Five Rules Every Restaurant Owner Should Know

Waitress repositions flatware on restaurant table
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As a restaurant owner, it is your responsibility to familiarize yourself with state and federal employee laws, such as those pertaining to minimum wage, overtime, and tips. Here is a basic overview of employer responsibilities, which every new restaurant owner should be familiar. Failure to comply with these rules can result in hefty fines from local, state and federal authorities.

1. Minimum Wage

Minimum wage varies by state, so you will need to check with your local government to find out what the wage is for hourly employees as well as servers.

 Some states, including California, New York and Washington have a minimum wage that is more than double the federal minimum wage. In some states, servers have a separate minimum wage, since they collect tips. This is referred to as the "tipped minimum wage" and it also varies by state, ranging from $2.13 an hour to $9.19 hour.  A server must make enough in tips to equal the tipped minimum wage. If they don't, the employer must pay the difference. The US Department of Labor has an easy to read graphic about each state's requirements around minimum wage and tipping. 

2. Tips

Under the Fair Labor Standards Act (FLSA) tipped employees are to be paid a wage.  Tips always belong to the employee, though they can be used toward the employees wages, by the employer, as I mentioned above. At some restaurants, employees pool their tips. That means that they all put their tips together and divide them up equally at the end of the night.

This is completely voluntary, and employers cannot make their staff use this practice. 

3. Overtime

Overtime refers to hours worked beyond the standard 40-hour week. If an employee works overtime, they get paid time and half. For example, if a cook who is paid $12.00 an hour works 45 hours, five of those hours will paid at $18.00 an hour.

It is a good idea to limit overtime, otherwise you payroll costs will skyrocket. Occasionally an employee might offer to work overtime for their regular wage, to get more hours. Regardless of their wiliness to work for their regular wage, employers must pay overtime.

4. Minors

The hours and job positions a minor can work vary by state. For example, in the State of Maine a minor may work at 15, but they can’t serve liquor until 17 nor can they pick up knives (even to wash them) because it is considered too dangerous. Minors also have very stringent hours they can work during the school year. Always verify a minors age, with a birth certificate, drivers license, or social security number. 

5. Alien Workers

Alien workers, or immigrants, are another example of where you want to be sure and verify their worker eligibility. The last thing you need as a new restaurant owner is to be accused of hiring illegal immigrant to work for you, simply because you didn’t validate their visa or work permit.