Running a restaurant is a tough gig. Between navigating high-pressure service shifts, managing slim profit margins, and ensuring a great guest experience, keeping up with HR compliance can sometimes fall by the wayside.
Whether you’re running a small café or a chain of fine dining establishments, understanding HR compliance isn’t just about avoiding penalties—it’s about creating a supportive workplace for your team.
In this post, we’ll explore nine illegal HR mistakes (and how you can prevent them) to keep your restaurant protected and thriving.
Managing Front-of-House (FOH) and Back-of-House (BOH) teams requires more than good communication—it demands an understanding of labor laws and proper HR protocols. However, learning and understanding HR is not typically something people coming into the restaurant industry have prior experience or even an interest in.
Here are the top nine mistakes restaurants often make and how to fix them.
Employee classification impacts everything from wages to benefits. Employees classified incorrectly as independent contractors may be denied access to their rights to work or benefits. If your staff follows set schedules, works under your direct supervision, and performs the restaurant’s core duties, they are employees—not contractors.
Misclassification can result in significant fines and costs incurred for the restaurant owner. It can also disrupt restaurant operations by damaging employee morale.
Determining whether an employee is exempt (salaried and not entitled to overtime) or non-exempt (hourly and overtime-eligible) is crucial. Many restaurant workers are non-exempt due to the nature of their hourly schedules and job duties. Misclassification here could result in substantial back pay owed for unpaid overtime.
That’s why it’s so important to clearly define job roles and responsibilities when hiring and consult overtime laws in your state.
Have you asked an employee to come in early to prep for a busy shift? Maybe your closing crew cleaned up after clocking out? If so, you could face penalties for failing to record all hours worked. Employees must be compensated for every minute they’re on the clock—including so-called prep or cleanup time.
Implement a strict clock-in/clock-out system and educate employees on the importance of accurate time reporting.
During a hectic eight-hour rush, breaks and meal times can easily slip through the cracks. However, most states mandate meal and rest breaks for hourly employees, and failing to provide these can lead to fines.
Schedule dedicated break windows and hold managers accountable for ensuring team members take their breaks. It’s up to leadership to schedule/stagger breaks so that the restaurant can operate smoothly and employees can still make use of their entitlements.
Federal law prohibits managers from taking employees’ tips or using them to pay for service mistakes (e.g., a comped meal). Restaurants are also responsible for ensuring tipped employees earn at least minimum wage when tips are factored in—and covering the difference if they don’t.
Track tips meticulously and audit wage compliance regularly. Avoid “pooling” tips unless your state explicitly permits it.
Restaurants often overlook proper recordkeeping, but accurate employee files are a legal requirement. These files need to include details like Social Security numbers, birthdates, pay rates, hours worked, and emergency contacts. Not having these on file can result in audits and penalties.
Use an HR management system to keep digital records organized and accessible in case of an audit.
It may seem harmless to withhold an employee's final paycheck as leverage to return uniforms or tools, but this practice is completely illegal in most states. Wages owed to an employee must be delivered on time and in full, regardless of any missing company property.
Establish clear guidelines for returning company property during exit interviews but always pay final wages promptly.
With teens often filling entry-level roles, the restaurant industry must be mindful of child labor laws. There are strict rules regarding how many hours minors can work and what tasks they are allowed to perform (e.g., no operating certain kitchen equipment). Train managers to double-check age-based restrictions before scheduling minors or assigning duties.
It’s illegal to offset operational expenses (like broken plates or uniform purchases) by deducting these costs from employee wages. Such charges could leave employees earning less than minimum wage, which violates federal law. Restaurants must absorb these costs as part of doing business rather than passing them to your team.
Managing HR in a restaurant setting is no easy task. With staff turnover, busy shifts, and niche operational needs, compliance can feel like just another plate to juggle.
With over three decades of HR expertise and specialized experience working with restaurants, TBM can help you streamline labor compliance and protect your business. Our tailored HR solutions include everything from payroll support to employee handbook creation, so you’re prepared for whatever might come your way.
Reach out to TBM today to learn how they can manage your restaurant’s HR burden and ensure you’re compliant!