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.

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.

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.

Starting Jan 1, 2010, the changes to the New York State Department of Labors 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.

For all employees hired on or after October 26, 2009, the New York State Department of Labor requires employers to notify the employee, in writing, of their pay day and pay rate. The new law states that the notice:
1. Must be in writing in compliance with New York Labor Law Section 195.1.
2. Must include the regular rate of pay, overtime rate and regular payday.
3. Must be provided on a form available from the NYS Department of Labor. Get the form here:  www.labor.state.ny.us/workerprotection/laborstandards/PDFs/LS_52_Hourly_Rate_Plus_Overtime.pdf
4. Must be given to new employees before they do any work.
5. Employer must receive a written acknowledgment that the employee has received the notice.
For more info, see the NYS Department of Labor circular at: www.labor.state.ny.us/workerprotection/laborstandards/PDFs/P705_E.pdf

The New York City Mayor’s Office published a terrific guide that should be read by all individuals that own, or plan to own, a restaurant in NYC.  It’s a terrific resource for the basics of NY restaurant ownership.  Here’s the link to the guide:

http://www.nyc.gov/html/records/pdf/govpub/2737nycrestaurantguide-81606.pdf