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In This Issue... |
Editorial Advisory Board Richard M. Blau Gene Vosberg, FMP Barry K. Shuster Robert D. Gaines Rogge Dunn Aaron D. Allen Susie Biehler Don Luria Dennis P. Gemberling, CFBE Linda J. Lipsky TJ Schier |
In Next Month's Issue... |
Legislative Update: What Immigration Reform Means To Your Restaurant Your Legal Responsibilities When A Customer Chokes 10 Essentials To Restaurant-Friendly Vendor Contracts |
Take these simple steps to reign in your risk
With dozens of employees under complex wage regulations, restaurants are always perilously close to labor violations and lawsuits. Avoid the most common infractions by following these tips.
If you require servers to pool tips, such as making them give 10 percent to bussers or barbacks, you could be in violation of the law. A tip is a payment from a customer to a server in recognition of a service, according to federal wage and hour laws. Once the server receives the tip, she controls it absolutely. An employer cannot have any say over how much is kept or given away.
This is important if you take the tip credit, which is the exception to the Minimum Wage law that allows restaurantsto pay servers as low as $2.13 per hour. The tip credit requires servers to remain in control of their tips.
"One could argue that the entire tip is not really a tip for purposes of the wage and hour laws if the employer is keeping some control over it," explains David Comeaux, an employment attorney with Ogletree, Deakins, Nash, Smoak and Stewart, P.C. "You could be subject to backpay under fair labor standards."
To avoid this legal problem, make sure you make tip pooling voluntary and not mandatory.
If one of your employees works over 40 hours per week, you must pay her overtime. But be careful: The math here gets confusing. When you calculate an employee's overtime pay - let's say for a server who you pay $2.13 per hour - you must use her regular rate of pay, not her hourly rate. That regular rate of pay includes the $3.02 per hour Tip Credit. Therefore, if you take the Tip Credit, you would multiply overtime (one and one half times her regular rate of pay) by $5.15. In most cases, you would need to pay that server $7.73 for every hour over 40 per week she works.
How would the Department of Labor (DOL) discover if you weren't paying servers overtime? Remember that the DOL requires you to record when your employees punch in and out. You're required to keep those records for three years. "If the Department wanted to examine your business, it could look at those records to determine whether employees had been working overtime, and if so, if they had been paid properly," warns Comeaux.
Note: The Federal government only outlines minimum overtime standards. States and municipalities can establish additional restrictions. In California, employers must pay employees overtime for every hour worked over 8 per day, even if those employees do not work 40 hours per week.
If you have a policy of adding mandatory gratuity to sixtops or larger tables’ bills, you could be in violation of the law. To receive your tip credit, all tips must be voluntary. Even if the total tip amount goes to the server, you could disqualify yourself from the tip credit.
One way around this problem is to ensure that servers get tables of various sizes or rephrase the terms that appear at the bottom of your menus. Instead of writing, "18 percent gratuity will be added to tables of six or more," write, "We encourage gratuities of 18 percent for parties of six or more and will add this to your bill as a convenience. If you would like to do something different, please let us know."
This slight semantic change makes the tip voluntary and, therefore, keeps you eligible for the tip credit. Otherwise, you could have to give the server backpay under the Fair Labor Standards Act.
If you require employees to punch out for breaks, you should give them a full half hour. The DOL requires employers to pay employees for breaks of a short duration.
If a server's break is interrupted by a mealtime rush, and you ask him to punch in after just ten minutes, you should make sure to pay for that ten minutes, advises Comeaux.
Restaurant workers tend to be friendlier with one another than employees you'd find in other industries. Generally this helps to build a team atmosphere, but sometimes jokes can become discrimination or harassment lawsuits.
Last year, the Equal Employment Opportunity Commission indicated it saw restaurants as sites for higher than average levels of harassment. They noted that food and beverage establishments often hire younger workers who are less likely to know their rights.
Therefore, protect your employees by establishing a policy that defines acceptable and unacceptable behavior. Specify that it is inappropriate for a manager to take advantage of a subordinate by pegging her raise to going on a date. "If something like that is found to happen, the employer, not just manager, will be liable for sexual harassment," warns Comeaux.
In your policy, mention that employees are protected from environments in which they could be harassed for their sex, race, age, disability or other protected characteristics. Require all employees - from dishwashers to top managers - to receive harassment training. Your policy should not only forbid harassment, but require employees to report it if they observe it in the workplace.
Once you get reports of harassment, follow up quickly. Investigate complaints and take action. "If you’ve got policies, and you enforce them, you're in much better shape than you would be without them," mentions Comeaux.
Experts say raids are increasing in frequency and investigators are targeting restaurants
Don't wait until Immigration and Custom Enforcement (ICE) officials knock on your door to find out your rights. Prepare your workers before your restaurant gets raided.
The Department of Homeland Security is cracking down on employers who hire undocumented workers. "With upcoming federal discussions about immigration, you'll see more law enforcement in the business sector," says Jose Peres, an attorney at Quan, Burdette and Perez, P.C.
These raids tend to target employers from whom investigators can win big damages. They are also looking for restaurants that could net numerous arrests. Often they check random sites or are tipped off by a disgruntled employee.
ICE investigators must have a warrant or your consent to enter your restaurant. "If they come without a warrant the first thing you should say is, 'You need a warrant,' and not let them in," emphasizes Peres.
It's important that you not hide employees. You could get slapped with an aiding and abetting charge. However, you are not liable if your employees run away.
Investigators might claim they can enter your restaurant under the Open Fields Doctrine, or because they could see illegal activity from a public vantage point. If this happens, note what they say is the observed illegal activity. A good criminal defense lawyer could get that evidence suppressed.
If investigators question your employees, let your employees know they have the right to remain silent. Even if employees are detained, they can remain silent or ask for legal counsel. You can also have legal counsel during the raid and subsequent investigation, so call your attorney. He or she can rebut whatever the ICE investigators allege.
ICE investigators might come to your restaurant with a list of employee names. If you have been alerted to their visit, ask for that list. Let your employees know. If they are members of a union, share the list to get extra legal help.
A recent case involving Wal-Mart proved that employers are not legally immune if undocumented workers were provided by an employment service. Your liability is based on a reasonably prudent business person standard. If a reasonable business person would question employees' work status, you must too. "If there are people on your premise, you can't look the other way and say, 'I trust and put all my faith in the person who is in charge of this.' In other words, you can't hide behind an employment service," says Peres.
Big damages makes these cases attractive for plaintiffs' attorneys, but ruinous for you
Your shop could be sunk any night of the week if an intoxicated customer hurts, or kills, someone after leaving your restaurant. Follow these guidelines to avert devastating Dram Shop lawsuits.
There are two types of Dram Shop cases - first- and third- party lawsuits. A first-party suit can arise if a person enters your restaurant, is over-served, leaves and injures only himself. A third-party lawsuit can arise if a person enters your restaurant, is over-served, gets in car wreck and injures another person. The injured third party can sue your restaurant for damages. He can argue that you should have known you were serving somebody who was obviously intoxicated and likely to commit this injury.
Usually first-party suits don't do well. Courts often dismiss them because the customer’s choice to drink too much, as opposed to the restaurant’s furnishing of alcohol, is the proximate cause for the accident. One exception is if the over-served person is a minor.
Dram Shop laws are statutorily governed. Some states have protective laws, which say, unless you serve an obviously intoxicated person, or a minor, you’re not going to be liable for consumer-caused injuries. Other states allow litigants to bring claims against restaurants through statute or judicial decisions based on common law. In these cases, the plaintiff will try to prove that your waitstaff kept serving him despite his showing signs of intoxication.
To protect yourself, review your insurance policy. Make sure you have liquor liability coverage. "A big problem I see among non-chain restaurants is when operators come into the hospitality industry from other business fields. They load up on general liability insurance and don't realize that alcohol-
related losses are often excluded from general liability coverage. The insurance industry requires operators to obtain seperate liquor liability policies if they want coverage for their alcohol-related businesses," explains Richard Blau, an attorney with Gray Robinson.
Therefore, make sure your insurance portfolio includes adequate liquor liability coverage.
In some states, such as Illinois, restaurant owners are required to offer waitstaff certified alcohol-serving training. In other states, such as Florida, restaurant owners can get limited immunity from license revocation if they show that their employees received such training. "Server training is a smart investment even in states that don't require it by law. A plaintiff's attorney will have an easier time proving that you or your waitstaff acted negligently if you don't offer a training program," says Blau.
In all cases, it's a good idea to teach managers how to determine when someone should be cut-off and what types of documentation she should gather before an intoxicated customer leaves. A telephone bill showing that you called a taxi service that night, before the customer left, could offer critical protection in court.
Don't find out too late that you're missing essential content.
Immigration and Customs Enforcement (ICE) investigators have their sights set on the restaurant industry. Here's how to proceed if auditors come for your I-9s.
ICE investigators must give you at least three days' notice before they come to review your I-9s. This alert usually comes via a personal visit or a certified letter.
If you haven't been notified, and an investigator shows up, you have a right to request additional time before the inspection is conducted, advises Monica Guizar, an attorney with the National Immigration Law Center.
Once an auditor notifies you, contact your attorney immediately. He or she can set up a neutral place for the auditors to review your documents, so you don't have to meet them at your restaurant.
It's important to note that you can ask agents to give you more than three days to gather your documents.
When reviewing your I-9s, auditors will look for mistakes, such as missed checkmarks, missing dates or clerical errors. They will look for I-9s with blank bottom sections, which means you didn’t review employee identification or work authorization documents. They will check to see if you reverified eligibility to work documents when you were required to do so. They will also look to see if alien registration numbers match their internal records for a person.
Note: If you received a Social Security Number No Match letter for an employee, make sure you store this somewhere other than the I-9 file. Unless investigators are engaged in a criminal investigation, the Department of Homeland Security and the Social Security Administration are not supposed to share information about your business or employees. Therefore, the most likely way ICE investigators would know about your forewarning of an employee's incorrect use of a Social Security Number, is if they find those documents in his I-9 file.
Walk the I-9 tightrope between civil right protections and immigration regulations
The terrain between mandatory identification verifications and discrimination is narrow. Follow these I-9 best practices to navigate these obstacles.
Ask only required questionsWhen checking an employee's identity and eligibility documents, you have to be careful about the questions you ask. For example, it is illegal to ask if your new hire is a U.S. citizen. "That is an irrelevant question," explains Richard Madison, an immigration attorney in New York. "The question is really, 'Are you authorized to work in the U.S.?' Then, when the answer is 'Yes,' you can ask, 'How are you authorized? Show me the paperwork.'"
You can get into legal trouble if you try to "play it safe" and only hire U.S. citizens. That is discrimination against people legally authorized to work in the U.S.
It is likewise illegal to ask for specific documentation, such as a birth certificate. You can only ask for proof of eligibility to work and proof of identity. "You cannot ask for more than the minimum necessary to establish identity and authorization," explains Madison.
When reviewing identification and work authorization documents, consult the back of the I-9 form. Courts have ruled that employers are suppose to meet a reasonable person standard when reviewing documentation. In other words, if a reasonable person would believe the documents to be authentic, then you can't be held liable if a new hire gives you falsified information.
Three days after hiring an employee, you are required to fill out and store an I-9 for him. It's best practice to keep photocopies of his identification and work authorization documents too. "In case the government makes an audit, they will say, 'How could this guy have possibly had a Social Security card? What did you actually look at? Didn't it look obviously falsified?' If you show the copy, then
you're pretty much off the hook," explains Madison.
Oftentimes, employees will give you documentation with expiration dates. If these are eligibility to work documents, you must ask for new proof of eligibility to work on the dates that those documents expire. This does not apply to identity documents, such as driver's licenses, or to Green Cards or Passports. Those expiration dates refer to the documents, not the person's identity or eligibility to work.
Note: You can't initially accept an identity document that is out of date.
Be aware that non-U.S. citizens may legally have their own Social Security cards. Those cards either say, "Valid for work only with DHS authorization," or for those who cannot work, "Not Valid for Employment."
Customers in poor health who risk seafood could become your problem.
Zealous plaintiffs' attorneys have their sights set on restaurants for foodborne illness cases. The feds don't seem worried about stopping these frivolous suits either. Here's how to defeat these lawsuit before they happen.
Most foodborne illness cases involve seafood such as raw clams and oysters. Both of these shellfish contain a natural bacteria that most people can ingest in small doses. Many of the people who sue restaurants have some preexisting condition, such as hepatitis, which causes them to have compromised immune systems. Nevertheless, they eat the raw food and bring one of two suits against a restaurant. They either bring a strict liability case, in which they argue the product was inherently dangerous and should have come with a warning, or a straight negligence claim, in which they argue the restaurant didn't exercise due care in keeping the seafood at appropriately cold temperatures.
To protect yourself from a lawsuit, post explicit warnings in conspicuous places. These signs should read, "Raw Seafood Contains Natural Bacteria. Please Be Aware That This Is Uncooked Food. If You Have A Health Condition That Precludes Your Being Able To Eat Uncooked Food Don't Eat This."
"That will take the teeth out of a failure to warn and strict liability claim," explains Elizabeth DeConti, an attorney with Gray Robinson.
Often negligence cases can involve many defendants -a product's manufacturer, distributor and the serving restaurant. Meticulous records that show your procedures for storing perishable food, as well as where you got the food and what you did with it upon receipt, can safeguard you.
"Those records mitigate the restaurant's position because it says, 'From the time we had this product, it was very well cared for,'" says DeConti.
Some states have laws that allow judges and juries to recognize comparative negligence. In these cases, the court or jury members weigh the restaurant's negligence, as a result of not properly caring for the food, against the negligence of the person who might have had a compromised immune system but risked eating uncooked food.
Many foodborne illness lawsuits occur because restaurants put their raw foods on their buffet bars. These buffets include food that is chilled by layers of underlying ice. Overhead lights make it difficult to keep this food at an uniform temperature. "If you're going to serve raw seafood, do it on a plate-by-plate basis," encourages DeConti.
Fortunately, foodborne illness cases aren't cost effective for plaintiffs' lawyers. Damages are usually very small. Someone might have missed a day of work or, at worst, had a hospital visit for gastric distress. If a customer reports that he got ill at your restaurant, and says he wants to sue you, see if your insurance will pay for his damages.
You might also want to evaluate if the amount the person is asking for is logically related to his damages. Is he just looking for profit? If this is the case, and you're concerned about setting a precedent, you can proceed into court. Otherwise, evaluate whether it would be cheaper to pay the customer out of pocket or hire a lawyer, litigate and possibly see your insurance premiums increase.
Discover where your liability begins and ends with these documents
Did someone give you a false Social Security Number? Here's where your liability begins and ends.
The Social Security Administration (SSA) sends Social Security Number No-Match letters to employers in an attempt to account for the billions of dollars of unclaimed Social Security payments that don't match their account numbers. They emphasize that they do not send the letters to ferret out unlawful workers. If you receive a letter, they are asking you to help them straighten out their books.
There are various ways, other than a falsified document, that a mismatch could occur. If the employee changed her name, was adopted or recently married, then it is possible for her name to not match the number in the SSA's records.
There is also the possibility for a clerical error. For example, the employee could have filled out his I-9 in an illegible manner, or you could have read the number incorrectly when you entered it into the payroll system. The SSA knows these possibilities, so a No-Match letter is not a formal accusation that you are hiring illegal workers.
If you receive a No-Match letter, the first thing you should do is bring it to the employee’s attention, recommends Chris Helm, an attorney with DWT. You can suggest that she contact the SSA and straighten things out. Ask the employee to provide proof of eligibility to work again.
If you receive further No-Match letters listing the same employee and number, you are probably on notice that you need to take further steps. Reverify the employee's I-9, and ask him to provide some other evidence of employment authorization. If Immigration and Custom Enforcement or Department of Labor officials investigate you, a lack of follow-up action, in the presence of discrepancies such as No-Match letters, could result in fines or sanctions.
Therefore, don't store No Match letters with your I-9s (seeWhat To Do If ICE Investigators Raid Your Restaurant on page 3). Furthermore, if that employee can't provide valid eligibility documents consider terminating his employment for liability reasons.
Don't wait until you get a Cease and Desist letter or, worse yet, a summons to appear in court
We're all trying to market specials at the same time, and even the best ideas can overlap. Protect your slogans and dish names by getting trademarks - and prevent a lawsuit.
Even if you are absolutely sure you came up with your idea, there's a chance that someone owns the term. If you put your idea into the public arena, in a radio commercial, for example, the actual owner could hear it and send you a Cease and Desist letter, which requires you to stop using the term. He could also send you a summons to appear in court.
Once you invent a good idea, check to see if someone owns it. Start by searching for your term on Google. Be forewarned, though: An Internet search often yields a false sense of security. Sometimes, an idea is trademarked but not in circulation. Therefore, if the online search proves clear, do a search through the U.S. Trademark Office.
Here's the process: Submit your idea to the Trademark Office with the $325 application fee. Officials will search for the term in their databases. If they do not find any direct matches, they will look for conflicts under two additional standards - the confusingly similar and dilution doctrines.
The first doctrine states that trademarked ideas or slogans should not be confusingly similar to other ones. If you come up with the Summer Burger, and someone has the Summer Sandwich, the distinction might confuse consumers.
The second doctrine states that your mark cannot dilute another brand. If your restaurant is named the Summer Grill, and you make the Summer Burger, then someone's product called Summer Tanning Oil, might confuse buyers. People might think you make tanning oil, which dilutes your brand.
If your idea (now called a mark) has no matches, and is not confusingly similar to or diluting other marks, then the Trademark Office publishes the idea publicly between one to three months after you apply. The public has 30 days to object. If nobody objects, then the mark is yours.
Users of marks can be categorized into Senior and Junior users. If you own the mark, then you are the Senior user. A Junior user is someone else who uses the mark unknowingly or maliciously. You have the right to sue a Junior user if he uses your mark. Usually, though, it's more cost effective to send a Cease and Desist letter first, advises Michael Rule, an attorney at Pepper Law.
Injured workers can increase premiums, lead to lawsuits and decrease productivity
Don't get embroiled in a personal injury lawsuit because you didn't give people a safe place to work. Follow these rules to protect your employees - and your bottom line.
Most employee injuries occur when someone slips on a slick surface. To address this problem, have someone test your skid coefficient.
If your maintenance or cleaning company puts wax on the floor, ask them to put grit in the varnish layer. "That can protect your customers as well your employees. It will decrease your liability in the front of the house too," explains Rogge Dunn of Clouse Dunn Khoshbin, LLP.
You can also prevent falls by putting rubber mats in dishwashing and prep areas. Use honeycomb mats, so water can seep away from the walking surface. Rubber mats provides employees with a grippable surface, as well as a soft barrier if they fall. Rubber mats are especially important to prevent slips around ovens and stoves.
Finally, let your employees know that leather soled shoes, as opposed to crepe sole shoes, offer better traction, explains Sherman Williamson, an engineer at the Occupational Safety and Health Administration.
Back injuries: Use vendors, consider layout
If vendors make deliveries directly to your restaurant, make sure they do the heavy lifting. Often, employees get hurt when they lift unfamiliar objects. Also, train employees to lift with their legs, as opposed to their backs. If employees have to do a lot of lifting you might want to provide them with back brace belts too.
Also, look at where you place heavy objects. If you regularly require a sack of potatoes to be moved from a storage area to a prep area, store it at waist level so employees don't have to bend down to get it. Store light items such as containers and spices in high or low locations.
You don't want an employee's cut to become an infection, so keep workspaces clean. Make sure equipment like slicers remain well-maintained, and that your employees know how to use dangerous equipment.
The best way to protect yourself from expensive personal injury lawsuits is to have workers comp insurance. Beyond the potential payout, insurance underwriters, adjusters or comp carriers will provide free safety reviews. They will visit your restaurant and give you ideas about how to make your workplace safer - either with a physical inspection or by providing free material.
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| The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Copyright © 2008 by Robert Gaines - Krigel & Krigel, P.C. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. | |
