Breaking Down the Costs (And Benefits) of Starting A Food Truck
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NYC restaurant laws are much less straightforward than the clear growth of income in the U.S. over the past two decades.
Today, the longest continuous economic expansion since World War II is still well under way. New Yorkers are taking the opportunity to celebrate the prosperity they're feeling. Disposable income is on the rise (see graph below), and it's being spent on dining out at restaurants, bars, and nightclubs at an almost unprecedented rate.
But the laws that govern the industry are much less easy to follow, for two reasons:
First, they are constantly changing.
Second, restaurants are scrambling to operate with supply to meet the growing demand in a way that blinds them from proactive compliance.
When you have a crowded restaurant or bar, you become preoccupied with operations. Legal risks and regulations facing your business easily take a backseat.
But they shouldn't. Violating a law or regulation could cost your property thousands of dollars.
Don't wait until an inopportune time strikes to get hit with a regulatory fine. Restaurant owners and managers in NYC should be aware of these five important legal risks:
Minimum wage is a huge topic in the restaurant, food, and hospitality industries. There is currently a nationwide push demanding $15 as the minimum wages for all workers. That said, the federal minimum wage remains at $7.25 per hour and has not increased since July 2009. There's been particular confusion in this area because of the constantly-changing landscape. New York Governor Andrew Cuomo signed legislation in 2016 that mandated gradual increases to New York's wages. The goal is to reach $15.00 by December 31, 2018 for any business over 10 employees.
That said, businesses where employees receive tips (i.e. restaurants) are regulated differently. These establishments can pay below the normal minimum wage. Depending on location in New York, the minimum wage with this tip credit is $7.50 per hour for most of the state or $8.70 for New York City. (NYC Is scheduled to increase to $10 by the end of 2018.) The governor has also announced in his State of the State Address in January 2018 that he will be reassessing the tip credit policy entirely. This could make what is already a complicated issue for restaurant or bar owners even more complicated.
To make the issue of payment even more confusing, the federal government has reversed its view on the treatment of tips. Back in 2011, the Department of Labor under Obama administration introduced one regulation. It stated that workers like waiters — rather than owners or operators — owned tips. They had the say in deciding how to divvy up tips amongst themselves.
However, the Trump administration reversed course on this issue in March 2018. The DOL published an official notice stating it would be rescinding tip-sharing. This recent federal action contrasts actions taken by the state government in Albany. Given that, tip pooling and control of tips is an issue that needs to be handled carefully by restaurant, bar owners, and operators.
See more information about March 2018 change here.
Another legal headache for restaurants and bars is employee accommodations.
This is particularly an issue in NYC, where the New York City Council passed an amendment to the city’s Human Rights Law. The New York City Human Rights Law (most often called the NYCHRL) requires employers to provide reasonable accommodations to employees with disabilities, who who are pregnant or victims of domestic violence, or who need accommodations for religious reasons.
The January 2018 amendment to the NYCHRL expanded upon New York employers’ responsibilities under this law. It now requires employers to engage in a “cooperative dialogue” with an employee who requests a reasonable accommodation: (1) for religious needs; (2) related to a disability; (3) related to pregnancy, childbirth or a related medical condition; or (4) for their needs as a victim of domestic violence, sex offenses or stalking. As a part of this dialogue, employers must produce a written final determination identifying any accommodation that was granted or denied.
Employers who fail to engage may be found liable of engaging in an unlawful discriminatory practice under the NYCHRL. This more formalized process opens employers to an increased likelihood of violations of the NYCHRL. If you are not careful how you handle accommodate requests made by employees under the NYCHRL, you could be subject to a legal issue.
Restaurants and bars may also face legal issues related to scheduling staff members. The most important aspects of this are: 1) total number of scheduled hours per employee per week, and 2) total hours of advance notice of schedule.
Many retailers and franchise-type restaurants use scheduling software (called "predictive scheduling" software) to manage their payroll and as conservatively as possible. However, many non-chain restaurants and bars tend to favor old-fashioned scheduling with a pen or a computer. In doing this, they often do not realize that overtime can be an issue. The truth is, the law requires that employers give employees 72 hours notice before any schedule starts.
This means that an employer cannot require employees to be "on call" or available to work. Under this regulation, it is illegal to require employees to wait until a Saturday afternoon to determine whether they are needed to work that night or not.
Health grades can make or break a restaurant or bar's business. New York City has one of the most robust restaurant grading systems in the country. The New York City Department of Health (DOH) conducts unannounced inspections of each restaurant in the city at least once per year.
These inspections result in a certain number of compliance points for the areas of food handling, food temperature, personal hygiene of restaurant personnel and vermin control. The lower the total score, the better the inspection score. Beginning in 2010, restaurants started receiving letter grades from the NYC DOH which are posted on the DOH's website. Restaurants are also required to post whatever letter grade they received "prominently" on a placard. If a restaurant receives a score it believes to be unfair or inaccurate, it can seek an administrative hearing.
Because inspections are random, you should follow the highest standards in food preparation and cleanliness at all times. This is the best way to ensure that they do not unintentionally receive a poor health grade. Don't get caught by surprise on a busy day!
That’s all for now! Do you have any legal risk you want information on? Feel free to tweet at SevenRooms!