January/February 2021 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.


Restaurant Rescue Plan Included in COVID Relief Bill: On February 4,  the Senate voted 90-10 to approve a Restaurant Rescue Plan as an amendment to a larger budget resolution. Senate Amendment 261 was co-sponsored by Republican Senator Roger Wicker and Democratic Senator Kyrsten Sinema. The amendment is part of a budget resolution passed by the Senate on February 5 that paves the way for passage of President Joe Biden's pandemic relief package.  The Restaurant Rescue Plan establishes a $25 billion grant program for restaurants hurt by the pandemic and was based on the RESTAURANTS Act. The $25 billion in grants fall short of the $125 billion in the RESTAURANTS Act but would mark the first concentrated relief grants set aside for independent restaurants. Details of the plan would need to be established after the budget reconciliation process is complete and should be made public in the coming weeks.

California Considers Bar and Restaurant Recovery Act: On February 4, a bipartisan group of California State Senators and Assembly Members introduced the Bar and Restaurant Recover Act. This legislation directed to helping restaurants and bars recover from the COVID-19 pandemic.  SB-314 would make expanded outdoor seating permanent. ease liquor license requirements, and authorize open container entertainment zones. 

Cities Approve “Hero Pay” for Grocery Workers: Several cities, including Seattle, Long Beach, and Los Angeles have passed hazard pay increases for grocery store workers of approximately $5/hour.  Grocery organizations are fighting the increase, and in some cases have shut down low-performing stores in these areas. 

Administrative Developments

FDA Announces 2024 Compliance Date for Food Labeling Regulations: On January 4, the Food and Drug Administration announced that it would set January 1, 2024 as the uniform compliance date for final food labeling regulations that are issued in calendar years 2021 and 2022.  In its Federal Register publication of the rule, the FDA stated: “Use of a uniform compliance date provides for an orderly and economical industry adjustment to new labeling requirements by allowing sufficient lead time to plan for the use of existing label inventories and the development of new labeling materials.”

Biden Issues Worker Protection Executive Orders: On January 21,  President Biden issued an Executive Order on Protecting Worker Health and Safety that calls for a government review of worker safety standards for COVID-19.  The Executive Order directs the Secretary of Labor to issue revised guidance to employers on workplace safety during the COVID-19 pandemic within two weeks. It further directs the Secretary of Labor to consider emergency temporary standards on COVID-19 and issue those standards by March 15, 2021.

DOL Delays Proposed Tip Pooling and Independent Contractor Rules: On February 5,, the Department of Labor (DOL) published two notices of proposed ruling to delay the effective date of two rules finalized by the DOL under the Trump Administration regarding tips and independent contractor rules. The proposed delays are designed to allow the DOL “additional opportunity for review and consideration” of both rules.

FDA/USDA: No Transmission of COVID Through Food: On February 18, Acting FDA Commissioner Janet Woodcock and Acting USDA Secretary Kevin Shea issued a joint COVID-19 update statement that current epidemiologic and scientific information available to the FDA and USDA indicates no transmission of COVID-19 through food or food packaging.  The officials stated: “Our confidence in the safety of the U.S. food supply remains steadfast. Consumers should be reassured that we continue to believe, based on our understanding of currently available reliable scientific information, and supported by overwhelming international scientific consensus, that the foods they eat and food packaging they touch are highly unlikely to spread SARS-CoV-2.”


California Supreme Court Rules That Independent Contractor ABC Test Applies Retroactively: On January 14,, the California Supreme Court unanimously ruled in Vazquez v. Jan-Pro Franchising Int'l, Inc. that its ABC test for independent contractor classification established in its 2018 Dynamex ruling applied retroactively.  The ABC test presumes that a worker is an employee unless the hiring entity can prove that the worker is (A) free from the company’s control; (B) performs work outside the home; and (C) is customarily engaged in an independently established trade, occupation, or business.  As a result of the ruling, the ABC test will apply to pending wage order-related misclassification claims (for minimum wage and overtime, for example) that were pending in April 2018 (when the Dynamex ruling came out); and claims that have not yet been filed for conduct before 2018.

Ninth Circuit Revives “Krab Mix” Menu Case: On February 9,, a divided Ninth Circuit Panel held that consumer claims against the P.F. Chang’s restaurant chain based on the term “Krab Mix” in certain menu items could proceed. The Court reversed a lower court decision that had thrown out these claims.  Plaintiff’s claims arose from the purchase of P.F. Chang’s sushi rolls that are identified on the menu as being made with a “Krab Mix.” Plaintiff claimed that based on the “Krab Mix” name, he believed the items contained a mix of real crab and imitation crab. 

Restaurant Claims for Business Interruption Coverage Flounder: A number of restaurants throughout the country have brought suit against their insurance companies, arguing that business interruption insurance should cover losses suffered due to COVID-19 shutdowns.  According to the University of Pennsylvania, more than 80 percent of rulings on pandemic-related business interruption cases have granted motions by insurance companies to dismiss the cases.  However, a small percentage of cases (approximately 34 cases) have survived this stage, and will go forward.  These include multidistrict federal litigation in Chicago by a group of restaurants against Society Insurance.