Licensing FAQ’s by Heather Kirk, Director of Licensing
Originally Published : November 24, 2020
WE’RE MAD AS HELL
AND WE’RE NOT GOING TO TAKE IT
That Saturday when they called the race for Joey B was one of the great days in New York City history. Brooklyn turned into one big Grateful Dead show parking lot. Everyone was smiling and being kind to one another with too-cool-for-school Williamsburg kids hanging happily with born and bred locals. Everyone peacefully celebrating together and dancing and singing and drinking and smoking in McCarren Park. Bands played and people were dressed in fun costumes and all was right with the world. It was a moment to savor.
Of course, the mood was fleeting and our buzz assaulted by our whiny little manbaby-in-chief who refuses to concede the election. DT’s tantrums have delayed the transition and has hampered Joey B in his effort to put together a plan for getting m-m-m my corona under control. The industry needs two things: money and a corona-free country. DT’s hubris and subterfuge distracts our feeble minded D.C. Dearly Elected who continue to bicker about who won the damn election instead of turning their focus to more stim relief and pandemic control. Enough!!!
I mean, Land Ho right?! Vaccine Island is in sight and maybe we can make it there in our rickety, little dinghy and keep afloat for the next 6 months with a little help from our frenemies in DC. We have three vaccines now and that’s a big piece of the puzzle and we should be celebrating but the histrionics and hubris emanating from the White House has created a congressional black hole and all the energy from our Dearly Electeds has been sucked into it and it just needs to stop so we can move forward for crying out loud. Enough!!
The money is there right? Or, if it’s not we can print it so what on earth can Speaker P and Mitch & The Sideparts be waiting for? All we need is enough to get us through the winter and then we can emerge in spring thin and hungry and certainly cranky but with a good shot of survival. So, let’s keep up the pressure and pester Chuck and Nancy and Andy and Bill and stay involved. Now is not the time to lose steam.
While we’re all fighting the good fight, we do still have to prepare for the cold and the next shutdown and Landy and our employees so here are some questions that you all have been asking us. We hope you find the answers helpful.
Licensing by Heather Kirk, Director of Licensing
What do I need to do to prepare my outdoor dining structures for winter?
Now that we are hitting the colder months, it is important to review the new guidelines that have been issued by the various city and state agencies. If you have dining outdoors, outdoor structures, heating elements, etc. The deadline for compliance with these new guidelines is December 15th.
- Review the guidelines and follow the restrictions – we have noted some of the important changes for you below.
- All 18” roadway barriers must be completely filled with soil or sand
- Barriers must have a fully built interior wall and bottom to hold filler material
- Continuous reflector tape must be added along the top outside edges, and snow sticks must be added to the corners of the two barriers facing traffic
- Sandbags, reflector tape, snow sticks, and plastic barriers will be available to all participants, free of charge. Participating restaurants will be emailed with distribution and pickup detail. Limited deliveries of plastic barriers will be made to the “high priority” restaurants; those restaurants will be contacted separately.
- If three (3) side walls or more are in use, the occupancy limit will be capped at 25 percent capacity, and all indoor dining guidelines must be followed.
- Sign up for weather advisories
Review the links below for useful information:
What heating elements can I use outside and are there requirements for storage?
Electric heaters are allowed on both sidewalks and roadways. Propane and
natural gas heaters are allowed on sidewalks only and are prohibited in roadways. Open flame natural gas-fired heaters are not permitted. The use of propane for heating requires a permit from FDNY and compliance with FDNY regulations for outdoor use, handling and secure outdoor tank storage overnight.
- Review the guidelines
- Apply for the necessary permits
Review the links below for useful information:
Can I expand my outdoor dining to my neighbor’s space if they have agreed to let me use it?
Official instructions and guidelines have not yet been released and at this time you are not allowed to use this space. The City will allow restaurants to expand seating to the frontage of a single adjacent property on either side, as long as the adjacent property owner formally agrees to the use of the space for a specified period of time and commits not to charge a fee for its use.
Does the 10:00 pm curfew for dining mean all patrons must be out at 10:00 pm or that we just have to stop seating at 10:00 pm?
Based on current guidelines as of 11/13, all patrons must be out of the premise no later than 10:00 pm. This includes outdoor dining as well. At or after 10:00PM daily, no patron may remain in or enter into an interior portion of the premises for any reason. Additionally, you must also cease the sale of alcohol at 10:00 pm for to-go curbside and delivery.
Review the links below for useful information:
Can I have live entertainment?
Restaurants and other on premises food and beverage establishments that have a license through the SLA are only allowed to offer on-premise music if their license certificate specifically allows for such activity (i.e., live music, DJ, recorded, etc.).
Only incidental music is permissible at this time. This means that advertised and/or ticketed shows are not permissible. Music should be incidental to the dining experience and not the draw itself.
All other forms of live entertainment, such as exotic dancing, comedy shows, karaoke etc., are not permissible currently regardless of phase.
If you have any questions about licensing, please email Heather at: [email protected]
Real Estate by Mayan Bouskila, Chair of RE Group
When should I approach Landy to work out a rent relief deal?
Now! You should approach your Landy sooner rather than later. It takes time to negotiate a rent relief deal that works for both Landlord and Tenant. Some Landys want to help – they want to keep you. The first step is to ask to work out a deal!
Tip – Prior to reaching out to Landy, crunch numbers. Consider the sort of deal that you can afford in the event you are at take-out/delivery only (if a shutdown is around the corner, this is equivalent to the strictest lock down at the start of the pandemic).
My Landy told me to “pay what I can for the next [insert period]“. They also confirmed this in an email. Is this sufficient to amend my Lease?
No! Until there is a writing signed by both landlord and tenant memorializing the change in rent obligations (or any other changes that have been agreed to by you and Landy), the terms of your Lease prevail (including the rent obligations contemplated under the Lease). Any deals that are struck between you and Landy should be amended in writing and signed by both parties – consider this your insurance policy!
My Landy won’t work out a deal with me. I can’t afford to surrender under my ‘good guy guaranty’. I want to hand in my keys under 1932-A. Will 1932-A relieve me of personal liability?
As a refresher, Local Law 1932-A was signed into law on May 26, 2020 by the Mayor of New York, and if you satisfy the conditions set out in Local Law 1932-A, arguably, you could walk away from your lease without incurring personal liability for a default that occurs during the specified period set out in Local Law 1932-A.
However, despite Local Law 1932-A being law, there are risks involved in ‘handing back your keys’ to the landlord without obtaining a written surrender and release agreement from your landlord, including, but not limited to:
1. the landlord bringing a lawsuit against you and challenging your position;
2. the landlord challenging the constitutionality of the law;
3. the landlord challenging whether a default has yet occurred if you have not received a notice of default;
4. the landlord raising the issue of the form of guaranty being a separate agreement to the lease, and not a provision included in the lease thus rendering 1932-A inapplicable; and
5. potential other unknown avenues of challenge which are unforeseen at this point in time.
Legal challenges to Local Law 1932- may take several years before they are finally resolved. Surrendering your Premises under the Lease to the Landlord early is considered a breach of contract. In New York, a breach of contract claim has a 6-year statute of limitation. If the Court were to overturn Local Law 1932-A, there is a possibility that you may be subject to liability beyond the 6-year statute of limitations.
What should I do having regard to the above?
Tenants should attempt to negotiate a surrender and release agreement with the landlord, and use Local Law 1932-A to leverage a favorable outcome!
If you have any questions about Landy or leases, email Mayan at: [email protected]
Litigation by Joe Taylor, Associate attorney
Can my landlord evict me for failure to pay rent?
No. On October 20, 2020, Governor Cuomo issued Executive Order 202.70 extending the prohibition of the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent from March 7, 2020 through January 1, 2021. See https://www.governor.ny.gov/news/no-20270-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency . However, this has not stopped landlords from filing lawsuits seeking to recover the outstanding rents and for ejectment in both Civil Court/Landlord-Tenant Court and NY Supreme Court. Despite the moratorium, the Courts have not rejected these filings, so if your landlord files an action against you, please let us know right away so we can assist you.
Can my landlord harass me for rent?
No. New York City Administrative Code § 22-902(a) provides that a landlord may not engage in commercial tenant harassment, which is defined inter alia as “any act or omission by or on behalf of a landlord that (i) would reasonably cause a commercial tenant to vacate covered property, or to surrender or waive any rights under a lease or other rental agreement or under applicable law in relation to such covered property…”, which includes threatening a commercial tenant based on their status as a “person or business impacted by COVID-19” and “attempting to enforce a personal liability provision that the landlord knows or reasonably should know is not enforceable pursuant to §22-1005 of the Code.” However, this does not include any rent demands that your landlord is allowed to send pursuant to the terms of your lease.
Can my landlord enforce the Guaranty provision of the lease?
No. On May 26, 2020, the New York City Council passed NYC Administrative Code § 22-1005 (also known as Local Law 1932-A) which prohibits the enforcement of personal liability provisions triggered by events which occurred between March 7, 2020 to September 30, 2020 in commercial leases for businesses impacted by New York’s mandated closings or limitations to service. See https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=4424954&GUID=C2A4AC16-7409-465E-B5A4-A84F6E7989FB&Options=&Search. On September 28, 2020, New York City Mayor DeBlasio extended the protection from September 30, 2020 to March 31, 2021. See https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=4635291&GUID=CD374E63-1E3D-4C99-B482-136A8A4DF109&Options=&Search= . As we have written about previously, 1932-A is currently the subject of a federal court action filed by several landlords against the City of New York seeking to have the law overturned on constitutional grounds. The landlords filed a motion seeking a declaration that Local Law 1932-A is unconstitutional and the City filed a motion to dismiss the action. Both motions are fully briefed and we await the Court’s decision on the matter, which could be handed down any day.
As the guarantor of a lease, can I elect to terminate my Guaranty?
Yes. As a guarantor, you can choose to trigger what’s known as a “Good Guy Guaranty” (the “GGG”) clause of the Guaranty agreement. The GGG allows a guarantor, but not the tenant, to terminate their personal liability for the lease, provided they comply with the specific requirements of the GGG clause. These requirements may differ, but generally require the guarantor to provide written notice to the landlord of their intent to trigger the GGG clause and pay all rent and additional rent owed to date (and for an additional period of time, usually defined as the “guaranty period”), and surrender the premises in the condition required by the lease. If you are considering triggering your GGG, let us know and we can work with you to ensure that you properly trigger your GGG.
As a tenant, are there any laws that protect me from having to pay rent?
Unfortunately, there are not currently any protections in place for tenants regarding the payment of rent. However, as referenced above, there is currently a moratorium on evictions based on failure to pay rent until January 1, 2021. Also, check your lease (and any lease modification agreements) to see if you have a force majeure clause or similar clause that may suspend your obligation to pay rent under certain conditions. If you are behind on rent, it is wise to approach your landlord to try to agree on a rent modification and/or rent abatement schedule.
Are Courts currently hearing Landlord/Tenant Eviction Actions?
Since there is currently a moratorium on evictions based on failure to pay rent until January 1, 2021, there have been no eviction orders executed. However, once the moratorium is lifted, courts will start to hear these actions again. Additionally, the courts are accepting the filing of new actions, which may require a response despite the current moratorium. If you have been served with lawsuit seeking to evict you, please reach out to us so we can assist you. We believe that landlords are attempting to queue these actions up so that once the moratorium is lifted, they will swiftly complete the eviction proceedings that have been brought during this interim period.
Are Courts currently hearing non-Landlord/Tenant Actions involving claims such as breach of contract, misappropriation, fraud, partnership disputes or other business torts?
Yes, all levels of court, NY Supreme Courts, Federal Courts, and Civil Courts (landlord-tenant actions) remain open and are continuing to hear all non-Landlord/Tenant actions. Additionally, NY Supreme Courts and Civil Courts are accepting new filings related to landlord-tenant disputes, which could require your response before the expiration of the moratorium.
If there is another shutdown, what are my responsibilities for my leased space?
Unless your lease, or any modification, states otherwise, you are still responsible for rent and any additional costs listed in your lease as “additional rent” (i.e. real estate taxes, water, and electric), as well any other obligations listed in your lease. As the cold weather comes, it is important to note that these responsibilities include maintaining proper liability insurance and keeping the sidewalk adjacent to your space (and street-dining space) free and clear of any ice and snow (and any other potential tripping/slipping hazards) even during a shutdown. Based on the information available regarding the Open Streets program, the City believes that you are responsible for keeping your street-dinging spaces safe, so please make sure to contact your broker to make sure your insurance policy will cover street-dining space.
For questions about Landy litigation or evictions or 1932A, email Joe at: [email protected]
Employment and Labor by Lee Jacobs, partner
I may need to start cutting schedules, will my employees be eligible for partial unemployment?
Possibly, yes. If an employee is making less than $504/week (and aren’t scheduled for more than 3 days/week), employees will be eligible for partial unemployment benefits in New York. Partial unemployment benefits are calculated based on the number of days you work, not the number of hours. For every day you work, you lose access to 25% of your maximum unemployment benefits. So, if you work three days a week, you get 25% of your benefits. If you work two days a week, you get 50% of your benefits, and if you work one day a week, you get 75% of your benefits.
That being said, all decisions for unemployment benefits eligibility are made solely by the NYS Department of Labor. Do not make any promises or guarantees with respect to benefit eligibility. Instead, refer your employees directly to the DOL website.
Can we require employees to produce negative COVID-19 results before reporting to work?
Yes, you can require your employees to have a negative COVID test before reporting to work, ONLY IF the policy is enforced fairly and equally across your entire workforce. Once you implement the policy, it must be followed by EVERYONE, regardless of their job role, seniority, function, etc. No picking and choosing — you cannot apply it to some employees and not others.
As a reminder, you cannot require employees to receive antibody testing.
What do I do if an employee reports a positive COVID-19 diagnosis?
As businesses in the hospitality industry are considered essential businesses, you are not required to shut down or send all of your workers home. If one of your team members tests positive for COVID-19, here are the steps you should take:
– Get Details. Ascertain when, if at all, the employee first began experiencing symptoms, the last time they were in the workplace, and the employees with whom they worked most closely while on the premises most recently.
– Notify Staff. Contact those team members that worked closely with the employee that they may have potentially been exposed to COVID-19, without identifying the sick employee by name.
– Clean & Disinfect. You must continue to regularly clean and disinfect all areas, such as offices, bathrooms, common areas, and shared equipment. Business closure and/or a third-party deep clean is at the discretion of the employer. Please feel free to call us if you have any questions about this.
– Maintain & Monitor. Be sure that you are still requiring your employees to fill out their daily health screenings and enforcing all NYS-mandated rules to help stop the spread of COVID-19 in the workplace. Employees should also be reminded that they should be self-monitoring their own symptoms. Managers should also be monitoring employee symptoms and sending any symptomatic employees home.
– Report. You are required by law to report an employee’s positive test to the NYC Test and Trace Corp. To do so, you’ll need to call 866-692-3641 and follow the basic prompts.
Can an employee refuse to return to work due to fear of contracting the virus?
Employees are only entitled to refuse to work if they believe they are in imminent danger. The threat must be immediate or imminent, which means that an employee must believe that fear of infection is legitimate, well-founded, and imminent. More importantly, that fear must be reasonable, meaning that after you have received information that an employee is afraid to come to work, you should contact that employee to discuss (and document) their fears.
Explain to your employee while showing your health and safety policies how their concerns are being addressed. Offer additional PPE to help resolve the concerns. Document every step. Documenting this process is key to preventing or limiting any liability to your business. For example, if a cashier was concerned that they could be exposed at the cash register/check-out station, you would begin by explaining to your employee what steps are already in place to prevent an infection, and demonstrating what PPE was already available for use.
If the employee still expresses concerns, a reasonable accommodation would be to offer a plexi-glass barrier between the employee and customers. This is an example of understanding your employee’s concerns, demonstrating compliance, and offering accommodations—all with the goal of keeping your employees actively and safely employed. This should all be dealt with on a case-by-case basis, of course, so please contact us with any questions.
I took out an EIDL loan, which is secured with a lien against our business assets. Unfortunately, our only option now is to sell the business — can we sell assets subject to a lien?
A: The short answer is you can, but also you can’t. Transferring the collateral of a loan without the consent of the lender is almost certainly a default of your loan agreement. Further, the fact that you sold the assets doesn’t change the fact that there is still a lien upon them — the lender can still come after the Buyer and seize that deep fryer. There really are no good answers here — for a lot of you feeling the heat, there isn’t much time either. Selling the assets won’t relieve you of liability to the lender or remove the lien, however it may be your best chance to get some value out of your business to pay back the loan or other creditors — it’s a calculated risk that must be deeply and carefully considered.
As Jerry and Bobby and the boys say: Rudy’s looking for a fight/ Rat cat alley, roll them bones/ Need that cash to feed that jones/ And the politicians throwing stones/ Singing ashes, ashes, all fall down/ Ashes, ashes, all fall down
P.S. Someone needs to get Rudy to a mental health professional STAT! He’s not well.