 75 people); Sidewalk Café License (indicating number of tables and chairs); Local law 12: Taskforce/ Resuscitation Equipment; Sign Prohibiting the Sale of Cigarettes to Minors (if cigarettes are sold on the premises); Cigarette Retail License (if cigarettes are sold on premises); Operating Permit; Choking First Aid Sign; CPR Sign: Permit to Manufacture Frozen Desserts; Sign Indicating Availability of Most Recent Inspection Report; Alcohol and Pregnancy Warning; Alcohol and Beverage Control Law; Sales Tax Certificate; Signs Designating “Smoking” and “Non-Smoking” Areas; Exit Signs (required over each exit) or Exit Directional Signs (if exit is not in clear sight); Waste Carter and Times of Refuse Removal; and Nutritional Information Pertaining to Certain Items Termed “Diet” , “Light”, or Similarly Modified Foods.

The penalties for not posting these required signs range from minor monetary fines to seizure of assets and forced business closures.

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Oct 31 2017

RESTAURANTS SERVED WITH SEXUAL HARASSMENT SUITS

Published by under Sexual Harassment

 

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.

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Oct 30 2017

EMPLOYMENT CONTRACT: Keeping Key Personnel

As the owner of a restaurant, you should consider providing your key personnel with employment contracts. The employment contract will provide the employee with job security, will clarify all of the conditions and duties of employment, and will create a contractual obligation for them to be employed for the term of the contract.

GENERAL RULE: While there is no required form that the contract must take, certain key provisions should be included, such as the (i) term (i.e. length of employment), (ii) compensation, (iii) employees duties and obligations, (iv) confidentiality, non-disclosure, non-compete, and non-solicit provisions, and (v) grounds for termination or a “Just Cause” clause.

The more detail contained in the contract, the less room for disagreement during the employment period. As an owner, be sure to have the “Just Cause” clause worded in a manner that allows you to terminate the employee during the term, without any penalty, if the employee engages in negligence, misconduct, excessive absences, drug use, theft, fraud, fails to perform his duties in a professional manner, performs an act or omission of an act that could be deemed injurious to the company financially or to its reputation, or is convicted (or a plea of no contest) of any misdemeanor or felony.

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Oct 30 2017

Americans with Disabilities Act Compliance

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The Americans with Disabilities Act (ADA) is one of the most important national civil-rights laws dealing with the rights of people with disabilities. The ADA prohibits discrimination on the basis of a disability in areas of employment, places of public accommodation, housing, public services, transportation, and telecommunications. However, a barrage of ADA lawsuits have recently been filed against New York restaurants and bars and a great deal of them really have nothing to do with assisting those with disabilities.

I very recently defended another NY restaurant in an ADA case where the Plaintiff was claiming that the bathrooms were not ADA compliant because the mirrors were too high, the pipes under the sink were not properly insulated, and the bathroom sign was placed too high and didn’t contain the word “bathroom” in braille. In that case the Plaintiff was correct. These issues were in fact violations of the ADA and the Defendant restaurant had no choice but to settle the legal action. The settlement included a nominal payment to the Plaintiff himself, a much larger payment to the Plaintiff counsel for their legal fees (prevailing Plaintiffs are entitled to legal fees in ADA cases so these amounts are always worked into a settlement), and an agreement to fix the violations. The total settlement payment was over $10,000.00 plus tack on another $6,000.00 for legal defense fees bringing the cost of that legal action to over $16,000.00.  The actual cost incurred to fix the violations . . . .$95.00.

Defendants with any ADA violations, if sued, must ultimately make a business decision. That business decision almost always requires the Defendant to settle the case rather than proceed forward running up their own legal defense fees along with the plaintiff’s legal fees.

The point of this post is simple. Be fully ADA compliant. The ADA law is very technical and even a minor violation may result in a very expensive lawsuit from an “enterprising” plaintiff counsel. Be proactive. Retain qualified legal counsel and have them do a walk-through of your establishment ensuring compliance and pointing out any and all issues.

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