RESTAURANT LAW NEWSLETTER

Table of Contents:

RESTAURANT SERVED WITH SEXUAL HARASSMENT SUITS

POST THE SIGN; AVOID THE FINE

THE DRAM SHOP ACT AND RESTAURANT LIABILITY

SLIP AND FALL LIABILITY

UNLAWFULLY WITHHOLDING EMPLOYEE TIPS

RECENT CASE DEVELOPMENTS

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RESTAURANTS SERVED WITH SEXUAL HARASSMENT SUITS.
By Mark Stumer

The food service industry has recently been hit hard with a barrage of sexual harassment lawsuits.
A jury awarded 4.9 million dollars to an employee of Brinker International (the company that owns Chili´s Restaurant) who said she was sexually harassed by a manager and then faced retaliation when she complained. 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 know 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 recent 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. The more obvious is “quid pro quo” sexual harassment, which occurs when a beneficial condition of employment is premised upon an employee’s submission to sexual advances. Frequently, that claim is also raised when an employee rejects a sexual advance, and claims a connection between that rejection and a subsequent adverse job action. That action may be a denial of a raise or promotion, a termination, or a “constructive discharge” where an employee claims that the retaliation made his or her job conditions intolerable. Far more pervasive and more evident in the courts is harassment based on a “hostile work environment.” According to the case law and the EEOC´s interpretive regulations, a “hostile environment” is one that is so pervasive that it materially alters the terms and conditions of employment. Most employers don’t realize that their obligations with regard to sexual harassment arise before any act of harassment occurs, such as the posting of sexual harassment free workplace. Additionally, many lawyers, including the writer of this article, strongly urge their employer clients to disseminate a clear and explicit sexual harassment prohibition policy and reporting procedure. This policy is critical because under federal case law, an employer fulfills its obligation if it takes all reasonable steps to prevent harassment before it occurs and takes effective steps to remedy harassment after it takes place. If these general principles are consistently and carefully applied, the employer can go a long way towards avoiding liability for sexual harassment.

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POST THE SIGN; AVOID THE FINE
By Mark Stumer

Every year restaurant and bar owners are being subject to harsh fines, both monetary and criminal, as result of failing to post various signs as required by New York State and City laws. 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 Café 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 having these signs posted in clear view range from minor monetary fines to seizure of assets and forced business closures.

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THE DRAM SHOP ACT AND RESTAURANT LIABILITY
By Mark B. Stumer

A restaurant or bar owner may be held liable for the acts of their patrons who drink and later drive while intoxicated.
In order to sustain a cause of action under General Obligations Law (commonly known as the Dram Shop Act) the plaintiff must show : (1) that he was injured by an intoxicated person; (2) the defendant sold to or otherwise procured liquor for the intoxicated person; and (3) the defendant thereby caused or contributed to such intoxication. Recently, a restaurant and a bar were both sued for wrongful death after a man died in an automobile accident while driving home after allegedly drinking alcohol at the restaurant and subsequently, at the bar. The court ruled in favor of the restaurant and stated that the plaintiff failed to show that the restaurant sold to or otherwise procured liquor for the intoxicated person. This conclusion was reached after the plaintiff failed to counter the statements of the defendants and witnesses asserting that the victim did not appear intoxicated at the restaurant on the night of the accident. The liability then rested with the bar.
The owners of any establishment that serves alcoholic beverages would be wise to inform and advise their entire staff of the consequences that can result in serving a patron who appears intoxicated. Employees who do not know of the Dram Shop Act are likely to violate it. Additionally, an owner should adopt a strict policy which mandates the discharge of any employee who serves an alcoholic beverage to anyone in contravention to this policy.

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SLIP AND FALL LIABILITY
By Mark B. Stumer
National Safety Council statistics establish that more people are injured in America in slip-and-fall situations than in any other accident scenario. The owner of a restaurant or bar where such casualties occur is not automatically legally responsible for the consequences of a slip and fall on his 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. 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.

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UNLAWFULLY WITHHOLDING EMPLOYEE TIPS

Under federal and state wage and hour law, employers who employ regularly tipped employees may pay those employees an hourly wage rate below the minimum wage, as long as the employees’ tips result in them being paid at least the hourly minimum wage for all straight time worked.

To take advantage of this “tip credit”, an employer must ensure that tipped employees retain all of the tips they receive. “Tip-pooling” or “tip-splitting” arrangements are allowed, but there are strict guidelines for maintaining such arrangements lawfully. Among those requirements, tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors – and management. Old Homestead and Nobu are just a couple of New York restaurants that were sued for violating these guidelines but there are many others.

Restaurateurs should take very careful precaution in ensuring that they are fully complying with New York’s wage and hour laws.

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RECENT CASE DEVELOPMENTS:

Tax Evasion

Two members of the Cipriani family, renowned for their string of opulent restaurants in New York and Venice, pleaded guilty to tax evasion and agreed to pay $10 million in restitution and penalties to resolve a case brought by Robert M. Morgenthau, the district attorney of Manhattan. Arrigo Cipriani, the family patriarch, pleaded guilty to a felony tax charge while Giuseppe Cipriani, his son and the chief executive of Cipriani U.S.A. Inc., pleaded guilty to a misdemeanor. Guilty pleas were entered as well for three corporate units of Cipriani U.S.A. on tax felony charges. In addition to paying penalties and restitution in the amount of $10,000,000.00, an independent monitor will be installed through 2011 to ensure that the companies pay appropriate taxes. The companies will also likely face a federal tax liability arising from the case, but how much is unclear at this point.

Employment of Illegal Aliens

Bad news for a network of New York nightclubs as the U.S. Immigration & Naturalization Service recently announced that it had fined the clubs $52,540.00 for knowingly hiring and continuing to employ two illegal aliens. The Main Tower Nightclub, Inc., has already filed for liquidation in U.S. Bankruptcy Court, along with the company owning its sister restaurant, Kelly’s Sports City Grill.

Food Poisoning

The family of a toddler who developed kidney problems after his parents ate contaminated hamburgers at a Jack-in-the-Box restaurant has reached a $4.4 Million settlement with the restaurant’s parent company.  Several hundred people who became ill from an out-break of E. Coli bacteria linked to contaminated and undercooked hamburgers at Jack-in-the-Box restaurants. Three children in Washington State died in the out-break.

Sexual Harassment

Hooters of America Inc., the restaurant chain that requires waitresses to wear skimpy clothing, was recently sued for sexual harassment by a former waitress. Annette Phillips is seeking class action status on behalf of more than 1.000 female non-management Hooters workers she says suffer from harassment. Phillips’ suit claims a relative of a Hooters manager slapped her on the buttocks and physically threatened her. She says that when she complained to a manager who saw the episode, he told her to ignore it. She also claimed that some male managers had exposed themselves to female workers. She is not, however, challenging the Hooters policy that requires waitresses to wear shorts and tight T-shirts.

National Origin Discrimination

The Plaza Hotel paid $525,000.00 to settle a lawsuit accusing the hotel of subjecting Muslim, Arab, and South Asian workers to a hostile work environment following the attacks of September 11, 2001. The lawsuit, filed by attorney Mark B. Stumer against the Plaza Hotel and Fairmont Hotel and Resorts, Inc., alleged that employees at the hotel were called offensive and derogatory names related to the 9/11 terrorist attacks based on their Muslim religion and/or their Arab and South Asian national origins. The workers were called “terrorist,” “Osama,” “Taliban,” and “Dumb Muslim.” In settling the lawsuit, the company also agreed to implement improved procedures to train managers and employees at 14 hotels nationwide.

National Origin Discrimination

Seven former workers at Daniel, the upscale Manhattan restaurant, filed a lawsuit in Federal District Court saying they were denied promotions to higher-paying and more visible positions. The lawsuit, which also named Daniel´s owner, Daniel Boulud, claims that the restaurant discriminated against the workers, immigrants from Latin America and Bangladesh, because of their ethnicity, race and national origin. The lawsuit was recently settled for an undisclosed amount.

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