Are You Also a “Security Guard Company”?

Steven H. Rosenfeld

By Steven H. Rosenfeld-

 Havkins Rosenfeld Ritzert & Varriale, LLP, New York, New York.

[email protected]

New York Law – specifically Article 7-A of the General Business Law, known as the Security Guard Act of 1992 (NY GBL §89-e et. seq.) – requires security guard companies to maintain general liability coverage for death and personal injury of at least $100,000 per occurrence and $300,000 in the aggregate and must file a certificate with the Department of State that it maintains such insurance.  Specifically, NY GBL §89-g(6) provides, in relevant part:

So, if you, the bar or nightclub owner, directly employ an individual for security purposes, such as a bouncer, are you considered a “security guard company” which must comply with the statutorily mandated insurance requirements?

The short answer is no. An  establishment  that is licensed for the sale and consumption of alcohol, such as a bar, which hires an individual to principally perform security activities, such as a bouncer, is not considered a “security guard company” because it does not employ “security guards” within the meaning of the Security Guard Act of 1992 or 19 NYCRR §170.1.

Under the Security Guard Act of 1992, a security guard company is, inter alia, a person, firm, or company that employs “security guards.”  Although proposed as an amendment, the statutory meaning of “security guard” does not include persons hired as bouncers or security personnel at establishments licensed for the sale and consumption of alcohol.  Thus, such establishments do not fall within the statutory meaning of “security guard company” and, therefore, are not required to comply with the statutorily mandated insurance requirements.

Article 7-A of the General Business Law

New York courts have not opined on which establishments qualify as a “security guard company” within the meaning of the statute, nor whether the statute is applicable to all establishments who employ persons for security purposes. Consequently, the courts have not discussed whether establishments licensed to sell and serve alcohol, such as pubs and bars, which employ a  person to provide security, such as a bouncer, are considered “security guard companies” that must comply with the insurance requirements of NY GBL §89-g.

As a result of the lack of case law as a means for analysis, the statutory text and legislative history of the Security Guard Act, NY GBL §89-e et. al.,  lends insight into whether establishments such as pubs and bars fall into the statutory meaning of “security guard company.”

At the outset, NY GBL §89-f provides definitions for terms within the Act, including the meaning of “security guard company.”  Specifically, §89-f(5) provides:

“Security guard company” shall mean any person, firm, limited liability company, corporation, public entity or subsidiary or department of such firm… employing one or more security guards or being a self-employed as a security guard either on a proprietary basis for its own use or on a contractual basis for use by another person, firm, limited liability company, corporation, or public entity.

Under NY GBL §89-f(6), “security guard” is defined as a person, other than a police officer, employed by a security guard company to principally perform one or more of the following functions within the state: (a) protection of individuals and property from harm or theft; (b) deterrence, observation, detection and/or reporting of incidents to prevent unlawful or unauthorized activity; (c) street patrol service; or (d) response to alarm system for intrusions. Security guards are required to have a valid registration with the State. See NY GBL §§ 89-f(6),g.

In sum, a “security guard company” is a person, company, or entity that employs one ore more security guards who are persons that principally perform the activities of protection, deterrence, street patrol, or response to alarms for intrusions. From a textual analysis of the statutory language, it would seem that an establishment licensed to sell or serve liquor, such as a bar, who employed a person for the purposes of protection of individuals and property and deterrence of unlawful actives fits the statutory meaning of the “security guard company.”

However, the statutory text provides only limited information and insight as to what establishments are included within the statutory meaning of “security guard company” and who is considered a “security guard.”  A review of the legislative history of the Security Guard Act allows for a more complete analysis.

19 NYCRR §170.1 Security Guards

As background, in New York, codes, rules and regulations are issued by executive departments and agencies granted rulemaking authority. The current rules and regulations are compiled in the NY Codes Rules and Regulations (NYCRR). When a department or agency seeks to propose a new rule or amend an existing rule, the agency must publish the proposed rule in the New York State Register.  Published weekly, the New York State Register contains newly proposed amendments to state agency rules and provides interested parties an opportunity to comment on actions before the agency adopts the rule.

Specific to the matter here, 19 NYCRR §170.1, titled “Security Guards,” further codifies and clarifies the meaning of terms set forth by the Security Guard Act.  NYCRR §170.1(a) provides that a person described in GBL §89-f(6) “is a security guard if he or she principally performs the activities or prevention deterrence, control or enforcement.”   “Principally performs” means, in relevant part, engaging in the functions set forth in the statute – prevention, deterrence, control, and enforcement – for more than fifty percent of the person’s regularly scheduled work hours.  19 NYCRR §170.1(c).  19 NYCRR §170.1 gives no further explanation as what is a security guard company or who is a security guard.

According to the 2010-2015 NY State Register (2010-15 N.Y. State Reg. 37), in April 2010 the Department of State attempted to amend the language of 19 NYCRR §170.1. The Department sought to include persons employed as “bouncers” in the definition of “security guard.” The proposed amendment would mandate that bouncers register as security guards with the State and would further require that employees of bouncers “become registered as authorized security guard employees.”

The proposed amended language which sought to alter the meaning of “principally performs,” stated:

However, those who perform duties within, about, in front of or adjacent to, or in any parking lot provided for patrons of an establishment licensed … for the sale and/or consumption of alcoholic beverages on the premises, for any period of time whatsoever and who are employed, permitted with or without just compensation, or retained as an independent contractor by an on-premises alcoholic beverage licensee to grant or refuse admission, to escort a patron or prospective patron from the establishment… and/or areas under control of the establishment … to keep order, to protect persons and/or property from harm and to deter, prevent, terminate and report any unlawful or unauthorized activity, shale be deemed to principally perform security guard functions and shall be required to register as a security guard pursuant to Article 7-A of the General Business Law. 2010-15 N.Y. State Reg. 37.

The above proposed language was never adopted into 19 NYCRR §170.1(c) nor in any other provision in Article 7-A of the General Business Law, the Security Guard Act.

Therefore, absent the adoption of the proposed amendment to 19 NYCRR §170.1, it is clear that bouncers and those employed for security purposes by establishments licensed for the sale and consumption of alcohol, such as bars and pubs, are not “security guards” within the meaning of the Security Guard Act.  Accordingly, establishments licensed for the sale and consumption of alcohol are not “security guard companies” within the meaning of the Security Guard Act because the establishments are not employing “security guards,” but are rather employing bouncers and security personnel who are not included in the statutory meaning of “security guard”.

Conclusion

Establishments licensed for the sale and consumption of alcohol who employ bouncers and security personnel are not security guard companies within the meaning of the statute and, therefore, are not required to comply with the statutorily mandated insurance requirements prescribed by the Security Guard Act.

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Written by Steven H. Rosenfeld of  Havkins Rosenfeld Ritzert & Varriale, LLP for RMS Hospitality Group