Category Archives: Compliance

OLCC Case Profile: Aroma Restaurant’s License Suspended

Compliance, OLCC

OLCC Case Profile: Aroma Restaurant’s License Suspended

Permitting unlawful activity is a category III violation under Oregon law. The OLCC has determined that the provision of security services by an individual without DPSST certification constitutes unlawful activity under Oregon law. Aroma Restaurant was sanctioned for permitting unlawful activity of this nature.

This case is interesting for two reasons. First, it illustrates the OLCC’s escalating penalty schedule and the OLCC’s discretion in increasing or decreasing the sanction based on aggravating or mitigating circumstances. Second, it highlights the importance of promptly addressing compliance issues after a violation and having systems in place to avoid “low hanging fruit” violations.

The OLCC’s sanction guidelines suggest the following penalties for category III violations:

• First in two year period. $1,650.
• Second in two year period. $4,950 or a 30 day suspension.
• Third in two year period. Mandatory 30 day suspension.
• Fourth in two year period. Cancellation.

Here, the licensee had a previous category III violation for a similar incident within the last two years. The standard sanction would be a 30 suspension or a civil penalty of $4,950. Here, the OLCC found aggravating circumstances and imposed a sanction of either a 32 day suspension or a $4,950 civil penalty and 2 day suspension. So, in either case, the licensee faced a mandatory suspension. For licensees with video lottery, the imposition of a mandatory suspension is particularly important because the Lottery will turn off the video lottery machines for the length of the suspension, at a minimum. The Lottery has the discretion to terminate the retailer contract under such circumstances.

The second lesson from this case is just as important. After settling a violation or losing at a contested hearing (or, ideally, as soon as the compliance problem comes to their attention), a licensee must take the time to ensure that the underlying problem has been addressed. The escalating penalty schedule provides for increasing sanctions for violations of the same category within a 2 year period of time. Generally speaking, violations serve as a red flag to OLCC enforcement and may lead to increased scrutiny of a licensee’s business. So, in addition to ensuring that the issued underlying the violation has been addressed, such a licensee would be well served to audit its alcohol service policies and procedures to ensure future compliance, or to have a third party conduct such an audit. DPSST and service permit violations are low hanging fruit violations that can be easily avoided with sound systems and regular compliance checks. In addition to avoiding violations, ensuring that your staff is appropriately trained and permitted helps the business to stay in compliance generally.

I provide compliance audits for licensees and would be happy to talk with you if you have concerns about the compliance of your licensed business.

60% of Portland Licensees Sell to Minor Decoys in Recent Operation

Compliance, OLCC

The OLCC conducts minor decoy operations across the state.  Licensees are selected in two primary ways for these operations: random and targeted.

First, the OLCC selects a pool of licensees at random to be tested for compliance.  Any licensee may be selected at random at any time.

Second, the OLCC responds to citizen complaints and will conduct minor decoy operations and compliance checks for licensees that are subject to such complaints.  In addition, the OLCC typically will retest licensees that fail a minor decoy operation.  Both approaches target licensees that may be compliance risks.

The recent 60% compliance rate is well below the state wide average of 81%.  Click here for more information.

Increase in Penalties for Certain Types of Unlawful Activity: A Recent OLCC Rule Change

Compliance, Laws & Rules, OLCC

The OLCC recently adopted amendments to OAR 845-006-0347 that increased the sanctions for certain types of unlawful activity that a licensee permits to occur on the licensed premises. Before the amendment, violations involving permitting unlawful activity on the premises were category III violations. Now, violations that involve death, serious physical injury, use or attempted use of a deadly weapon, or certain sexual offenses are category I violations. Violations that involve the use of a dangerous weapon with intent to cause death or serious physical injury are category III violations.

What does this mean to licensees? If a situation arises in which any of the types of unlawful activity described above appear imminent or are occurring, licensees should take immediate action to prevent them from occurring. Hoping that the situation will resolve itself or waiting to call the police until it’s too late can result in serious consequences. Licensees that have reason to believe that patrons may be brining weapons onto their premise may want to consider policies that ban weapons on the premises and the use of screening methods to prevent patrons from bringing them into the premises. Establishing solid house policies coupled with consistent training can help prevent problems, including those addressed by this rule.

Allowing OLCC Inspectors Access to the Premises: a Recent Rule Change

Compliance, Laws & Rules, OLCC

The OLCC recently amended OAR 845-006-0345 to set a uniform standard for when licensees must allow OLCC inspectors and police officers to enter the premises to conduct a reasonable search to ensure compliance with Oregon’s alcoholic beverage laws. In short, a licensee must allow an OLCC inspector or police officer to enter the premises if they identify themselves and desire to enter the licensed premises. If the premises is or appears to be closed, the law enforcement officer must have a reason to believe an alcoholic beverage law violation is occurring. In addition, after the law enforcement officer is on the licensed premises, the licensee must allow the officer to conduct a reasonable search before asking them to leave the premises.

A violation of these prohibitions is a category II violation. Violations are divided into five categories with a category I violation being the most serious and a category V violation being the least. The proposed penalty for a violation is based on the category of the violation and is more harsh for more serious violations. In addition, the OLCC has adopted an escalating penalty schedule in which the suggested sanction for each successive violation in the same category within a two year period is increasingly harsh. For example, the proposed penalty for a first category II violation is a 30 days suspension. The proposed penalty for a second category II violation within a two year period is cancellation. Although the penalties proposed by the penalty schedule are suggestions, the penalties imposed by the OLCC often closely track those set out in the penalty schedule.

What’s the take away here? Licensees are responsible for the acts and omissions of their employees and agents while acting on behalf of the licensee. At a minimum, licensees should discuss these prohibitions with their staff to make sure that they understand when they need to allow law enforcement officers into the licensed premises. The proposed penalty for a first violation of these prohibitions is a 30 day license suspension and could have a serious impact on the continued success and operations of a business. The best practice is to address this issue in a house alcohol service policy that is reviewed and signed by all employees.

Disclaimer. This is for information purposes only and is not intended to and does not constitute legal advise. Please contact an attorney if you have any questions or concerns.

OLCC Prohibitions and Violations

Compliance, OLCC

Yesterday, I talked about a recent rule change regarding allow law enforcement officers access to licensed premises. The change was to OAR 845-006-0345. This rule contains a number of other prohibitions that can result in serious violations. As such, it’s worth summarizing the prohibitions here even though there were no changes related to them.

  • Drinking on Duty. Licensees and service permittees are prohibited from drinking or being under the influence of intoxicants while on duty. ”On Duty” means an entire work shift, including breaks. It is possible for a licensee or permittee to put himself or herself on duty or back on duty under certain circumstances. For example, a staff member that finished their shift, clocked out, and is having a drink at the premises could put herself back on duty by taking actions on behalf of the licensee after having a drink, such as by helping out if business picked up or to address a particular problem situation. This could happen even if the employee did not clock back in and was not paid for their time.
  • Failing to call the police when an OLCC inspector directs the licensee or permittee to do so. This prohibition is clear, but important to remember. If an inspector asks a licensee to call the police, the licensee should do so even if there is disagreement about whether making such a call is appropriate or necessary. This is a category II violation.
  • Destroying or concealing evidence. This includes attempting to do so. This is a category III violation.
  • Allowing a patron to leave with an open container. This is a category V violation.
  • No drive-up windows. It’s true. If you want to buy your alcohol at a drive through window, you’ll need to head south to Texas. This is a category III violation.
  • Liquor as a prize. Licensees are prohibited from offering alcoholic beverages as prizes. Drinking games need to stay at home. This is a category V violation.
  • Allowing a visibly intoxicated person to drink an alcoholic beverage. Licensees and permittees are prohibited from allowing VIP’s to drink or continue to drink. A licensee or permittee who makes a good faith effort to remove the alcoholic beverage from a patron is not in violation of this prohibition. A good faith effort means to place a hand on the drink to try to remove it or to make a verbal request if the server has reason to believe that touching the drink could cause a disturbance.
  • Promotions that encourage excessive consumption. Licensees are prohibited from, among other things, offering unlimited drinks during any set period of time for a fixed price or offering discounts on alcoholic beverages after midnight. The most common violation of this prohibition is the “bottomless mimosa”. These are category III violations.

 

Disclaimer. This is for information purposes only and is not intended to and does not constitute legal advise. Please contact an attorney if you have any questions or concerns.