Article contributed by Nicola Ciliotta, Ellenoff Grossman & Schole LLP
Does your restaurant send out notices of eligibility for unemployment every time an employee’s shift is reduced, during temporary layoffs or suspensions, for seasonal closures, or on certain slow weeks? If not, your business may be unintentionally violating New York law. Restaurants may be surprised to learn that, since November 2023, the New York Labor Law has required employers to notify employees about their right to apply for unemployment benefits – not only when they are terminated – but also during temporary layoffs, shift reductions, or seasonal closures.
Although this has been the law for nearly two years, restaurants may have unwittingly failed to comply during this time. Recent industry trends suggest that the New York Department of Labor dedicated much of 2024 educating employers on this new law, rather than issuing penalties, and that it will begin more active enforcement soon.
The Law
The New York Labor Law specifically states that employers must provide written notice whenever an employee experiences one of the following:
- Permanent or indefinite separation from employment;
- Temporary separation or layoff;
- Reduction in hours; or
- Any other interruption of continued employment that results in total or partial unemployment.
Partial unemployment is defined as working fewer than 30 hours per week or earning less than $504 in gross weekly wages. Per the New York Labor Law, written notice must be provided every time an employee falls below these thresholds, even if the change is temporary, part-time, seasonal, or even if it is a one-time occurrence.
Examples of workplace scenarios where written notice would be due include:
- A part-time server normally scheduled for 35 hours works only 25 hours in a single slow week. Notice is required.
- A seasonal cook returning from summer break is scheduled for fewer than 30 hours. Notice is required.
- A line cook’s gross pay falls below $504 due to fewer shifts or lower tips. Notice is required.
- A part-time busser is already earning less than $504 per week and/or working less than 30 hours, but their schedule is being reduced further due to a downturn in business. Notice is required. Conversely, however, if a dishwasher is earning more than $504 per week or working more than 30 hours, and their schedule is being reduced for the summer (but they will still be earning over $504 per week or working over 30 hours), no notice is required.
The Required Notice Form
In order to satisfy the written notice requirement of the law, employers must provide eligible employees with the Department of Labor’s Record of Employment, which can be found at the following link: Department of Labor Record of Employment Form. The form requires, among other information, employer name and registration number, and contact address for wage/employment verification
requests.
Why Restaurants Are Particularly at Risk
Restaurants are especially vulnerable to violation of this part of the New York Labor law because restaurant schedules often fluctuate weekly and seasonal slowdowns are common. In addition, restaurants are often a focus of Department of Labor audits because the industry is considered high-risk for labor law violations. As a matter of fact, in its FAQ page, the Department of Labor explicitly notes that the unemployment requirement applies to “employment situations where work schedules change weekly, for instance restaurant shifts”. This all suggests that restaurants are prime targets for the Department of Labor in potential audits and enforcement measures.
Potential Penalties
While the law does not specify a fixed fine for failing to provide the required written unemployment notice, noncompliance can still create significant risk. The Department of Labor may treat missing or late notices as a violation of general labor law recordkeeping and notification requirements, which can trigger civil penalties and audits, or require corrective action. Employees could also claim delayed or lost unemployment benefits if notice was not provided. Further, repeated or willful violations of the law may expose employers to increased scrutiny during investigations, which may lead to stiff civil penalties and even criminal prosecution. Because the law is relatively new and has not been widely enforced to date, it is not entirely clear the exact penalties that may be assessed for such violations, but the Department of Labor has consistently assessed civil penalties for similar recordkeeping violations.
How Can Your Restaurant Reduce Exposure to Potential Legal Liability?
In order to avoid future violations, restaurants should consider the following steps:
- Regularly review employee schedules and pay to identify reductions below 30 hours/week or $504/week;
- Train managers to recognize when schedule or pay changes trigger notice obligations;
- Automate alerts in existing human resources/payroll systems for employees falling below the applicable wage and working/scheduled hours thresholds;
- Ensure that the required Department of Labor form is issued for every qualifying reduction — even temporary or seasonal; and
- Keep copies of all notices provided to prove compliance.
Conclusion
By auditing schedules, issuing notices consistently, and retaining documentation, restaurants can ensure compliance, protect their business, and provide employees with the information they are legally entitled to receive — before potential enforcement becomes more commonplace which may result in legal liability to your business.
Nicola Ciliotta is an Associate in the Labor & Employment practice group at Ellenoff Grossman & Schole LLP in New York City.
His expansive labor and employment practice encompasses everything from representing employers in court and other forums, to advising businesses on all aspects of the employment relationship.
Mr. Ciliotta has significant experience representing clients in state and federal court, grievance and arbitration proceedings, and before various government agencies in employment disputes involving allegations of, inter alia, discrimination, sexual harassment, retaliation, wrongful termination, hostile work environment, and unpaid wages.
Mr. Ciliotta’s practice also consists of conducting internal investigations and advising businesses on compliance with federal, state, and local labor laws and regulations. Nicola Ciliotta can be reached via email at nciliotta@egsllp.com or by phone at 212-370-1300.