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Hospitality Newsletter NYS/NYC Legal Edition June 2019

Hospitality Newsletter
NYS/NYC Legal Edition
June 2019

 

LEGAL UPDATE

 

Suffolk County Bans Salary History Questions

Effective June 30, 2019, employers with 4 or more employees in Suffolk County may not:

-Inquire, in any form of application or otherwise, about a job applicant’s wage or salary history, including but not limited to, compensation and benefits.

– Rely on the salary history of an applicant for employment in determining the wage or salary amount for such applicant at any state in the employment process including the offer or contract.

It is acceptable to state the salary range on a job description and ask the applicant what they expect in terms of compensation.

Violations under the RISE Act may result in an award of compensatory damages to the individual, payment to the County general fund, and civil fines and penalties in an amount not to exceed $50,000 ($100,000 if the violation is found to be willful, wanton or malicious).

 

Lien Bill Passes

By NYC Hospitality Alliance

 

The NYS Legislature introduced legislation also known as the SWEAT (Securing Wages Earned Against Theft) Act, that, if enacted, would allow a business and personal lien to be placed on the owners, top 10 investors, and managers of a business based solely on the accusation of a wage violation. The legislation was recently passed by the state Senate and Assembly.

Next steps: The legislation will be sent to Governor Cuomo who will decide to sign the legislation into law or veto it.

You may click here to read the NYC Hospitality Alliance’s original analysis of the proposal, which has since been amended. You may read a list of ways the bill was amended below:

Amendments to the legislation that were secured:

  • The definition of Employee Lien limits the lien to the particular employee and not to a putative class.
  • Removes Labor Law section 191 from the definition of a “wage claim.” This is good because it will prevent employees from filing liens when they allege that they were not paid on a weekly basis and instead were paid on a bi-weekly or semi-monthly basis.
  • Makes it more difficult to obtain a lien based on wage related paperwork errors.
  • Clarifies that liens are automatically extinguished if the employer prevails or the employee fails to pursue the underlying wage claim.
  • Provides for penalties for a willful exaggeration of a claim.
  • Removes the provision that the burden of proof for wage claim attachments rests with the defendant.
  • Employee liens can now only be filed within three years after the cessation of employment.
  • Limits an employee’s ability to inspect the records of a non-public corporation to only obtaining names, addresses, and value of the shareholder’s interest in the corporation. Therefore, the employee cannot obtain the financial records of the corporation as was in the original bill.
  • Limits an employee’s ability to inspect the records of an LLC to only obtaining names, addresses, and value of the member’s interest in the LLC. Therefore, the employee cannot obtain the financial records of the LLC as was in the original bill.

 

Social Security No-Match Letters Are Back:

By Ali Brodie, Fox Rothschild, LLP

 

In March 2019, the Social Security Administration resumed issuance of Employer Correction Request Notices, commonly referred to as “Social Security No-Match Letters.” The No-Match Letters are being sent to businesses throughout the country that are identified as having a name and Social Security Number (SSN) combination submitted on wage and tax statement (Form W-2) that do not match SSA records. Employers may recall receiving these notices until 2012 when the Obama administration suspended these communications.

Employers receiving No-Match Letters in 2019 must take proper steps in addressing the request. Most importantly, employers should not assume that a No-Match Letter is proof of an unauthorized or undocumented worker; likewise, an employer cannot use the letter alone as a basis to take adverse action against an employee.

Upon receipt of a No-Match Letter, an employer should take the following initial steps :

  • CHECK the reported no-match information against its personnel records.
  • If the reported discrepancy cannot be resolved, INFORM the employee of the letter and ask the employee to confirm his or her name/SSN.
  • If the discrepancy still exists, ADVISE the employee, in writing, to contact the SSA to correct and/or update his or her SSA records and give the employee a reasonable period of time to resolve it.
  • SUBMIT corrections to the SSA.
  • If the employee does not respond or act to resolve the issue, CONTACT immigration counsel to discuss next steps and document a continued proactive response.

An employer’s failure to address a No-Match Letter and/or failure to follow-up with an employee and their progress towards resolving the no-match could lead to a finding by ICE of constructive knowledge of employing unauthorized workers.

Additionally, it is worth noting during an ICE Form I-9 Audit, the Notice of Inspection usually requests employer records concerning receipt of No-Match Letters and evidence as to how the company responded to the letter(s).

The reintroduction of No-Match Letters is a reminder for employers across the country in all industries of the need to ensure accurate records for wage-reporting and Forms I-9.

 

 

NY Employers Must Increase Paid Voting Leave for All

By Carolyn D. Richmond, Glenn S. Grindlinger and Erika H. Rosenblum, Fox Rothschild, LLP

 

Effective immediately, New York’s amended voting leave law requires employers to provide employees with “up to three” hours of paid time off to vote at “any election.”

Further, employers must post a notice in the workplace outlining employees’ rights under this new law not less than ten working days before every election. These amendments were included as part of the comprehensive New York State 2019-2020 budget.

Employees are permitted to take time off to vote only at the beginning or end of their shift, unless otherwise agreed upon by both the employer and the employee. If an employee decides to request time off to vote, they must notify their employer “not less than two working days” before the election. Payment is made at the employee’s regular hourly rate or the hourly rate they would have earned had they not taken leave. Tipped employees for whom the employer takes a tip credit are to be paid at the regular minimum wage. Employers are reminded that they are prohibited from making any deductions to an exempt employee’s pay for partial day absences, including for taking voting leave permissible under New York law.

Previously, New York State employers were required to pay for “up to two” hours of paid time off if the employee had less than four consecutive hours between the opening of the polls and the beginning of his/her work shift, or between the end of his/her work shift and the closing of the polls. This four hour requirement is no longer a pre-requisite for receiving paid time off to vote. As such, all employees are essentially guaranteed payment for up to three hours to vote at any election.

Employers should review their employee handbooks and other written policies to ensure that their voter leave policies comply with the new law. Moreover, employers should take necessary steps to prepare for an increase in absences on election days.

 

DOL Shelves Proposed Scheduling Regulations

By Fox Rothschild, LLP

 

The New York State Department of Labor (NYDOL) announced that, at this time, it is no longer going to pursue regulations to the Miscellaneous Industries Wage Order that would have required “call-in pay” or “on-call” scheduling.

The decision to allow the regulatory process to expire is a result of the widespread feedback the NYDOL received criticizing the proposed regulation’s “one-size-fits-all” approach. The NYDOL’s decision does not impact call-in pay requirements set forth under other New York wage orders, such as the Hospitality Industry Wage Oder.

Further, some New York City employers have additional call-in, on-call and scheduling requirements under the New York City Fair Workweek Law (see prior Alert); the NYDOL’s decision does not impact the Fair Workweek Law.

 

 

NYC LEGAL UPDATE

 

Effective July 1st – CBD Prohibited

Statement from Department of Health on Cannabidiol (CBD) Is Prohibited in Food and Drink:

In December 2018, the Food and Drug Administration (FDA) issued a statement clarifying its position on cannabis-derived products. The FDA stated that it is unlawful to add CBD to food or drink.  As a result, the Health Code also prohibits adding CBD to food or drink.

The Health Department is currently educating food service establishments that CBD is prohibited from being added to food and drink, and to stop offering these products. Beginning July 1, 2019, if operators have not voluntarily come into compliance, the Health Department will embargo food and drink products that contain CBD—the products will have to be returned to the supplier or discarded. Starting October 1, 2019, the Health Department will begin issuing violations to food service establishments for offering food or drink containing CBD. Violations may be subject to fines as well as violation points that count toward the establishment’s letter grade.

For more information on CBD in food or drink, please visit the FDA website: https://www.fda.gov/NewsEvents/PublicHealthFocus/ucm421168.htm

We will update you on our enforcement of this product if the FDA updates its guidance.

 

 

2 Weeks Paid Time Off Law:

Mayor de Blasio, Public Advocate Williams and the City Council has proposed a legislation requiring all businesses, including restaurants and bars, to provide up to 2 weeks of paid time off to all employees. This is in addition to the 1 week of paid leave currently required. This is another well-meaning but expensive, administrative burden that makes surviving as a small business so difficult in NYC. Click here to read NYC Hospitality Alliance’s executive director, Andrew Rigie’s article on this proposal.

 

Employers Must Provide Lactation Rooms

By Fox Rothschild, LLP

 

New York City businesses with 15 or more employees must provide a lactation room upon request and should have a written lactation room policy in place as of March 17.

The New York City Council in October 2018 passed a package of bills relating to maternal health and family care that included two bills amending the New York City Human Rights Law. Mayor Bill DeBlasio signed these bills into law, creating specific lactation room and related policy requirements.

As of March 17, 2019, employers in New York City with 15 or more employees must provide to employees, upon request, a lactation room, which is defined as:

[A] sanitary place, other than a restroom, that can be used to express breast milk shielded from view and free from intrusion and that includes at minimum an electrical outlet, a chair, a surface on which to place a breast pump and other personal items, and nearby access to running water.

The lactation room must be in reasonable proximity to the nursing employee’s work area and the employer must also provide employees with a refrigerator suitable for breast milk storage in reasonable proximity to such employee’s work area. If providing a lactation room would pose an undue hardship on the employer, the employer must engage in “a cooperative dialogue” with the employees who would otherwise be entitled to the room.

Additionally, relevant employers in New York City must establish and distribute to all current and new employees a written policy describing their employees’ right to request a lactation room and the process by which an employee can request use of a lactation room.

 

 

NYC Protections for Reproductive Health

By Fox Rothschild, LLP

 

Effective since May 20, 2019, the New York City Human Rights Law prohibits discrimination relating to an employee’s “sexual and reproductive health decisions.” Employers may not discriminate on the basis of “any decision by the employee to receive services which are arranged for or offered or provided to individuals relating to the reproductive system and its functions.”

Examples of sexual and reproductive health decisions identified in the law are:

  • Fertility-related medical procedures
  • Family planning services and counseling
  • Access to all medically approved birth control drugs and supplies
  • Emergency contraception
  • Sterilization procedures
  • Pregnancy testing
  • Sexually transmitted disease testing and treatment
  • Abortion procedures
  • HIV testing and counseling

Employers should ensure that handbooks, anti-discrimination policies and other relevant policies are updated to include sexual and reproductive health decisions as protected.

 

 

Rules on Gender Identity & Expression

By Carolyn D. Richmond, Glenn S. Grindlinger, and Alexander W. Bogdan

 

The New York City Commission on Human Rights (the Commission) recently adopted new rules addressing discrimination based on gender identity or expression under the New York City Human Rights Law (NYCHRL).

These new rules, which go into effect on March 9, 2019, address NYC employers’ obligations towards gender non-conforming employees. The rules have two primary purposes: (1) provide examples of behavior that the Commission will deem to be in violation of the NYCHRL; and (2) establish definitions for a number of gender-related terms. The Commission previously published enforcement guidance on discrimination based on gender identity in December 2015 as noted in our January 2016 alert.

NYC employers should become familiar with these new rules as they create new avenues of potential liability for employers of gender non-conforming employees.

 

AUTOMATING RESTAURANT INVENTORY MANAGEMENT:
By HotSchedules

 

The industry is buzzing about automation these days. With labor costs expected to double and the consumer demand for a seamless checkout experience, the focus is on how to automate the front of house with kiosks and mobile payments. But before you go out and buy a hamburger-flipping robot or a drone for food delivery, let’s talk about the basic processes that we have yet to fully automate in the back of house. While auto-counting may be a thing someday, it’s not here yet. If you can’t fully automate the inventory process, you can at least use tools that automate its more cumbersome aspects. Maximum labor output, higher levels of accuracy, and better accountability are possible with a system that automates certain tasks to enable manager productivity and on-the-job success.

Restaurant managers are busy people and every minute counts. Fifty-plus hour weeks are not unheard of and burnout is a big contributor to high turnover. While turnover is an accepted reality in the industry, manager retention is proven to be key to repeat customers and happy employees. It’s also critical for cost management if you consider that the average turnover cost of a restaurant manager at $15,271, according to research firm TDn2K. Manager turnover is a concern when you consider how tedious inventory can be. Quite frankly, it’s not a manager’s favorite thing to do. It’s time-consuming and chains them to the back office desktop. Yet those day-to-day decisions around inventory can define a manager’s success or failure as they have a big impact on the bottom line. High operating and food costs are considered the second-largest concern for operators. In fact, 60% of operators say that food costs are a significant challenge, continuously eating away at their profits. Food costs are expected to rise another 3% in 2019, so that concern is not going away anytime soon.

As operators become increasingly concerned about food cost, inventory becomes a key KPI for managers. But too many managers lack modern tools to be truly successful in that area.

It is hard to believe that with all the technology available to us today that spreadsheet-based inventory processes are still overwhelmingly common. Even when restaurant chains make inventory management technology available to their managers, those systems tend to be antiquated and configured for the corporate office and accounting needs — not the operations team that depends on the tool daily. When inventory is tracked manually, patterns of waste, theft, and inefficiency fly under the radar. There are lots of reasons to avoid spreadsheets or paper but the most obvious one is those errors can go uncorrected for long periods of time resulting in a string of bad decisions like over or under ordering, increased waste and theft. In fact, a Carnegie Mellon study found that the overall error rate on spreadsheets was an incredible 947%. Yet the biggest reason to not use a spreadsheet for inventory is that unless you are an Excel master, you can’t draw a conclusion on your cost of goods sold.

What if you could reduce the number of errors in your inventory process and cut the time it takes to count inventory by more than half? Inventory management software solutions with spot count configuration (also known as cycle counting) allow leaders to select items that usually have a high variance or high cost and configure blind counts of those items on a more frequent basis. A manager may take a full inventory on Monday, then check steaks on Tuesday and champagne on Friday. By spot counting inventory or only counting certain portions of it at a time, managers can avoid spending hours doing numerous full inventory counts that can drag late into the night. According to Hospitality Technology’s 2018 Restaurant Technology Study, increasing productivity was a key driver for new IT purchases. By automating the spot count selection, and therefore reducing count time, operators can:

Alerts are nothing new and every system sends them. The problem is when alerts and notifications become noise — if they are too frequent or don’t provide actionable information. Modern inventory management should offer the ability to configure alerts to focus on the exceptions, not the everyday occurrence. Operators need the ability to set thresholds on an acceptable variance or level of on-hand product. For instance, if a manager is receiving product from a vendor and the order is short, the system should alert the manager on the spot that they will not have enough product based on expected sales volume for the week. The ability to take corrective action at that moment within the same application is key. This type of automation helps to drive favorable behavior and decisions at the store level.

It’s really hard to predict an outcome. If it wasn’t, most of us would be in Vegas right now instead of “in the weeds.” What we know to be true is that forecasting is a non-negotiable part of restaurant management. So why don’t all managers do it? Roughly 30% of managers don’t consistently run a forecast to make staffing decisions even though they have the tools to do so.

More often than not, restaurant managers rely on the “gut algorithm” to make decisions. Rather than trust a computer-generated or corporate-driven forecast, they make predictions based on their tenure and experience. So what if the forecast was served up to your managers based on pre-configured corporate goals and objectives? Automation of the forecast ensures that best practices are followed consistently throughout the organization and saves the manager significant time by replacing manual work. The impact of an inaccurate forecast is far-reaching and can have a domino effect on the business. From product ordering to waste management — automated forecast generation results in the following benefits:

 

 

 

For clarity and fast response, managers need to easily access and understand the critical metrics that impact profitability. While dashboards are fairly common in back-office systems, the ability to drill into the details without combing through dozens of data points to draw conclusions is not. Managers make daily decisions such as how much product to order or how to adapt the schedule to meet the demands of a last-minute catering order. Wouldn’t it be great if they could rely on a single application to not only view the data to support those decisions but also reflect on the shift and communicate plans for improvement?

Consolidated planning tools and dashboards provide context for managers when making decisions. A major change in the forecast could be explained by a store log entry. An adjustment to a standard order could be based on a promotion that was recently added to your store calendar. Imagine if restaurant managers could spend more time REVIEWING your data, taking action on insights, and optimizing business performance rather than searching for clues and running hard-to-comprehend reports from yet another system. Ideally, a modern inventory solution should empower managers to:

There’s a definite need for more agile restaurant technology. Some of the first innovations in restaurant tech set out to mediate the challenges created by food cost, waste and inventory management — but there’s been a lag in development over the years. Restaurant leaders are looking for more nimble ways to drive inventory best practices across management teams. There’s also a need to understand where issues are happening on a global scale — intuitive reporting and heightened visibility to get better controls over food costs and waste continues to be a problem that modern technology can solve. According to Donald Burns, The Restaurant Coach, one of the primary reasons that managers quit is that they were not properly prepared for the position. Lack of managerial training can easily turn into the problem that keeps on giving. Without the tools necessary to handle time management and be successful at their jobs, managers fall into a trap of working too many hours, which leads to a poor work-life balance. A modern inventory management system should reduce the time drain and simplify these processes resulting in improved manager performance and job satisfaction:

 

RESTAURANT PERFORMANCE INDEX

The National Restaurant Association’s Restaurant Performance Index (RPI) is a monthly composite index that tracks the health of and the outlook for the U.S. restaurant industry. Launched in 2002, the RPI is released on the last business day of each month.

 

Latest RPI

As a result of softer readings in both the current situation and forward-looking indicators, the National Restaurant Association’s Restaurant Performance Index (RPI) fell sharply in April.  The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.1 in April, down 1.8 percent from a level of 101.9 in March.

The Current Situation Index, which measures current trends in four industry indicators, stood at 99.7 in April – down 2.1 percent from a level of 101.8 in March.  The sharp April decline gave back all of the gains registered in March, and dropped the Current Situation Index to its lowest level since January 2018.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators, stood at 100.5 in April – down 1.5 percent from a level of 102.1 in March.  April’s decline came on the heels of four consecutive gains in the Expectations Index, and represented its lowest level in nearly two years.
Read the full RPI report.

RPI Methodology

The RPI is measured in relation to a neutral level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators. The Index consists of two components – the Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), and the Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions).

 

The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among more than 400 restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. Restaurant operators interested in participating in the tracking survey, contact Bruce Grindy at bgrindy@restaurant.org.

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