Operating a Restaurant within the Law: A 101 in Compliance (Part 1)

From a customer perspective, it’s easy to imagine how extensive the laws and regulations are for governing restaurant operations – and you would hope so, since you are trusting this establishment with your nourishment and, subsequently, your health.

Now just imagine what life is like behind the scenes!

For busy restaurant owners, the legal and regulatory requirements associated with running their business is a big part of their daily lives.

From labor laws to food safety laws and new regulations such as no smoking laws, understanding and achieving compliance with legal and regulatory requirements can have a big effect on the success of a restaurant operation.

If you are in the process of opening a restaurant, or are already in the business and need to stay abreast of dynamic changes to the law, below you’ll find part one of a two-part overview of the federal regulations that impact restaurateurs and links to where you’ll find more guidance.

All this information is drawn from Business.gov, which provides consolidated access to small business resources from all levels of government at www.business.gov.

Minimum Wage, Tips, and Overtime

Full-time and part-time restaurant employees are entitled to certain wage standards. These requirements, regulated by the Fair Labor Standards Act (FLSA,) cover minimum wage, tips, food credits, and overtime:

  • Minimum Wage – Currently the federal minimum wage for non-exempt workers is $6.55 per hour. However, this will increase to $7.25 per hour on July 24, 2009.
  • Food Credit – As an employer, you can take credit for food provided at cost. This is typically in the form of an hourly deduction from an employee’s pay. If you just want to give your employees a discount on menu prices, you can’t deduct this as a credit from their wages.
  • Tips – If your employees receive more than $30 a month in tips, then they are considered “tipped employees”.  Some employers can take a credit for a certain amount of tips earned by their employees and apply it to the payment of the minimum wage. The laws on this vary by state. If you do this, you must tell your employee in advance, and you must be able to provide evidence that your employees are receiving the applicable minimum wage (at least) when wages and tips are combined.
  • Overtime – If you require your employees to work any time over a 40 hour work week, you must pay overtime at a rate of at least one and one-half times the employee’s hourly rate. The National Restaurant Association provides a helpful guide on How to Calculate Overtime for Tipped Employees.This is just a glimpse at restaurant wage-standards law. To find out more, visit Business.gov here.

The second part of this two-part overview of the laws and regulations that impact restaurateurs business will focus on the laws that pertain to youth labor, immigration, food safety and taxes.

Other Resources