High Profile and Very Expensive Spanking for Playing Games with Tips and Server Wages

By - March 14, 2012 | Alcoholic Beverage Law | Email Will Cheek

New York Celebrity Chef Batali, of “Iron Chef America,” “The Chew“ and “Mario Eats Italy” fame, has agreed to pay out $5.25 million to employees to settle an employee class-action lawsuit about tipping.

The settlement involves 1,100 employees, but serves as an expensive lesson about the consequences of playing fast and loose with federal wage and hour laws and skimming off tipping pools.

According to the Toronto Sun, “Batali and the other owners of the eateries unlawfully skimmed four to five percent of the staff’s wine or alcoholic beverage sales from the tip pool, taking an unlawful “tip credit,” paying staff members less than the minimum wage, and failing to provide “spread-of-hours” pay — that is, extra pay when a double shift extends over a certain number of hours in the day.”

Lesson learned.  Don’t mess with tips and basic rules about wages.

Minting Money But Avoiding the Grim Reaper in Downtown Nashville This Weekend

By - March 12, 2012 | Alcoholic Beverage Law | Email Will Cheek

Downtown Nashville bars and restaurants are poised to have a huge weekend, with St. Patrick’s Day falling on a Saturday, and NCAA men’s basketball playoff’s at Bridgestone Arena on Friday and Sunday. Cash registers will be ringing nonstop.

So why is Will Cheek blogging about this?

The NCAA tournament will draw a huge college crowd, with tons of under 21 year-olds looking to try to grab a drink at watering holes. St. Patrick’s Day is infamous for inspiring revellers to drink to excess. The combination makes for a dangerous weekend mix of profitable sales, underage consumers and exuberantly intoxicated patrons.

Surprise! Nashville police and ABC agents plan to be out in full force this weekend. Plan on visits by law enforcement. Make sure your staff is ready and that everyone is vigilant about carding and taking care of intoxicated patrons.

Spring Snags an Hour of Alcohol Sales from Tennessee Saloons

By - March 09, 2012 | Alcoholic Beverage Law | Email Will Cheek

Hope springs eternal, but not for Tennessee restaurants and bars in the wee hours of Sunday morning March 11, when clocks spring forward for daylight savings time. At 2 am, clocks spring forward an hour.

Suddenly, it is 3 am. Is it closing time?

The Tennessee ABC says yes. Last Call is an hour early. At 2 pm standard time, when clocks are set forward one hour for daylight savings time, alcohol sales must cease. The Nashville Beer Board concurs. On Sunday morning, closing time is 2 am.

There is good news at the end of summer. On Sunday November 4, bars get a bonus hour and can close at the equivalent of 4 am, when clocks fall back at 2 am. At 2 am, suddenly it is 1 am. 

Confusion over daylight savings time is rampant. But the Tennessee ABC is clear about the rule. Close at 2 am this Sunday March 11.

Pay the Piper, Sings Davidson County Clerk

By - March 05, 2012 | Alcoholic Beverage Law | Email Will Cheek

From Una to Belle Meade, restaurant and bar owners across Metro Nashville Davidson County are getting letters that remind us of a famous Beatles song:

If you drive a car, I’ll tax the street;
If you try to sit, I’ll tax your seat;
If you get too cold, I’ll tax the heat; 
If you take a walk, I’ll tax your feet. 

The letters from the Taxman demand payment for two or three years of the obscure “liquor by the ounce permit.” Based on what we know, Metro has not invoiced the tax in the past couple of years, because of a computer glitch. All of a sudden, Metro is demanding payment for several years of the tax.

Here is a letter many folks are receiving:


The taxman has some baggage he is not sharing.
First, state law only authorizes the taxman to collect a tax equal to the 2003 ABC license fee. The law is not entirely clear, but if the taxman collects the current ABC license fee amount, the taxman has to pay some of the tax back to the ABC.
For example, the letter above demands $1,200 for three years.  We believe the city is only entitled to $1,000 for each year. 
Second, the privilege tax is not a mandatory tax, like sales and LBD taxes. Since the city failed to ask for the tax for the past couple of years, we question if the city can ask for the optional tax retroactively. To our knowledge, no law requires a licensee to pay the tax, unless the city assesses the tax.
Last but not least, Nashville, like most cities and counties, refers to the tax as a liquor by the ounce “permit.” It is not a permit; it is only a tax. Although Nashville can sue a taxpayer for delinquent taxes, the city cannot prevent a restaurant or bar from serving liquor, unless the Tennessee ABC takes action. 
We are recommending that licensees keep the notices, but not pay them until these issues are resolved. Stay tuned and if you want specific advice, email me at will@willcheek.com.

Memphis Moves Forward with Employee Registrations for Groceries and C Stores

By - March 03, 2012 | Alcoholic Beverage Law | Email Will Cheek

Memphis has a storied reputation for being conspicuously uncommon. The Home of the Blues has attracted considerable attention for its efforts to ensure that all employees of off-premise beer permit holders can legally sell beer.
We previously blogged about the story here.

On February23, 2012, Memphis issued revised instructions about requirements for employee registrations for off-premises sellers.

We read the letter as requiring a background check on every employee that touches beer, and a $21 employee card. Instead of requiring employees or employers to pay Memphis for the $29 TBI background check, the new rule essentially offsets the expense to the employee or employer.
The new rule laid down by Memphis reminds us of Louis Armstrong: “You like tomato, and I like tomahto. Potato, potatho, tomato, tomahto! Let’s call the whole thing off.”
Its the same darn thing – either pay Memphis to do the search or pay to do it yourself.
Tennessee and Memphis law require that beer permit holders cannot employ anyone that has been convicted of a felony, crime involving alcohol, or crime of “moral turpitude” in the past 10 years.
Most restaurants have liquor licenses and all servers are required to hold Tennessee ABC server permit cards, which require employees to disclose all crimes on the application.
There is no similar requirement for grocery and convenience store employees. Although state law prohibits a business from employing folks with disqualifying convictions, there is no way for local beer boards to realistically enforce the law.
The Memphis Alcohol Commission, which grants and oversees beer permits in Memphis, was justifiably concerned about sales to minors. The Commission decided that requiring criminal background checks for off-premises employees would help curb sales to minors.
Problem is, state law prohibits a city from imposing additional fees or taxes for beer licensing, if the city charges the lucrative “inspection fee” on beer wholesalers. Industry insiders report that Memphis reaps millions of dollars annually from the inspection fee.