The New York City Council has proposed a bill (No. 569-A), known as the Responsible Restaurant Act, under which a food service establishment’s record of compliance with federal, state and local wage-and-hour and employment discrimination laws (“Employment Laws”), would have a direct impact on its ability to obtain or renew its operating permit from the City Health Commissioner. This bill applies to any business in New York City that must obtain an operating permit pursuant to New York City Health Code § 81.05, where food is provided “for individual portion service directly to the consumer” (from fine restaurants to pushcarts). As explained below, this bill could have a major impact on such businesses.
Sponsored by Council Members Eric Gioia and Rosie Mendez, the Responsible Restaurant Act emerged from research that showed many restaurants were cutting costs by violating basic employment laws, which the sponsors felt undermined New York City’s workforce and its economy, and was also unfair to the responsible restaurants who “play by the rules.” They also felt such violations would directly impact the health and welfare of restaurant employees and their patrons. A hearing to consider the bill was held March 31 before the City Council’s Health Committee.
Under the proposed law, when a food service establishment applies for an initial or renewal operating permit, the health commissioner must consider its “standards of good character and fitness” and record of compliance with Employment Laws. With regard to good character and fitness, this applies not only to the establishment itself but also to any “principal,” which is defined as (a) one with 10% or more ownership interest, (b) an officer of any entity that owns such an establishment, or (c) any manager of the establishment who has authority to (1) hire and fire employees, (2) supervise and control employee work schedules, (3) determine rates and methods of salary compensation, or (4) maintain employment records. This broad, sweeping review translates into the potential for an individual manager’s conduct having an impact on the ability of a food service establishment to maintain its operating permit: If the commissioner determines the standards and/or record of compliance have not been maintained, the commissioner can actually deny or suspend the restaurant’s operating permit for any period of time deemed appropriate. Given the potentially severe impact, the bill contains an anti-retaliation provision protecting any person who provides information.
The bill outlines the methods by which the commissioner is to receive the information appropriate for this review. First, each applicant must complete a certified application that contains, at minimum, the following information:
• The name, business address, phone number and nature of interest in the establishment of each principal, as defined by the Act;
• Disclosure of any finding by a court or final agency determination within the preceding five years that the establishment or any principal thereof violated one or more of the Employment Laws; and
• Any additional information the commissioner deems relevant. (Undoubtedly, if this bill passes, regulations will be promulgated that more carefully define this category.)
Once the commissioner receives the above information, it will be publicly posted to the health department’s website. Moreover, at any time, members of the public may submit written comments about the character, fitness, and/or compliance with Employment Laws of an establishment and/or one or more of its principals.
In addition to the above, the commissioner may elect to hold a public hearing regarding an application or renewal of an operating permit to determine whether required standards have been met and maintained. Members of the public may also request a hearing. Furthermore, if the commissioner receives a disclosure or credible evidence of a finding by a court or final agency determination within the preceding five years that the establishment or any principal thereof violated one or more of the Employment Laws, the commissioner is without discretion and must hold a public hearing.
In addition to the possibility of a permit denial or suspension, if the necessary standards and/or record of compliance have not been maintained, there are further penalties identified for other violations. Thus, any person who willfully fails to disclose complete and accurate information on the certified application is subject to a fine of up to $2,000 and may be barred from submitting another permit application (initial or renewal) for up to two years. Moreover, anyone who is found to have engaged in retaliation must pay the individual “an amount set by the commissioner sufficient to compensate such individual and deter future violations, but not less than one thousand dollars or one hundred fifty dollars for each day such violation continued,” and may be barred from submitting another permit application (initial or renewal) for up to two years.
If this bill passes, restaurants will have an added incentive to carefully conduct an audit of their employment practices to ensure they are properly complying with all wage-and-hour and employment discrimination laws. Indeed, anyone who fails to do so acts at their own peril and at the risk of losing their operating permit. However, it will take some time before it becomes apparent whether or not this proposed law has a bite that is bigger than its bark.
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