The Restaurant Revitalization & Dram Shop Clarification Act of 2024
Here at Harmony we take drinking very seriously. Which is to say - alcohol consumption in the hospitality industry and the laws surrounding it. The only thing that we take more seriously is helping our clients manage their business with pricing freedom allowing for the use of service charges for operators who want to implement them.
This gently misleading introduction brought to you by the fact that last year, Washington, D.C. updated its regulations with the Restaurant Revitalization and Dram Shop Clarification Amendment Act of 2024.
The updated legislation went into effect last month, and includes a number of changes and updates to DC’s Dram Shop laws as well as a handful of gestures toward easing the pain of the chaos that is the protracted end of DC’s tipped minimum wage.
Here's a partial breakdown of the changes brought about by the passage of the law and their implications for operators in the District.
Sections Around Liquor Liability
Liability Clarification
The Act specifies that a licensed establishment can only be held liable if it knowingly serves alcohol to a person under 21 or someone visibly intoxicated, which is defined for the first time in the statute. These changes bring D.C.'s standards more in line with other jurisdictions.
Streamlined ABC Manager Training
The Act streamlines the process for licensing Alcoholic Beverage Control (ABC) managers. It allows restaurants and bars to register up to five ABC managers annually for a fee of $390. This change is aimed at simplifying the administrative burden and ensuring that more staff members are formally trained and certified to manage alcohol service responsibly.
Aside from easing administrative burdens and clarifying liability there is a significant operational improvement for restaurants. Since the above changes bring DC more in line with other jurisdictions, the law should have the knock-on effect of significantly decreasing the high cost of liquor liability insurance in the city.
Sections Around Service Charges / Tipped Minimum Wage
In addition to clarifying Dram Shop laws, the Act includes some provisions to support the post-pandemic revitalization of restaurants and ease the transition to a post-82 world. Harmony’s thoughts on this are well documented, but since the change is inevitable (and still not done any faster than 2027), we’re flagging the service charge updates.
Safe Harbor for Service Charges
Since the implementation of I-82 a group of professional plaintiffs have levied lawsuits against well-known local restaurant groups who were compliant with the Office of the Attorney General in Washington, DC’s guidance.
The bill includes a provision for “safe harbor” from consumer lawsuits regarding service fees meaning that any restaurant who is deemed compliant will have statutory legal protection against any lawsuits. Any service fee under 20% is within the safe harbor provided operators inform customers of the fee on menus, websites, and/or signage, with a clear explanation of said fees. It’s important to note that fees that aren’t compliant aren’t necessarily illegal but cannot avail themselves of the statutory protection afforded by the new law.
The Act also exempts these service fee payments from the calculation of restaurant revenue for the purpose of a commercial landlord’s determination of lease payments.
Finally, the bill requires an extensive education campaign on the tip credit changes and service charge guidelines be conducted by the Mayor’s office no later than April 1, 2025, and introduces new training programs funded by the city to help establishments educate their staff on responsible alcohol service and compliance with the updated regulations.
Delivery Provisions
During the pandemic many jurisdictions tried to protect restaurants by implementing fee caps that limited the commission that Third Party delivery platforms could charge restaurants for delivery. To get around this prohibition, the platforms started offering tiered pricing with higher commissions for “marketing” and placement but there was a suspicion that the platforms were prioritizing the restaurants who paid the higher commission for core delivery services.
To combat this, the Act makes permanent regulations that prevent food delivery platforms from limiting the number of drivers based on the commission paid by restaurants, aiming to create a more level playing field for smaller establishments by ensuring that they are not disadvantaged by high commission fees that could restrict their access to delivery services.
Additionally, the Act requires restaurants to provide delivery drivers access to restrooms, so restaurants will need to plan for this change.
Moreover, the Act mandates a comprehensive study on delivery driver working conditions to be conducted by the Mayor's office, with a report due to the Council by July 1, 2025. This study aims to identify and address any issues related to driver safety, pay, and overall job satisfaction, further highlighting the commitment to improving the livelihoods of those who are integral to the restaurant industry's success.
Conclusion
The Restaurant Revitalization and Dram Shop Clarification Amendment Act of 2024 marks progress for restaurant owners in Washington, D.C. By addressing the exorbitant costs of liquor liability insurance and streamlining the licensing process for ABC managers, the Act provides much-needed financial relief. Additionally, it provides some clarity and legal protection around permitted service charges and allows for some protection against the Third Party Delivery Companies.
For further details, refer to the full text of theAct.