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. 

The following list, while not all inclusive, will help to familiarize you with the most common violations of the NY ABC Law:
1. Sale to Minor (under 21 years old) - Section 65.1. (It is important to note that the Members of the Authority have directed that any sale to a person under 16 can result in revocation of the license, even
for a first offense.)
2. Sale to Intoxicated Person - Section 65.2.
3. Prohibited Hours of Sale - Sections 105.(a), 105.14 and 106.5.
4. Prohibited Hours of Consumption – Section 106.5.
5. Employment of a Minor - Section 100.2(a) - Bartenders, waitresses, waiters, hostesses and/or any persons who handle and receive payment for alcoholic beverages must be at least 18 years old. Bus persons and dishwashers who handle containers which have held alcoholic beverages must be at least 16 years old and must be directly supervised by someone at least 21 years old. Clerks and cashiers in liquor and/or wine stores or drug stores must be at least 18 years old. Clerks and cashiers who handle and receive payment for alcoholic beverages in grocery stores and convenience stores must be at least 16 years old and must be supervised by someone at least 18 years old.
6. Disorderly Premises (includes Gambling at on premises establishments, Lewd and Indecent conduct, Excessive Noise, Assaults, Narcotics at on premises establishments, Prostitution) - Section 106.6.
7. Gambling at establishments.
8. Narcotics at establishments.
9. Operating outside of your approved method of operation (e.g., operating as a “Bar” even though your application stated your use was going to be a “Restaurant” or use of security guards despite stating otherwise on your application, etc.).
10. Alteration of a licensed premise without approval of the Liquor Authority.
11. Minors in Licensed Establishment (According to Section 260.21 of the Penal Law, persons under the age of 16 must be accompanied by a parent or guardian to enter an on premises establishment).

The new law (S.6231C) which took effect in October 2010, creates a new program within the New York State Liquor Authority whereby an applicant for a liquor license can receive a temporary permit while waiting for their liquor license application to be processed. Prior to this law, an applicant could only receive a temporary permit if they are purchasing a business which already has a liquor license. The new temporary permit program will be a one year pilot program and should allow applicants to serve alcohol via the temporary permit within just weeks of applying.

The bad news . . .this new program currently applies only to applicants located OUTSIDE of New York City.

There are a two ways to buy a restaurant in New York. You can do it by purchasing the ownership shares of the seller or you can purchase the assets of the seller. Each has its advantages and disadvantages in New York but an asset purchase is almost always more beneficial for the buyer. With an asset purchase, the buyer is only assuming certain specified liabilities of the seller. With a purchase of the ownership shares (stock certificates if seller is a corporation and membership interests if seller is a Limited Liability Company), the buyer will be assuming ALL of the liabilities of the seller, known and unknown. In either scenario, a lien and judgment search must be performed on the seller’s business.

GENERAL RULE: Buy the restaurant by means of a bulk asset sale / purchase rather than a purchase of the ownership shares.

You must review the existing lease carefully to determine if the seller is able to assign it to you. If they are able to assign it, you must determine whether the existing clauses are acceptable to you including the term remaining on the lease, the rent amount, the security deposit, the personal guaranty, etc. If they aren’t able to assign the lease, the landlord needs to be contacted to inquire if they are willing to let the tenant “off the hook” and issue a new lease directly to you.

The purchase agreement, which will either be a stock purchase agreement or bulk asset purchase agreement, will need to state all of the terms of the sale including, but not limited to, the purchase price, the amount being held in escrow, the amount to be paid at closing, the specific assets being purchased, the date for closing, any contingencies to closing (e.g. liquor license granted to Buyer), and any personal representations and indemnifications. A Bill of Sale should accompany the purchase agreement along with a corporate resolution from the seller authorizing the sale. Remember, even with an asset purchase agreement, the buyer will be responsible for any unpaid New York State sales tax owed by the seller. This is why it’s very important to (i) file the appropriate bulk sales notice (form AU 196.10), (ii) have the seller personally represent that no taxes are owed and have him/her agree to personally indemnify the buyer for any unpaid taxes, or other liabilities, that were incurred on or before the closing date, (iii) set the closing date to occur after a tax release letter is received from the New York State Department of Taxation stating that no taxes are owed, and/or (iv) have a large portion of the purchase price held in escrow until the release letter is received from the Department of Taxation. This article is intended to give you a general idea regarding what to look out for but you should retain an experienced restaurant attorney if you are considering purchasing a restaurant or bar in New York.

This article is written as a follow up to my article regarding the New York State Liquor Authority Self Certification Process: http://www.restaurantlawyerblog.com/2010/01/04/liquor-licenses-granted-in-under-one-month/

In short, the process works great.  We’ve gotten conditional letters of approval for our self-certified liquor license applications within just one week from the date that we filed the applications! This allowed my clients to serve booze within just a couple of weeks of the date that I filed their application. . . a process that used to take months.  Kudos to the New York State Liquor Authority on this self certification program.   

Generally, no more than three on-premise liquor licenses are permitted within 500 feet of each other. This is commonly known as the 500 Foot Rule. However, there is an exception to this Rule known as the Public Interest Exception.   For more info on the 500 Foot Rule, See: http://www.restaurantlawyerblog.com/2009/02/02/liquor-license-the-500-foot-rule/ 

If the location is subject to the 500 foot rule, and no “grandfathering” or other exception applies, the license cannot be issued unless the State Liquor Authority makes an affirmative finding that it is in the public interest to issue the license. This clearly creates a presumption that the license should not be issued. The 500 foot rule requires that the Authority consult with the municipality or community board and conduct a hearing to gather facts to determine whether the public interest would be served by issuing the license. This is commonly referred to as the “500 Foot Hearing”.

GENERAL RULE: No more than three on premise liquor licenses will be granted within 500 feet of each other unless the public interest exception applies.

When considering whether it would be in the public interest to approve the application, the Authority may consider the following:
- the number, classes and character of other licensed premises not only in the area where the proposed establishment will be located but also in the particular municipality (or subdivision of the municipality);
- whether the applicant has obtained all other necessary governmental licenses and permits;
- the effect on vehicular traffic and parking in proximity to the location;
- the impact on the existing noise level;
- the history of ABC violations and reported criminal activity at the location; and
- any other factor specified by law or regulation that would be relevant to deciding whether public convenience and advantage, as well as the public interest, would be served by approving the application.

The hearing required by the 500 foot rule is conducted before designated staff in the Authority’s four offices. The Members of the Authority have delegated to specific licensing staff the ability to approve applications when, after the hearing is conducted, there is no community opposition and no other reason for disapproval. In cases where the application is opposed by the community, the matter is referred to the Members of the Authority for determination. However, the fact that the community opposes an application does not mean that the Authority must disapprove the application. Conversely, an application may be disapproved even if the community supports it.

To receive a Cabaret license, you must first request a Fire Department inspection of your premises.
If the inspection results are positive, you will be notified and permitted to submit your application within 60 days of receiving such notice. If you fail to submit your application within the 60-day period, the inspection process must be repeated.
If the inspection results are negative, you will receive notice of the Fire Department’s objections. You will then be responsible for taking corrective measures to address such objections.
In addition, the Community Board where your business is located has 45 calendar days to respond with a recommendation.
An electrical inspection is also required. In lieu of a Department of Buildings electrical inspection, DCA will accept a notarized statement from a licensed electrician on the electrician’s letterhead, stating that the premise complies with all current electrical building codes. If you submit a current Certificate of Occupancy issued by the Department of Buildings within three months of the application date, the notarized statement from a licensed electrician is not necessary. However, if a temporary Certificate of Occupancy is submitted, the statement from the licensed electrician is required.
If you pass inspection, submit the following documents in person to the Special Applications Unit at DCA.

Basic License Application
For Sole Proprietorships, submit a notarized copy of your Business Certificate, certified as a true and accurate copy by the County Clerk of the borough in which your business is located. The address appearing on your Business Certificate must be identical to the address for which you are seeking a license. If you are a sole proprietor doing business under your own name, and not a trade or Doing Business As (DBA) name, you do not need a Business Certificate.
For Partnerships, submit a notarized copy of your Partnership Certificate, certified as a true and accurate copy by the County Clerk of the borough in which your business is located. The address appearing on your Partnership Certificate must be identical to the address for which you are seeking a license.
For Corporations, submit a stamped Certificate of Incorporation or a filing receipt. If applicable, you must also submit your corporation’s Assumed Name Certificate. These certificates must be stamped by the New York State Secretary of State.
Enter the Sales Tax Identification Number (9-digit number) on your New York State Department of Taxation and Finance Certificate of Authority on the license application form.
Photo ID of the person submitting the application.

Environmental Control Board Clearance. The Department of Consumer Affairs will review the Environmental Control Board’s (ECB) records to see if you have any outstanding violations. If you are found to have outstanding fines or violations, you can submit full payment for all fines at the Licensing Center and we will forward such payment to ECB. If you wish to dispute ECB’s records, you can go to the ECB at 66 John Street, 10th floor, in Manhattan to settle these fines or violations and to obtain a clearance letter.
A copy of a current Place of Assembly Permit from the Department of Buildings must be obtained if total capacity exceeds 74 persons. The permit must indicate the usage for which a license is sought. The permit must not be altered or defaced in any way. The Fire Department will inspect your premises if you do not have this permit. If the Fire Department inspection is positive, the Place of Assembly Permit does not have to be submitted.
Certificate of Occupancy for proper usage, which has been stamped by the Buildings Department within the past two years. The Certificate must show the approval for “Use Group 12″ and “Cabaret” or “Eating and Drinking establishment without restriction on entertainment.”
Current Food Service Establishment Permit.
Notarized Affidavit of Security Personnel Background Check.
If you are a SOLE PROPRIETORSHIP or a PARTNERSHIP, the proprietor and each partner must submit a Notarized Child Support Certification form.
License Fee. Must be paid by check or money order payable to NYC Department of Consumer Affairs.