January/February 2020 Legal Update

Pooja S. Nair, a partner at Ervin Cohen & Jessup LLP compiles recent legal news affecting the restaurant, food and beverage and hospitality industries for Modern Restaurant Management (MRM) magazine.


California Supreme Court Defines Hours Worked: On February 13, 2020, the California Supreme Court interpreted what “hours worked” means under California law in an employment case involving Apple that may have repercussions in the restaurant industry. The California wage order at issue defined as “the time during which an employee is subject to the control of an employer and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” 

Apple store employees filed a class-action lawsuit against the company because they were required to submit to searches for Apple products in their belongings before leaving the stores but were not compensated for the time those searches required. The 9th Circuit Court of Appeals asked the California Supreme Court to clarify whether state law required that the workers be compensated for this time.  The Court held that “Apple employees are clearly under Apple’s control while awaiting, and during, the exit searches,” and therefore should be paid for that time.

7th Circuit Sides with Subway in TCPA Case: On February 5, 2020, the Court of Appeals for the Seventh Circuit affirmed the dismissal of a TCPA case against Subway, finding that Subway was not acting as a legal agent of T-Mobile.  A customer had sued Subway based on text messages he received through a T-Mobile coupon promotion, in which T-Mobile sent subscribers a weekly coupon or discount for “T-Mobile Tuesday.”  The district court dismissed the case for failure to state a claim against Subway, and the Seventh Circuit affirmed the decision.  The Court found that the complaint did not adequately establish that Subway was a legal agent of T-Mobile.  The two business had a contractual relationship, but there were no facts showing that Subway manifested to the public that T-Mobile was acting as its agent. 

Additionally, the T-Mobile text messages had numerous indications that T-Mobile maintained full control over the content, timing, and recipients of the text message advertisement.

Missouri’s Alcohol Ad Limitations Violate First Amendment: On January 8, 2020, the Court of Appeals for the Eighth Circuit held that the state of Missouri could not enforce a statute and related regulations restricting advertisements of discounted alcoholic beverages.  The laws and regulations prevented alcohol producers and distributors from advertising any details of what kind of discounts they offered on alcohol.  The Court found that the “content-based restrictions” limiting what alcohol producers and distributors could say in their advertisements functioned to restrict speech based on content and speaker identity.  The Court found that Missouri did not meet its burden of identifying a substantial interest that justified the restriction.


No Latex Gloves for California Food Service Workers: Senate Bill 677 was passed on September 5, 2019 and prohibits the use of latex gloves in food facilities and retail food establishments.  Instead, food employees are now required to use nonlatex utensils, including nonlatex gloves.  The law went into effect on January 1, 2020.

New York City Bans Cashless Businesses: On February 23, 2020, the New York City Council enacted a law to prohibit food stores and retail establishments from refusing to accept payments in cash.  This bill prohibits food and retail establishments from refusing to accept cash from consumers, with an exception for establishments that have devices that convert cash into prepaid cards without a fee.  The bill was approved by the City Council on January 23, 2020.

Virginia Expands Food Stamps Program to Restaurants: On February 25, 2020, the Virginia legislature passed a law directing the state’s Department of Social Service to participate in the Restaurant Meals Program of the SNAP (Supplemental Nutrition Assistance Program).  This means that SNAP recipients would be able to use their food stamp benefits for hot/prepared food at participating restaurants.

California Legislature Considers Fair Food Delivery Act: A California State Assemblywoman has introduced new legislation to protect restaurants from being exploited by food delivery platforms that add restaurants without permission and withhold customer data.  If passed, the bill would require delivery platforms to share customer information with restaurants and reach an agreement with restaurants before being able to add them onto the food delivery platform.  Currently, restaurants may be added to delivery apps without their permission.

Kansas Debates Fake Meat Labeling Bill: The Kansas Legislature is debating a bill that would require that producers and sellers of meat alternative products include specific disclaimers that their products contain no meat.  The bill is supported by lobbyists for the meat and livestock industry.  If Kansas passes the bill, it will be among a group of states banning this terminology for non-meat products.  Congress is also considering such a bill on the federal level.  State bills restricting the labeling of products have run up against First Amendment concerns.

Administrative Developments

FDA Issues Industry Guidance on Serving Sizes: On December 31, 2019, the FDA issued guidance for the food industry entitled: “Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion, Reference Amounts Customarily Consumed, Serving Size-Related Issues, Dual-Column Labeling, and Miscellaneous Topics.” 

NLRB Releases Final Joint Employer Rule: On February 26, 2020, the National Labor Relations Board issued its final rule governing joint-employer status under the National Labor Relations Act. Under the new rule, in order to be a joint employer, “a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.”

Mexico Introduces Sweeping New Labeling Laws: On January 24, 2020, the Mexican Ministry of Economy approved a modification to the official standard for pre-packaged, non-alcoholic foodstuffs and beverages.  The updated rule (NOM-051) establishes mandatory rules for all prepackaged, nonalcoholic food and beverage products sold in Mexico, regardless of their country of origin.