How to Avoid a Flood of Litigation Pitfalls as Restaurants Return to New Normal

Article contributed by Gregg Kligman, Meister Seelig & Fein LLP Hospitality Group

Everybody has their own snapshot of what “normal” is supposed to look like. For me it is the parking lot to access at my local LIRR train station. Or it might be the restaurant at which I met clients for dinner last Saturday evening did not have a single table open. The combination of those two makes it safe to assume that things we saw as pre-pandemic life are slowly creeping back to some kind of normal. 

People are busy again and the humming of the wheels of the industry are gaining momentum as an increasing number of workers return to their offices. This reality also means that litigating issues affecting the restaurant and hospitality industry are mounting.

It is no secret that the pandemic has bred woeful labor shortages in the foodservice industry and those laborers that the industry has been able to secure or retain are arguably now more informed than ever about their rights. A fact that is strengthened by the courts system. Consequently, our firm, Meister Seelig & Fein LLP, is seeing an increase in the filings of wage issues both inside and outside the restaurant industry from weekly wages issues to improper tip credit issues, and non-payment of overtime. We are faced with the whole gambit of wage and hour claims being asserted. Plus, there is definitely an optic whereby people are taking advantage of the courts again.

What this means is that restaurateurs must ensure that all their ducks are lined up neatly in a row. There are several practices that simply must become second nature. Those non-negotiables include always issuing notices of pay rate and payday. Your pay stubs must be state-compliant. Employees must be paid on a weekly basis. Time must be tracked accordingly to properly allot time in paying overtime and make sure that you are properly applying the tip credit and only taking the tip credit for those employees who are eligible. 

In several ways, I see where the Pandemic created a new level of confusion. With the growth over the past two years in Takeout & Delivery, operators need to make sure that tipped employees are not doing the packing and prep of takeout orders.  Only the non-tipped employee should handle all the delivery prep in addition to doing side work at the restaurant. Take steps to avoid your tipped employees potentially crossing the threshold of performing too much non-tipped work by adhering to the 80-20-30 rule as opposed to just the 80-20. It certainly helps to alleviate the pressure related to the restrictions on your tipped employees doing untipped work.

Just in case the “30” has you confused: what that means is that now there is the 30-hour continuous limitation with which you must now contend. Whereas previously the 80-20 rule stipulated that tipped employees could not do more than 20 percent of their shift of non-tipped work, now, federal law states that employees cannot exceed 30 continuous minutes of non-tipped work. 

The easiest way to avoid these pitfalls is to make sure that your payroll provider has experience with the hospitality industry professional.  In addition, you really do want your attorneys to review and make sure that everything is verifiable because we have seen numerous instances whereby while the pay stubs generated by the payroll provider are compliant with general New York laws, they do not comply with the intricacies for the
hospitality industry.

From a legal standpoint, we are also seeing an uptick in discrimination cases related to both sexual harassment and racial bias. We are also seeing cases that have been stalling in government agencies that were overflowed during COVID. These cases that were not attended to in the last two years are being picked up and moving forward once again. We currently have a case that was sitting for three years with nothing done and suddenly, they have filed a hearing on it. 

So, for those operators faced with discrimination lawsuits make sure that you have a sexual harassment prevention policy that is compliant according to state regulations. An annual sexual harassment training must be part of your operational agenda. There must be clear communication on how to report claims of discrimination. If you have not yet secured employment practices liability insurance, conduct the research to see if it is something that would make a difference for your team and your establishment. We are aware that several inherent practices fell by the wayside because of the pandemic. But restaurants are obviously in person and this training is paramount for the success of your operation.

There are two additional remnants from the pandemic that I believe will remain part of our existence going forward. The first is the increase of takeout and delivery services that we touched on and the second is the future of outdoor dining.  

These structures once provided an oasis of solace to the pandemic-weary diner but in some cases have now evolved into vermin-haven shantytown eyesores. Be proactive in ensuring that you are cognizant of the ever-changing rules regarding these outdoor dining structures. Make sure that you have the proper permits and that you are maintaining these structures so that they do not fall into disrepair. Already neighborhood residents are voicing their disgust, and some have even filed complaints against their continued purpose. It’s a bad look if you’re not maintaining your outdoor structure and it has fallen into disrepair. Patrons are going to use them as the yardstick to measure the cleanliness of your establishment and assume that the hygiene inside of your restaurant is also compromised.

So, as we round another bend and draw closer to what I like to refer to as the End-emic, I’d also like to see the industry receive a bit more leeway from policymakers. That they will continue to allow restaurants to operate with as little restriction as possible within reason. The industry will, of course, do its part by maintaining health and safety. But we would also like our operators to be able to concentrate on the everyday aspects of operating their business rather than being restricted by the fear of punitive measures and bureaucracy.

Many restrictions and laws have been placed on our operators in the last few years. For many of you the over regulation has been so restrictive that you have become more concerned with making sure you’re complying with the laws. To this I say get organized. Be compliant. Then concentrate on churning out the best product possible that will ensure an amazing guest experience.

Gregg Kligman is counsel at Meister, Seelig & Fein LLP. The New York City-based law firm deals in all aspects of business litigation. Mr. Kligman specializes in the management side of employment counselling and litigation. As many businesses look to rebound and rebuild from the COVID-19 pandemic, employer-employee relations, and the law that follows, remain as complicated as ever. In the glimmer of light at the end of the COVID-19 tunnel, Mr. Kligman provides the latest, need-to-know information for owners and operators in the restaurant and hospitality industry.

The post How to Avoid a Flood of Litigation Pitfalls as Restaurants Return to New Normal appeared first on Total Food Service.

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