A recent story in the Riverside Press-Enterprise by Sarah Burge about the arrest of a pizza shop manager caught my attention. This manager is accused of embezzling more than $1.3 million from the pizza shop. The thefts occurred over several years. He was actually also a “minority investor” in the business and managed the company’s finances. Until a business partner contacted the police.
If you have a business licensed by the Department of Alcoholic Beverage Control (ABC), screening your employees and managers is vital for two reasons. First, to protect your business. Second, it is actually against ABC law for an On-Sale licensee (i.e., restaurant, bar, hotel, nightclub) to knowingly employ any person who does not have the qualifications of a holder of the license.
What is a “manager,” according to the ABC? A manager is “a person to whom a licensee has delegated discretionary powers to organize, direct, carry on or control the operations of a licensed business.” If the person can hire or fire employees, contract for purchases or disburse funds (other than for replenishing stock), make or help in making policy decisions, then that person is a manager. And he or she must possess the same qualifications of a licensee.
How do you know whether your manager is qualified? Well, you may apply to the ABC, pay a $100 fee, and have the person fingerprinted (another $63). I say “may apply” because it is not mandatory. The ABC then investigates the person and if the person is qualified, the ABC provides you and your manager with a Notice of Qualification of Manager. If the person is found to be unqualified due to an adverse police record, then ABC will provide a Notice of Disqualification of Manager. If ABC finds your manager to be disqualified, then you have a right to a hearing before an Administrative Law Judge.
With the large investment of money, time and effort businesses make in their liquor license and business, $163 is a small price to pay for peace of mind.
To be or not to be in a bar or club. That is the question.
The Sayers Club is at 1645 Wilcox Avenue, Los Angeles, does, in fact, have a Type 48, On-Sale General Public Premises license. It was issued February 3, 2011 according to the ABC’s online records. And it was issued with conditions. (More on that later.)
A Type 48 license does not permit any person under 21 (“minor”) to enter and remain in the premises at any time—without lawful business. To do so would violate Section 25665 of the CA Business & Professions Code. To help prevent this, a Type 48 licensee is required by Rule 107 to post signs, “No Person Under 21 Allowed.” One sign at or near each public entrance and one on the inside.
The signage rule is very specific. The sign must be at least 7 x 11 inches with lettering at least 1” in height. The same law holds true for a Type 42, On-Sale Beer & Wine Public Premises, and a Type 61, On-Sale Beer Public Premises license. No minors are allowed, except for lawful business, and signs must be posted per Rule 107.
What is “lawful business?”
Lawful business would be things like an underage delivery person, a repair person, or a musician (there are rules for underage musicians, too). Also, there is no exception for things like underage spouses or a baby being held in its parent’s arms.
What can happen as a result of a violation? If ABC gathers the evidence and proves the violation, first, an ABC penalty. If a Type 48 business permits a minor inside, the liquor license is subject to suspension or revocation.
What does it mean to “permit” a minor to be inside the premises? Well, licensees have an “affirmative duty” to ensure no minors enter or remain inside. Passive conduct is the same as “permitting” a minor to be present. This means staff must be aware at all times and monitor what is going on. If someone looks under 30, check ID carefully. If the person is underage or has a fake ID, send them packing immediately.
ABC decides each penalty on a case-by-case basis. However, ABC uses penalty guidelines. There is a “standard” penalty” for each different type of violation, whether it be underage drinking, gambling, narcotics, or what have you. In this case, if the violation is proven, the owner could face the standard 10-day suspension of the liquor license. If the required signage was not posted, then ABC could tack on another five days.
Depending upon the case, the ABC might increase or decrease the number of days of the suspension. For example, if a business has had “priors,” the ABC may up the number of days. In this case, Sayers Club has no priors. If, on the other hand, a business can prove it has trained its staff in safe and legal serving practices, ABC might reduce the number of days. And in some cases, the ABC may permit a business owner to pay a fine instead of serving a suspension. Fines range from $750 to $20,000, depending upon the owner’s past record and his gross sales of alcohol. A higher-volume business will pay a greater fine.
We don’t know what the license conditions are for The Sayers Club–although a copy may be obtained upon request from the ABC. However, any violation of conditions is a separate matter. If proven, this carries a separate ABC penalty.
The second thing is a criminal penalty. If the ABC can prove the minor was inside and management or employees did not do anything to determine his age or remove him, then the owner or employee can be cited into criminal court. This carries a maximum $1,000 fine and/or six months in county jail.
As far as an underage patron goes, he, too, may be held criminally liable. This means a citation which, if found guilty, carries a fine of at least $200.
As always, the time to fix the roof is before it rains. If you have a Type 42, 48 or 61 license, post your “minor warning signs” as required, train your staff well, have a written safe alcohol policy and be vigilant about keeping minors out.
Recently there was a news story about a bar in Montrose who had their liquor license revoked for nonpayment of taxes owed to the State. The story was a little confusing because the reporter used the terms, suspended and revoked interchangeably.
These are two different things.
A liquor license suspension is a temporary halt in the privilege of selling alcohol. On the other hand, when the Alcoholic Beverage Control (the ABC) revokes a license, it is gone for good. (Except if the revocation is stayed on certain conditions–that’s more like a business being on probation. If the business owner violates the law again, while on a “stayed revocation,” then the license can be revoked outright for good.)
It’s true. The State can take action when a liquor licensee is delinquent in paying either Sales Taxes or Use Taxes owed to the Board of Equalization. (The ABC, by the way, can also refuse to transfer a license if the licensee is delinquent in other types of taxes. This is all spelled out in Section 24049 of the Business & Professions Code.)
Both the State Board of Equalization and the Franchise Tax Board may seize and sell an On-Sale General License or an Off-Sale General license (full liquor licenses) if the owner is delinquent in their taxes to either of these agencies. We’re talking about sales and use tax, personal income tax or bank and corporation taxes.
When these agencies begin this process, they give written notice to the ABC and to the business owner of their intent to sell the license. (This doesn’t allow these agencies to sell alcohol, though!).
This seizure is different from revocation by the ABC because the owner may redeem his liquor license at any time prior to the date of sale by getting current with the debts owed to the taxing agencies.
What is the ABC’s involvement in all this?
When the ABC receives the request for suspension from the Board of Equalization, it posts a Notice of Suspension at the licensed business and picks up the license certificate. The ABC then puts the liquor license on indefinite suspension status. If the owner disputes the accuracy of the taxes owed, the owner will have to take up his dispute with the taxing agency–not the ABC.
When the owner has satisfied any tax requirements or debts, the taxing agency notifies the ABC that they can lift the suspension.
Saturday, 9:06 a.m.
Anyway, here’s how the ABC’s Grant Assistance Program (GAP) works . . .
If your law enforcement agency receives a grant from the ABC, local officers conduct both prevention and enforcement programs. Here are just a few examples of the many innovative programs local agencies use to prevent and address alcohol-related crime:
Prevention programs are aimed at keeping alcohol-related violations from happening in the first place. An IMPACT inspection is one example.
• During an IMPACT inspection, local officers (often teamed up with the ABC) will stop in your business, identify themselves and do a compliance check. They actually have a checklist and look for areas of non-compliance. They look for proper signage, loitering, adequate food service and many other things.
• Now, they aren’t there to make arrests or to cite you–although it could happen for a serious violation. It’s more of a public relations effort.
• This program allows you to focus on fixing any problems at your business without getting into trouble with the ABC. If officers find any areas of non-compliance, they’ll let you know, and they’ll come back another time to see if you took care of the problem.
Enforcement programs investigate complaints of illegal activity such as:
• Sales to minors, including police decoys
• Shoulder-tapping (adults who illegally furnish alcohol to police decoys outside your business)
• Sales to obviously intoxicated persons
• Disorderly house (this is a licensed business that is disruptive with noise, loud music, ongoing crimes like drunks, fights, assaults, prostitution, drugs, etc.)
• Law enforcement problem (this is a licensed business that creates excessive calls for service and is draining the resources of the local law enforcement agency)
• Retail operating standards (this law addresses “quality of life” issues and applies to liquor stores and bars. It regulates things like litter, loitering, drinking on the property and excessive signage)
The best advice is to be proactive all of the time. Just because your local police or sheriff’s department didn’t get an ABC grant THIS year . . .
. . . Local law enforcement throughout the state are doing alcohol enforcement with or without grant funding because (they are required by law to do it)
ABC has been giving grants to local law enforcement agencies for nearly 15 years now. That means local agencies are better trained and equipped than ever before in alcohol prevention and enforcement. Your local agencies could very well be one of those agencies.
ABC investigators are still doing enforcement, especially during the holidays.
Here are a few of the controls you should have in place now and always:
1. Hire adequate staff and properly train them
2. Have all employees read and sign a copy of your written alcohol policies
3. Properly post any required signage for your license type
4. Make sure any ABC license conditions and retail operating standards are readily available for inspection by officers
5. Remind your employees of ABC and local law enforcement’s legal authority to visit and inspect all areas of your licensed business at any time–without a search warrant or probable cause. This includes your bar, back bar and office.
Be proactive and pay attention to detail. That’s the best way to prevent problems. If you have questions on any of this, get in touch with me.
Like President Kennedy once said, “The time to fix the leak in the roof is before it rains.”
Stay Safe and Legal,
Liquor License Advisor