Article contributed by Gregg Kligman, Meister Seelig & Fein LLP Hospitality Group
In my last column, it appeared that the pandemic was beginning to recede into our rear-view mirror, and we had rounded a bend, heading to the light at the end of the proverbial tunnel. But alas, here we are with COVID-19 diagnoses surging even amongst the double vaxxed and boosted! As we try to find our balance from that tailspin, the hospitality industry continues to be plagued by painful everyday operational realities.
While it appears that some operations are flourishing, for others, their task is downright Sisyphean. From where I stand, every sector of the industry is affected. I mean everything. The inability to hire labor, increasing costs, and tighter margins across the board, while simultaneously and seamlessly trying to provide great hospitality to guests. All this, of course, is coupled with the mental exhaustion of trying to continue to operate under these conditions and somehow create a pre-pandemic dining experience.
As if that was not enough, operators must now contend with increasing interest in unionization. While it is hard to predict the direction of this wave, one thing is for sure, Millennials and Generation Z are driving the interest in this phenomenon much like their grandparents, the baby boomers, had in previous decades.
In addition, there is a real concern over rebuilding the labor force, especially for larger operators. It is perhaps the hardest time to rebuild a workforce right now. Once upon a time, top chefs would be able to find talent just by opening the back door of their establishments to find a line of enthusiastic individuals willing to learn the craft. However, those days are over and that line doesn’t exist anymore.
The workforce just isn’t there. People have relocated or have ventured out into different fields and industries. There are also employees who remain cautious of returning to work and possibly putting their health in danger. Though the health experts declare that we have passed the pandemic phase, this is still an issue impacting the industry. Operators need to be cognizant of the rules that exist. Even though the Key to NYC requirements have ended, the NYC workplace vaccination requirement still exists. Additionally, New York State continues to require COVID pay. Therefore, employers must ensure that they are doing whatever they can to prevent the spread amongst their workforce because if people get sick and they are out, they must still be paid and that is on top of normal sick leave. COVID sick leave is not counted against
traditional sick leave.
As a result of all of these issues, operators are now faced with another challenge in rebuilding their workforce – creating an environment where people want to come to work – distinguishing themselves from their competitors. Whether it’s flexible scheduling or offering benefits they had not in the past, operators must think outside the box to determine what they can offer employees that is at a low or minimal cost to them.
There was a time when employees would be attracted to a venue because of a certain vibe or notoriety, but nowadays, that draw has certainly subsided. Potential employees are looking for concrete benefits, not necessarily increased pay, though that is somewhat necessary at this point. Potential employees want to know whether you already have a 401(k) plan. They want to know whether you are matching contributions. They are also interested in what kind of healthcare benefits and other benefits you bring to the table.
Hopefully, we will get to some sort of “normal” soon and we will see an influx of employees physically returning to work to maintain required staffing levels. We are at the end of the school year now and Summer should usher in the youth workforce to fill in the gaps, where legally permissible, and grow staffing levels to where they need to be.
While the idea of solving the workforce problem with the aid of robotics seems a likely prospect in some arenas, I have yet to see widespread implementation. Although not robotics, tech is here to stay with the pandemic driven use of QR coded menus. However, fine dining will never cross that line, otherwise it’s not fine dining. There is an expectation of service in the front-of-house for fine dining and destination restaurants. We have seen technology implemented to a certain extent in some fast-food establishments. With two kids under the age of five, I am consistently grabbing kids’ meals at fast-food restaurants and when I order I am physically typing everything in myself. With that I haven’t interacted with a fast-food employee in over three years of visits.
So the question is, what impact will technology have on the front-of-house in fast casual, chain restaurants and local independent operators? That may be the case if the lack of access to a workforce persists. We may see one or two people monitoring all of the tables and answering questions combined with iPads on tables for guests to input orders. In this scenario, support staff would bring everything out to the one or two servers who would then serve the food, address any questions, and coordinate beverage service.
I do see the potential for technology and automation becoming an integral part of the back-of-house. Aside from the efficiency element, technology can pave the growth path for those in lower-level positions like a dishwasher, through the potential elimination of those positions due to technology. This would provide those individuals with the opportunity to train to become a higher earning front-of-house employee.
However, operators must remember the requirements of the 80-20-30 rule. More than ever, operators need to be careful about what tipped employees are doing. That includes the diligent monitoring of non-tipped work now that operators have a 30-hour continuous limitation.
Previously, under the 80-20 rule, tipped employees could not perform non-tipped work more than 20% of their shift – also in New York non-tipped work cannot exceed two hours. Now, federal law has added this additional 30-minute aspect of it where tipped employees cannot exceed 30 continuous minutes of non-tipped work. This will undoubtedly affect scheduling.
Despite these being the worst of times, these are also the best of times. We are seeing a lot of new restaurants opening. Many entrepreneurs are capitalizing on the moment in history and taking their shot at the opportunities being presented to them by these circumstances. These are the people that are starting fresh and who really need to have everything right from the get-go to avoid incurring liability the second they open their doors.
My advice? As you welcome staff back and add new team members, don’t forget the basics. Ensure pay stubs include everything that’s required by law. Make certain, that your notices of pay rate and paydays are properly circulated. That you have a comprehensive handbook. That you are paying your employees weekly. Under New York law, hospitality workers must be paid on a weekly basis, regardless of position. Just recently, a large national chain was sued on the issue because their back-of-house employees were allegedly paid bi-weekly instead of weekly.
Also operators should have a Hero Act plan in place, though it need not be implemented at this time, and that it is included in your handbook. It does not need to be front and center. It should probably be an appendix to the handbook because it requires regular revisions depending on what the airborne disease is or what the circumstances are.
Our MSF team is here to help you make sure that not only is your handbook in proper order, but also that your new hire paperwork is in line with the requirements of the law. We scrutinize your payroll documents, your pay stubs, and your time records to ensure that you have the best defenses available should litigation be brought against you. We will also help you to sort out operational issues and offer problem solving strategies. Should there be real estate lease issues, as you get ready to grow again, we will help with that too.
Your End-Demic strategy comes with lots of challenges, but the good news is that it is loaded with opportunity.
Businesses should learn how to navigate the legal complexities, as the restaurant industry wades out of COVID, by contacting 646-273-8209 or email gmk@msf-law.com.
Gregg Kligman is counsel at Meister, Seelig & Fein LLP. The New York City-based law firm deals in all aspects of business litigation. Mr. Kligman specializes in the management side of employment counselling and litigation. As many businesses look to rebound and rebuild from the COVID-19 pandemic, employer-employee relations, and the law that follows, remain as complicated as ever. In the glimmer of light at the end of the COVID-19 tunnel, Mr. Kligman provides the latest, need-to-know information for owners and operators in the restaurant and hospitality industry.
Article contributions by Karen Jones
