Restaurant Industry Wage & Hour Compliance Program

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Restaurant industry employers are required to ensure that their pay practices, overtime calculations, and tipping policies comply with state wage and hour laws and the federal Fair Labor Standards Act (FLSA). Based on a study conducted by a district office of the U.S. Department of Labor (DOL), as many as 80% of employers are not in full compliance with the Act and applicable regulations. Wage and hour violations are most prevalent in low-wage industries, and the DOL is increasing its enforcement focus on the restaurant industry.

The FLSA and related state laws impose specific obligations relating to the following terms and conditions of employment:

  • Wages and hours worked -- minimum wage, tip credits, tip pools, hours worked, time records
  • Overtime -- overtime exemptions, overtime pay, white-collar duties tests, salary basis policies, recordkeeping
  • Child labor -- prohibited occupations, permissible occupations, limitations on working hours

To ensure full compliance, employers must implement policies and pay practices that meet the Act’s standards, and must notify employees of their rights and obligations. The DOL is enacting plans to increase enforcement of the FLSA and related laws by adding more than 300 additional inspectors and investigators to their staff as part of their proposed budget for FY 2015.

Noncompliance with wage and hour laws can result in fines, back pay, front pay, penalties up to $11,000 per violation, and possible imprisonment for willful violations. A recent DOL investigation resulted in the largest wages-and-tips case settlement in the history of the restaurant industry, totaling over $6.8 million in penalties and wage repayments. Additionally, President Obama
recently directed the DOL to revise its regulations pertaining to employee overtime, and the IRS released final rules on automatic gratuities that took effect January 1, 2014.

To help restaurant industry employers ensure full compliance with pertinent state and federal wage and hour laws, Personnel Concepts has introduced a comprehensive Restaurant Industry Wage and Hour Compliance Program. Our exclusive program is designed to help you audit your current pay practices to ensure that you are not committing the most common violations. This program also provides reference materials and documentation forms that you can use whenever a wage and hour, overtime, or child labor issue arises. It includes a comprehensive compliance guide (including guidance from an attorney on common violations), self-audit checklists, and mandatory tip credit notices (where applicable).

Who Needs It

All restaurant industry employers, with one or more employees on payroll, must comply with various state and federal laws pertaining to wage & hour practices, tipping policies, overtime, and child labor.


Good-Faith Compliance
While many wage and hour laws contain complex provisions that can result in inadvertent errors, government auditors and inspectors take into account whether the employer demonstrated a good faith effort to comply. Posting compliance information in the workplace and using the customizable materials included in our program can help you demonstrate good faith compliance during an audit or inspection.

Lawsuit Prevention and Defense
Employers in the restaurant industry have become increasingly susceptible to individual and class-action lawsuits relating to wage and hour violations. Penalties for non-compliance and judgments in wage & hour lawsuits are significantly more severe when a violation is found to be willful. Utilizing our program’s self audit checklists to identify risk areas and documenting your
compliance efforts can help protect you from potentially costly lawsuits.


Our Restaurant Industry Wage and Hour Compliance Program includes the following materials and information:

► A comprehensive compliance guide featuring a legal brief from an attorney on common industry violations, plain language guidance, overviews of applicable regulations, summaries of recent cases, and self-audit checklists

► Reproducible documentation forms to ensure compliance with record-keeping requirements:

• 25 overtime exemption checklists
• 25 mandatory tip credit notice forms
• 25 employee tip record forms

► An 11” x 17” FLSA Tipping Policy Poster to demonstrate good-faith compliance and communicate mandatory information about tips, tip pooling, and tip credits.