In response to the significant struggles restaurants have faced since the onset of COVID-19, last week, the New York City Council approved a bill that temporarily allows restaurants and other food service establishments to add a “COVID-19 Recovery Charge” to customers’ checks. The bill awaits signature from Mayor de Blasio and will be effective immediately upon signing. If the Mayor does not sign or veto the bill by October 16, 2020, it becomes law and is effective at that time.
The bill allows restaurants to impose a “COVID-19 Recovery Charge” of up to 10% of the customer’s bill (before tax) so long as the restaurant clearly discloses the charge to customers before any items are ordered. The disclosure must be (1) written, (2) clear that the COVID-19 Recovery Charge is a surcharge, not a gratuity for employees, (3) clear and conspicuous, (4) included on each page of any menu or document (whether in paper or electronic format) that lists prices for the customer, (5) in English, as well as in any other language used in the document upon which the surcharge is disclosed, unless such language is used solely in the names of items; and (6) in a font size similar to surrounding text. It must be referred to as either the “COVID-19 Recovery Charge” or the “COVID Charge” on the customer’s bill.
Restaurants may utilize the COVID-19 Recovery Charge for indoor or outdoor dining, but it cannot be imposed on delivery or takeout orders. Further, restaurants or other food service establishments that are part of a chain with 15 or more locations nationally doing business under the same name and offering for sale the same menu items may not utilize the COVID-19 Recovery Charge. Also, the COVID-19 Recovery Charge may not be imposed on any customer bill that already has an administration charge (i.e., for the administration of a banquet, special function or package deal).
The surcharge is permitted until 90 days after full indoor dining is permitted. Currently, indoor dining in New York City is scheduled to reopen at 25% capacity on September 30, 2020.
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If you have questions or would like additional information, please contact EGS’s Employment Law Practice Group Leader, Amanda M. Fugazy at afugazy@egsllp.com or the primary EGS attorney with whom you work.
