Why WeWork Locked Up Its Beer Taps In California

By Trisha Thadani
San Francisco Chronicle

WWR Article Summary (tl;dr) Companies don’t need a liquor license to provide alcohol in their offices, as long as the employees aren’t paying for it. But WeWork is in an unusual situation. It’s a landlord, not an employer to the people working in its buildings. And that puts it in a gray area under the law.

San Francisco Chronicle

Inside WeWork, a co-working company that caters to young professionals with its amenity-heavy spaces, some members in California have been asking: Where did the beer go?

Easy-to-rent desks with plenty of Silicon Valley-style perks, including beer, have long been part of the sales pitch to WeWork’s tenants and investors, and helped propel the company to a $20 billion valuation.

But when the taps recently got shut off in California, some startups housed at WeWork wondered what happened — and if they’re getting what they paid for.

“When I heard they got rid of the beer, I was like ‘What?'” said Anna Roubos, founder of Table Public Relations, which leases space in a downtown San Francisco WeWork. The beer “was part of the decision” to rent there, she added.

Companies don’t need a liquor license to provide alcohol in their offices, as long as the employees aren’t paying for it. But WeWork, which is based in New York and has a number of Bay Area locations, is in an unusual situation.

It’s a landlord, not an employer, to the people working in its buildings. And that puts it in a gray area under the law — highlighting how innovative businesses create new legal questions faster than regulators can keep up.

Open bars have long been part of tech culture, from Google’s boozy TGIF meetings to GitHub’s computerized Kegerator. Some have questioned whether the sanctioned office drinking is getting out of hand: Zenefits banned alcohol at company events in 2016.

WeWork has provided alcohol to its members for years across the country. One startup in a Boston WeWork even created a KegTrapper app to track which beers were on tap, though that hasn’t seen updates in months.

WeWork doesn’t have a liquor license in California — and under state law, it’s not clear whether it can go without one if it wants to serve alcohol to building occupants. When asked about the beer removal, a spokesman said the company is talking to state officials, but declined to elaborate.

WeWork also declined to comment on the timing of the alcohol removal, but some California members said they first noticed in December that the beer was gone, replaced by less-regulated options like kombucha, which is fermented tea.

“We are working with state officials to determine next steps as they learn more about our business,” a WeWork spokesman said in a statement. The company has 12 locations in San Francisco and one each in San Jose, Oakland and Berkeley, according to its website. It is unclear whether the company has removed beer in any states but California.

WeWork leases out shared work spaces in cities across the U.S. to people who don’t have traditional offices to go to every day, like freelancers or entrepreneurs. Early-stage startups rent larger offices in the buildings, and even large companies like Microsoft have struck deals with WeWork to house traveling employees or those working far from a traditional office.

Along with access to high-speed Internet, conference rooms and printers, WeWork spaces have pingpong tables, pool tables and bean bag chairs — amenities that blur the line between social life and work. When it comes to the self-serve beer, experts say the lines are even blurrier under California law.

Since most people in a co-working space aren’t the company’s employees, but paying tenants, companies like WeWork don’t clearly fall under any category in existing law, said Marco Costales, a partner at Nossaman LLP who advises clients on liquor license matters.

According to a WeWork contract shared with The Chronicle by a tenant who declined to be named, a membership fee includes the use of “kitchens and beverages” in the space.

Costales said regulators could take issue with the fact that “beverages” are included in the membership fee: “If the only way to access the beer is by virtue of leasing out the space or paying a membership fee, I think they are going to have a problem,” said Costales, whose firm has not had WeWork as a client.

A spokesman for the California Department of Alcoholic Beverage Control declined to comment on WeWork’s regulatory status.

The state has made exceptions to its general liquor license requirements for different types of businesses in the past. Gov. Jerry Brown signed a law in 2016 that said beauty salons and barber shops don’t need a liquor license if they provide only small quantities of alcohol — so your stylist can safely offer you a can of beer, as they do at establishments like Dry Bar, Public Barber Salon and Male Image in San Francisco. Other businesses that are exempt from liquor licenses under certain circumstances in California are hot air balloons and limousines.

Roubos said she wished WeWork had communicated the sudden change better, though her team doesn’t mind it: “We drink more kombucha than we ever drank beer,” she said.

Greg Wang, 24, who works at a small startup out of a San Francisco WeWork, was similarly unbothered: “Usually if I’m going to get a beer, I’m going to go to a bar next door,” he said.

Meanwhile, experts are scratching their heads about how California regulators will respond to the underlying question: Can co-working spaces serve alcohol?

“It’s a novel issue because (WeWork has) a novel model,” said John Trinidad, a senior counsel at Dickenson Peatman & Fogarty, who advises clients on liquor licenses. “It’s an adjustment for both the company and the regulations.”

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