Under the New York State Wage Theft Prevention Act, effective February 1, 2012, New York employers are now required to give annual notice to their employees of wage information, including:

•His or her regular rate(s) of pay and overtime rates of pay (if applicable);
•The basis of the employee’s wage rate (i.e. hourly, weekly, salary, commission, other);
•Any allowances claimed against the minimum wage (tip credit, meal credit, lodging allowances, etc.);
•The employer’s principal place of business, and mailing address (if different);
•The employer’s telephone number; and
•Additional employer information, such as the official name of the business and all “doing business as” names.
Employers are also required to obtain signed acknowledgements from each employee which memorialize the employee’s receipt of his or her wage notice. These signed acknowledgements must be retained by employers for six years.
This Notice requirement is an important law with significant penalties for non-compliance. Any new employee not provided with the notice within 10 business days of his or her start date may bring a claim to recover $50 for each workweek that a violation occurs and may recover up to $2,500, plus attorneys’ fees. For statutory violations relating to a current employee, the employer may be liable for damages of up to $100 per week and may recover up to $2,500, plus attorneys’ fees.

GENERAL RULE: Choose a Limited Liability Company over the other choice of entities when opening a new restaurant, bar or hotel in New York.

While the two have very strong similarities, they are not without their differences. For example, S-Corporations are subject to stringent corporate formalities such as holding annual corporate meetings, keeping the minutes of the meetings, appointing corporate officers to serve, and issuing corporate stock to owner’s which may often be difficult to sell and/or transfer. In contrast, an LLC does not require annual meetings, appointing officers, the recording of meeting minutes, or the issuance of stock. Moreover, profits and losses distributed by an LLC need not be made in proportion to ownership share. However, in contrast, if an S-Corporation owner owns 50% of the shares, he/she MUST receive 50% of the profits and/or losses.

Additionally, the amount of S-Corporation shareholders cannot exceed 100 and all must be U.S. citizens or permanent residents. An LLC does not have these restrictions either.

A downside to forming an LLC is the publication requirement. Within 120 days after the filing of the initial articles of organization, notice must be published once each week for six successive weeks, in two newspapers of the county in which the office of the LLC is located (one newspaper to be printed weekly and one newspaper to be printed daily; both need be designated by the county clerk). If the LLC is located in New York City, this publication will cost about $1,100.00. By contrast, an S-Corporation does not have any publication requirement. This publication cost is the main disincentive to choosing an LLC when doing business in New York, but in the end, if you plan on being in business for the next 10+ years, given the flexibility of the LLC entity, this additional cost is worth it.

GENERAL RULE: Yes. Bars, restaurants and other eating and drinking establishments with a lawful occupancy of less than 75 persons are regulated by the Fire Code as a “public gathering place” and do require an open flame permit for candles and sternos, amongst other combustible things.

The regulations governing the use of open flames and Liquid Propane Gas (LPG) apply to eating and drinking establishments whether they are large enough to be classified as a place of assembly (75 or more people) or are regulated as a public gathering place.  Among other things, the law regulates the preparation of flaming foods and beverages, and the use of candles and combustible liquids in tabletop lamps and other open-flame decorative devices; solid alcohol for food warming (Sternos); and charcoal for cooking in hibachis.

Permits for open flames are issued by the Fire Department’s Bureau of Fire Prevention upon completion of a satisfactory inspection of the premises. Permits are normally issued for a period of one year and must be renewed upon expiration.

• 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.

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”.