Happy Hospitality New Year!!

Event season will soon be in full swing and we want you to be prepped for success. This exciting and often profitable time does come with some risk. Let’s discuss so you can avoid them.

There is perhaps no greater headache for an event host or caterer than a cancelled event. All the time and energy you put into preparing only for a guest to cancel or modify the event at the last minute – it’s a drag, to say the least, and one that occurs all too frequently. That said, your event contracts can help you recover lost costs for a cancelled event.

Recovering lost costs isn’t easy, though, and it’s actually a mechanism that is carefully regulated by municipal codes. The good news here is that these limiting statutes essentially boil down to a simple rule: the termination penalty has to actually mimic the cost of the cancellation. In other words, you can’t put yourself in a better position than you would have otherwise been in if the event took place. But, if you can demonstrate that you spent money towards a scheduled event that was later terminated, you can theoretically recover that cost.

The amount of actual expenses incurred in reliance of a given event is almost always largely, and sometimes entirely, dictated by when the cancellation takes place. In fact, New York City’s rule is that if the cancellation occurs more than 6 months from the event date, it’s presumed that the caterer can reschedule, which puts a lower limit on permissible cancellation fees. Conversely, cancellations that occur closer to the event date itself are presumed more expensive to the caterer, since it’s more likely that the caterer spent resources on staff and inventory for the scheduled event, and less likely that the caterer can reschedule that event date last minute.

So, a good catering or event contract will structure termination fees based on the timing of the cancellation relative to the event date. The closer the cancellation is to the scheduled date, the higher the termination fee can theoretically be.

Unfortunately, many catering contracts out there do not contain detailed remedies for cancellations, and do not afford special considerations to last-minute cancellations. This can make it hard to recover lost costs, and often leaves caterers footing the bill for irresponsible (and disrespectful) consumer behavior.

To avoid this risk, we’d recommend giving your catering and event contracts a fresh read, paying careful attention to your termination and cancellation language. Our team is standing by to assist with that review.

Layoffs and Furloughs

Many of our clients felt the pain of the summer slowdown that resulted in furloughs and layoffs across the industry. Never fun. But, if you are considering a lay off or furlough in the future, it is important that you do it the right way.

If you have more than 50 employees, you are bound by the New York State WARN Act to give employees at least 90 days’ notice prior to any such mass layoff or furlough event.  Moreover, if your furlough extends for more than 6 months, you also must comply with certain notice requirements as if it was a lay-off. Doing it the wrong way can subject you to fines and an investigation by the Commissioner of Labor.

Non- Competes

It’s best not to rely on non-compete language in future employment contracts for your high-level employees (or any employees) as the enforceability of those clauses are coming to an end. On June 20, 2023, the New York State Assembly passed a bill that, if signed into law by Governor Hochul, will effectively ban future non-compete agreements for any employee, salaried or hourly, and at any rate. As you negotiate those employment contracts, might as well keep this provision out, as it will likely not be enforceable by the time you need it.

EEO-1 Reports

Don’t forget that if you have 100 employees or more you must file an EEO-1 report: The Employer Information Report (EEO-1 report), is collected annually under the authority of Title VII of the Civil Rights Act. Based on the number of employees and federal contract activities, certain employers are required to file an EEO-1 Component 1 Report on an annual basis under the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor Office of Federal Contract Compliance Programs (OFCCP) regulations. This is required by law, and is not voluntary.

I-9 Form Update

A quick reminder that there is a new version of Form I-9 that you must start using by November 1. We recommend adopting this new form as soon as possible.

Employee Relations – PIPS

The last thing we have been seeing across the board is an overall adoption by owners of performance improvement plans (PIPs). Since hiring has been tough, many of our clients are opting to give their employees an opportunity to work on improving through a PIP instead of resorting to firing.

A PIP should include information on acceptable performance levels, specific and measurable objectives that are achievable, relevant, and time-bound, guidance on what management will do to assist the employee, details on progress meetings, and consequences for not meeting the objectives of the plan. If after taking the time to meet with the employee, he/she is still not improving, you have a clear path to termination.

If you have any concerns, give Hamutal Lieberman, Partner and Chair of the Employment Practices and Litigation groups, a call!

As Tony Bennett would sing so sweetly: “But I miss you most of all/ My darling/When autumn leaves/Start to fall.”  We will miss you so much Tony. 

Happy Almost Autumn Everyone.

David