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.

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.

Having a sidewalk cafe 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 cafe 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 cafe and the location of your establishment.

The three types of sidewalk cafe’s are the: (i) enclosed cafe, (ii) unenclosed cafe, and (iii) small unenclosed cafe. 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 cafe, (i) there must a minimum three foot Service Aisle for staff within the cafe, (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 cafe and any other object near the curb.

However, there are certain areas in New York City that are sidewalk cafe 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 cafe at the premise, be sure to contact a qualified attorney or the New York City Department of Consumer Affairs Sidewalk Cafe 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.

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 Cafe 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.

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 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.

You worked hard thinking of that perfect name for your restaurant, you spent a small fortune and countless hours marketing that name, and because of all your efforts that name has developed a great buzz and reputation in New York. . . and less than a year later another restaurant opens up in NYC with almost the same name as yours! To make matters worse, people are now going to that other restaurant thinking that it’s yours! What do you do?

If you had your restaurant’s name trademarked, you would call your attorney, he/she would draft and send a cease and desist letter to your competitor, and you would put that competitor out of business or at the very least force them to change the name of their restaurant.

GENERAL RULE: Trademark registration for the name of a restaurant or bar should be done for EVERY establishment so long as it can be done.

A trademark is any word, name or symbol adopted and used by a person (or that person has a bona fide intent to use that word, name or symbol and subsequently does use it) that identifies and distinguishes his or her goods or services from those manufactured and sold by others, and indicates the source of those goods or services. Names of restaurants, as long as they are not generic or merely descriptive, are terrific candidates for trademark registration. Additionally, a trademark is considered an asset which is not only valuable to a business but invaluable to a business if you are considering opening more than one establishment with the same name or ultimately licensing and/or franchising your concept.

Are Community Boards notified of when the NYSLA receives applications in their neighborhoods?

For certain types of establishments, Community Boards are notified before the NYSLA receives an application. The Alcoholic Beverage Control Law requires that anyone applying for an on-premises license notify their community board of their intention to apply for a liquor license 30 days before filing an application with the State Liquor Authority. Proof of the 30 day notice must be submitted with the application. The community board may submit an opinion, either in favor of or against granting the license. That opinion will become part of the record used by the NYSLA in deciding whether to approve the application.

What are the different types of licenses granted by the NYSLA?

There are several types of licenses granted by the NYSLA, the following are the four basic ones issued:

On-Premises Liquor: Generally considered to be the standard “bar” license. Allows on-premises consumption of liquor, wine and beer and also allows for sale of beer (only) for off-premises consumption.  Food, such as soups and sandwiches, MUST be served.

Grocery Beer/Wine: Off-premises beer license as listed above, see “Grocery Store Beer”. Additionally a “wine product” is defined as a beverage containing wine with added juice, flavoring, water, citric acid, sugar and carbon dioxide, not containing more than six percent alcohol by volume (typically referred to as “wine coolers”).

Catering: Allows providers of food for banquet halls, dining halls, etc., to provide liquor, wine and beer for consumption for an assemblage for a particular function (i.e. retirement dinner, wedding reception, private party) to which the general public is not admitted. This license is for this type of function only.

Liquor Store: For the sale of liquor and wine (no beer) for consumption off the premises. The only additional items allowed to be sold, such as ice and corkscrews, are listed in the ABC Law. Only one license is allowed per person (corporation, partnership, etc.).

What is the 500 foot rule and how does this apply to community boards? When the NYSLA receives an application, there is a general presumption that it will be approved unless there is a good reason not to approve it. However, for on premises license applications falling under the 500 foot rule, (meaning there are already 3 or more existing establishments with the same type of license within 500 feet of the proposed applicant), the presumption switches, and by law the application cannot be approved unless the SLA finds that issuing the license would be in the public interest. The 500 foot law requires the NYSLA to consult with the community board and conduct a hearing to gather facts to determine whether the public interest would be served by issuing the license. Generally speaking, if there is no opposition to the application, and no other issues presented that requires consideration by the Members of the Authority, the application is acted on by the NYSLA’s Licensing Bureau. In cases where the community board or other interested parties oppose the application, or there are other issues requiring review by the Members of the Authority, the matter is referred to the Members for determination. It is important to note that the fact that there is opposition to an application does not necessarily mean that the Authority will disapprove the application. The Authority may also applications even when there is no opposition. In situations where there is opposition to an application, applicants may come to an agreement on stipulations concerning the operation of the establishment (e.g. closing hours, live music, etc). In such cases, the applicant may incorporate those stipulations into the approved method of operation. These stipulations then become conditions of the license privilege and failure to comply subjects the licensee to disciplinary action. The SLA can impose certain conditions on the operation of the establishment without the consent of the applicant if there is good cause to do so.

Stipulations: Before a license is issued, if a Community Board and applicant agree to certain conditions of the license, some of which can be written into the license and some that cannot, how can the Community Board handle this? If the Community Board and the applicant reach an agreement with respect to the operation of the establishment, the applicant can incorporate into the application those conditions that are relevant to the operation of a licensed establishment.

What is the 200 foot rule? Under the 200 Foot Rule an establishment cannot be licensed to sell liquor at retail if it is on the same street and within 200 feet of a school, church, synagogue or other place of worship. The rule also applies to wine stores. It does not apply to on premises establishments that are licensed for wine and/or beer only and to grocery stores. There are two exceptions under the law if the establishment existed prior to the enactment of the law in 1934 or if the location was licensed prior to the existence of the school or place of worship and has been continuously licensed ever since.

What weight does the CB have in recommending approval or denial of retail license? While not binding on the Members of the Authority, the NYSLA considers input from community boards in all licensing decisions. However, courts have held that, for applications not subject to the 500 foot rule, community opposition alone is not sufficient to disapprove an application.

How do I know what Community Board represents me? The following link is from the Mayor’s Community Affairs Unit. http://www.nyc.gov/html/cau/html/cb/directory.shtml

Can a bar or nightclub transfer their license to another owner? Does the Community Board need to be notified? Does a transfer require NYSLA approval? Licensees may not transfer a license, in the way transfer is commonly understood (i.e. licenses may not be sold or given from one person or company to another). The NYSLAs Licensing Bureau staff uses the terms transfer and new applications only to differentiate between an application for an establishment that is currently licensed and selling their business (transfer) and an establishment that is not currently licensed (new). In both cases, the license applicant must go through the same process, including notifying their CB and holding a 500 foot-hearing if applicable. A corporate licensee may have a change of officers, directors and stockholders without going through the entire application process. In such a case the licensee has to submit information regarding the new persons coming into the corporation and the financing involved.

How do temporary permits work? If a license applicant gets a temporary, does this mean they will get a full liquor license? A license applicant who is purchasing the existing business that is currently licensed to sell alcoholic beverages may file an application for a Temporary Retail Permit. This allows the license applicant to begin operating the business and serving alcoholic beverages while their application for a permanent license is being reviewed. In order to qualify for this permit, the establishment must have been open and operating at least 30 days prior to the filing of the application. The permit is granted at the discretion of the NYSLA for a period of 90 days, and may be renewed. Issuance of the permit is not a guarantee that the licensee will be approved for a permanent license.

Does the license expire once the licensee’s establishment ceases to exist? A liquor license is connected to the individual and a specific location. If the establishment ceases to exist their license certificate must be returned to the NYSLA. If the entity has vacated the premises is considered abandoned, the NYSLA Licensing Bureau sends out an abandonment letter to verify if the prior tenant has vacated the premises. When a licensee closes their business, they are required to alert the NYSLA and hand in their license, this is referred to as surrendering the license. Licensees are entitled to a refund on the unused portion of their licensing fee.

Are there any routine unannounced inspections of establishments by NYSLAs enforcement unit to ensure compliance with the Alcoholic Beverage Control Law or is it complaint driven? The SLA conducts unannounced undercover inspections as part of its investigation of a licensee. An investigation by the SLA may include: 1. on-site inspections of a licensed establishment; 2. on-site undercover investigations by NYSLA Investigators and other law enforcement agencies; 3. a review of reports and investigations by other law enforcement and regulatory agencies; and 4. interviewing potential witnesses/complainants and collecting evidence of potential violations. Information comes to the NYSLA from a variety of sources, including police and other law enforcement agency referrals, complaints by other government agencies or officials, and complaints made by the public. The identity of a person making a complaint is kept confidential.

The Ninth Circuit Court of Appeals in San Francisco has recently ruled that Yelp can revise, edit and prioritize business reviews based on advertising money that the site receives from the business.

This high profile ruling really destroys the veil of impartiality that Yelp was benefitting from for all these years.  Now its crystal clear that Yelp may (although they have not admitted that they did) delete bad reviews for a restaurant that places an ad on its site and similarly delete positive reviews given for a restaurant that refuses to place ads on the Yelp site.

Seems that this is a real wake up call for all of us (myself included) who thought that Yelp reviews were not being edited, deleted or possibly even created by Yelp itself.

Unlimited drink specials are illegal in New York (with limited exception for private events).   This Prohibition included “bottomless glass” of champagne brunch specials but it is regularly ignored because most owners are simply not aware of it. However, the prohibition was recently placed into the spotlight and the New York State Liquor Authority (NYSLA) issued the following statement on Feb. 26, 2014 which was supposed to ease and clarify the prohibition:

Serving unlimited drinks to a patron is prohibited under the Alcoholic Beverage Control law, and instances of over serving by our licensees will be investigated and prosecuted. However, there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. Even under these limited exceptions, licensees still have a legal obligation not to over serve patrons.  The SLA will continue to take a balanced regulatory approach by allowing licensees to conduct specials where alcohol is an accompaniment, while simultaneously cracking down on specials that promote excessive drinking. -New York State Liquor Authority

The New York City Hospitality Alliance publicly commended the NYSLA for issuing this statement and for providing such clarity. However, all the rest of us must have missed the clarity that the NYC Hospitality Alliance apparently saw in that statement.

there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. When is the service of alcohol incidental to the event/brunch?  Always?  Sometimes?  When there are pancakes on the menu? Why just brunch?  If the service of alcohol can now be now deemed incidental during brunch, why is it not deemed incidental during lunch or dinner as well?

The reality is that the NYSLA statement provides no clarity whatsoever on the prohibition and in fact causes more confusion because now there appears to be some new exception to the prohibition that applies to certain brunch specials . . .but leaves us all in the dark as to the necessary elements of this exception.  Until there is some actual clarification or specifically stated exception to the prohibition, we still recommend that you do not offer any unlimited drink specials during brunch, lunch, dinner or otherwise.