Restaurant Compliance: Prevent Wage and Hour Claims




  • Defend against claims by taking objective, detailed notes and having any alterations to time clocks documented in writing; emails and text messages count as documentation.
  • Avoid documenting on pen and paper. Explore whether your POS system can do any heavy lifting for you. Contact your account representative for a refresher of your system’s features.
  • Enforce policies consistently and make reviewing policies a critical part of onboarding new staff at every level.

Last month, we hosted Marie Trimble Holvick at the Pared office to broadcast our very first segment of Pared On-Air titled “Restaurant Labor Laws and Compliance in 2019.” Holvick is a partner at Gordon & Rees, specializing in their Employment and Retail & Hospitality practice and she also serves on the Board of Directors for the Golden Gate Restaurant Association.

This is the first of our four-part series where we review highlights from the broadcast based on the main topics discussed. This installment covers wage and hour best practices for restaurant operators and managers.

Wage and hour claims overview

In a 2014 study, the U.S. Department of Labor found that between 2010 and 2012, 84% of full-service restaurants had violated labor standards, including but not limited to tip violations. Making sure your restaurant is in compliance requires effort from managers, your HR team, as well as your entire staff.

Marie’s first tip to restaurant business owners is a simple one: “What it boils down to is be nice to your employees. What frequently happens is somebody who thinks they’ve been treated unfairly about how they’ve been let go with very little notice. That’s the person that goes to a lawyer.” In most cases she sees, the general manager or owner isn’t intentionally deciding to treat an employee unfairly. Rather, lawsuits often stem from enforcing policies inconsistently or improper documentation.

Between 2010 and 2012, 84% of full-service restaurants had violated labor standards.

To protect yourself from wage and hour claims, Marie offers the following tips.

1. Detailed documentation is critical

Any adjustments to employees’ time clocks must be documented in writing. Communication can come in the forms of email or even text message, as long as there is a written record and a manager has signed off on it. Marie warns that the hardest cases to defend are those where clients come in with dozens of alterations to time cards without documentation and say, “‘Oh well, this guy was just really forgetful.’ That’s not what it looks like now that he has a lawyer.”

2. Optimize your POS system

Where Marie sees most businesses stumble are situations in which documentation processes are not clearly outlined or inconsistently followed. For example, older establishments that solely rely on pen and paper to document may find it difficult to track down notes and keep documentation centralized. Most businesses these days rely on a POS system to take orders, but Marie recommends checking in with your provider to see if there are additional features to help support your internal operations. “There may be bells and whistles that they offer that you either don’t have or don’t know how to use. And it’s really easy to set it up so that’s all in one system” Marie recommends.

3. Review policies during staff trainings

Another layer of defense that managers can implement is thoroughly training staff on policies regarding meal periods, taking breaks, clocking in and out and that those in leadership positions are enforcing these policies consistently. For staff members who are floor managers or are in charge of managing other employees’ time, “make sure that they’re trained on your policies and trained on the law. Because it’s those people on the front lines who make sure that these policies are actually being enforced,” Marie advises. A simple solution to make sure all incoming employees acknowledge these policies is to make it a mandatory part of the onboarding process.

What to do if an employee needs to be terminated

Despite taking all the necessary precautions, managers or owners may eventually find themselves in a situation where they’ll need to let an employee go. Before getting to this stage, however, Marie emphasizes that a manager’s first response to poor performance must be disciplinary action framed as guidance to eventually help the employee succeed. “There are very few situations where you should just flat out terminate somebody. Even situations involving theft or say, a fight in the workplace. The best way to handle it is to send somebody home.” Marie says. Alternatively, issue a suspension, send the employee home, regroup, and consider a termination later. For issues related to tardies, no shows, or poor performance, be sure to issue written warnings as this will help build a case for termination.

If an employee does need to be terminated, Marie stresses that you must be prepared. “Have a witness present. The last thing you want is a he said, she said situation. You want another manager – you don’t want a lower level employee.” Agree with your witness beforehand whether they will speak or simply take notes. Additionally, you’ll want to be prepared to hand over a final paycheck as well as any COBRA paperwork.

For a detailed discussion on these guidelines and more view our full broadcast here. Stay tuned for the next installment of this series. We’ll be covering proper tip handling.

Disclaimer: The information provided in article is for informational purposes only and should not be construed as legal advice. Please contact your attorney if you seek advice in regards to any specific issues outlined above.

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