Pay Overtime

If one of your employees works over 40 hours per week, you must pay her overtime. But be careful: The math here gets confusing. When you calculate an employee's overtime pay - let's say for a server who you pay $2.13 per hour - you must use her regular rate of pay, not her hourly rate. That regular rate of pay includes the $3.02 per hour Tip Credit. Therefore, if you take the Tip Credit, you would multiply overtime (one and one half times her regular rate of pay) by $5.15. In most cases, you would need to pay that server $7.73 for every hour over 40 per week she works.

Note: The Federal government only outlines minimum overtime standards. States and municipalities can establish additional restrictions. For example, in California, employers must pay employees overtime for every hour worked over 8 per day, even if those employees do not work 40 hours per week.

Rephrase mandatory gratuity

If you have a policy of adding mandatory gratuity to sixtops or larger tables' bills, you could be in violation of the law. To receive your tip credit, all tips must be voluntary. Even if the total tip amount goes to the server, you could disqualify yourself from the tip credit.

One way around this problem is to ensure that servers get tables of various sizes or rephrase the terms that appear at the bottom of your menus. Instead of writing, "18 percent gratuity will be added to tables of six or more," write, "We encourage gratuities of 18 percent for parties of six or more and will add this to your bill as a convenience. If you would like to do something different, please let us know." This slight semantic change makes the tip voluntary and, therefore, keeps you eligible for the tip credit. Otherwise, you could have to give the server backpay under the Fair Labor Standards Act. However, making sure the servers receive tables of various sizes (including tables without a mandatory tip) in most cases will eliminate the tip credit issue so long as those employees earn sufficient voluntary tip income.

As a note, a mandatory gratuity really is a sale and the income from the mandatory tip really belongs to the employer and therefore subject to sales tax in states like Missouri.

Pay employees for 15-minutes of break

If you require employees to punch out for breaks, you should give them a full half hour. The DOL requires employers to pay employees for breaks of a short duration.

If a server's break is interrupted by a mealtime rush, and you ask him to punch in after just ten minutes, you should make sure to pay for that ten minutes.

Have strict policies against sexual harassment

Restaurant workers tend to be friendlier with one another than employees you'd find in other industries. Generally this helps to build a team atmosphere, but sometimes jokes can become discrimination or harassment lawsuits.

The Equal Employment Opportunity Commission has indicated it views restaurants as sites for higher than average levels of harassment. They noted that food and beverage establishments often hire younger workers who are less likely to know their rights.

Therefore, protect your employees by establishing a policy that defines acceptable and unacceptable behavior. Specify that it is inappropriate for a manager to take advantage of a subordinate by pegging her raise to going on a date. The employer and not just manager may be liable for sexual harassment.

In your policy, mention that employees are protected from environments in which they could be harassed for their sex, race, age, disability or other protected characteristics. Require all employees - from dishwashers to top managers - to receive harassment training and identify a person that any employee can complaint to. Your policy should not only forbid harassment, but require employees to report it if they observe it in the workplace. Once you get reports of harassment, follow up quickly. Investigate complaints and take action to eliminate the harassment.