The COVID-19 pandemic has impacted the hospitality and restaurant industry perhaps more than any other sector. Some locally owned small restaurants were forced out of business while others were able to remain open. During quarantine, restaurant owners, employees, and patrons were affected by capacity limits, mask-wearing, sanitizing every surface – the list goes on. However, COVID-19 is not the only legal issue facing restaurants and others in the hospitality industry in New Jersey, the pandemic only added fuel to the fire. Those who are interested in finding out more about some of the most common hospitality and restaurant legal issues may want to consider visiting with Yates Law, LLC at (551) 237-8921.
Common Restaurant Legal Issues
From lease agreements and liquor laws to vendor contracts, employee agreements, and contract disputes, there are so many things to consider from a legal standpoint for restaurant owners, managers, and others in the hospitality industry. Given the fast-paced work environment and desire to provide the best possible service to customers, restaurant owners or others responsible for making legal decisions often lack the time and understanding of certain legal issues to do so. Whether a restaurant operator has one small location, or several locations scattered throughout New Jersey, having an experienced restaurant law attorney review all legal contracts, agreements, and other documents is something owners may want to consider.
Liquor Laws in New Jersey
New Jersey has what some have referred to as the most archaic liquor or alcohol laws in the United States. Regulations governing the availability of alcohol vary substantially from one town to another, with a few municipalities designated “dry towns.” While dry towns do not allow restaurants or bars to serve alcohol to customers, other municipalities may be able to obtain a Class C retail license to offer alcoholic beverages at restaurants and bars.
However, the cost is often prohibitive and may be $1 million or more considering a new retail liquor license is generally obtained via a public auction. The New Jersey state record was recorded at $1.5 million in 2006 at a Cherry Hill auction. Liquor laws are some of the most complex and could result in restaurant legal issues for owners and operators who are not familiar with or do not understand these laws.
Other Legal Issues for Restaurant Owners
There are several other legal issues that restaurant owners must focus on and proactively take steps to ensure compliance.
Insurance policies were once fairly straightforward, however owners of restaurants would never have imagined what was to come prior to March of 2020 when the entire country literally came to a standstill. While insurance policies are contracts between the insurance company and restaurant it insures, many of these policies were drafted and executed prior to the pandemic. Restaurants across the country were subject to government-ordered shutdowns that left many businesses closed for months or longer. Insurance companies are likely to deny claims based on business interruption. However, restaurant owners may be able to file an insurance claim if there was damage to their restaurant or patron, depending on the facts and circumstances of the case. Restaurant and hospitality operators may want to consider visiting with Yates Law, LLC to learn more about their legal rights under their insurance policy.
Permits and Licenses
New restaurant owners in New Jersey may need permits and licenses which include a food safety permit, food service establishment permit, general business license, and an alcohol beverage license when the establishment desires to provide adult beverages to patrons who are legally of age. According to a State of New Jersey Business Action Center publication, other state and federal requirements for those in the restaurant or catering business may include:
- Tax registration with the Division of Revenue & Enterprise Services (DORES) and in some cases obtaining a Federal Tax ID from the Internal Revenue Service
- Manager Food Safety Training & Certification for food managers
- Registering trade names and doing business as (DBA) names
- Sales & use tax
- Wage and hour compliance
- Building permits including a construction permit and inspections as covered under the state’s uniform construction code
- Worker’s compensation covering all employees of the establishment
These are just a few compliance items those in the hospitality and restaurant industry should consider in order to operate establishments in a lawful manner and reduce the risks of a lawsuit.
Commercial Leases Between Landlords and Tenants
Most restaurant operators rent the space they use in conducting business from a landlord. This means there is a lease agreement between the landlord and operator regarding specific requirements such as the payment of rent, maintenance and repairs of the property, utilities, city taxes, and more. The COVID-19 pandemic created financial challenges for restaurant operators who were unable to pay full rent to their landlords, if any at all due to the government shut down. Even now, many people are hesitant about patronizing restaurants and bars. Keeping employees on staff has also been a constant struggle for many restaurant owners.
Landlords often have mortgages to pay on the property they lease to tenants, making leases one of the top restaurant legal issues today. In some cases, it may be possible to negotiate a rent reduction or abatement when tenants are unable to meet their financial obligations. In other situations, restaurant owners who rent their spaces may want to consider having a knowledgeable attorney review their leases to determine if it may be possible to use the “force majeure” clause as described by the American Bar Association.
Consider Scheduling a Consultation with Yates Law, LLC
Restaurant legal issues are often a top concern for those who are new to owning a restaurant or other hospitality venue, or operators who are experienced but want to do everything possible to ensure compliance with New Jersey law. No restaurant operator wants to face a lawsuit, which could not only affect the profitability and popularity of the establishment, but an owner’s reputation as well. A new restaurant often presents its own special set of circumstances for those not familiar with the complexities of getting an operation off the ground to a solid start legally. Those who are concerned about certain legal issues or need legal guidance to help navigate the complex laws relevant to the restaurant industry may want to consider reaching out to Yates Law, LLC at (551) 237-8921.