Why This Matters
Labor law violations are the #1 source of lawsuits in the restaurant industry. The average wage-and-hour settlement costs $40,000–$200,000 for small to mid-size restaurants. And ignorance isn't a defense.
You don't need to be a lawyer. But you do need to understand these basics.
Overtime Rules
Federal (FLSA)
- Non-exempt employees must receive 1.5x their regular rate for hours worked over 40 in a workweek
- Salaried managers are exempt ONLY if they meet all three criteria: salary basis, salary level ($684/week minimum), and duties test (primarily management)
- "Manager" in title doesn't mean exempt. If they spend most of their time doing non-managerial work (cooking, serving), they may be non-exempt
State Laws
Many states have stricter overtime rules:
- California: Daily overtime after 8 hours, double time after 12
- Colorado: Daily overtime after 12 hours
- Some states: Overtime on the 7th consecutive day worked
Always follow whichever law (federal or state) is more favorable to the employee.
Break Requirements
Federal law doesn't require breaks, but most states do:
- Meal breaks: Typically 30 minutes for shifts over 5–6 hours
- Rest breaks: Typically 10 minutes per 4 hours worked
- Key rule: If the employee isn't completely relieved of duties during a break, it must be paid
That means if a server eats lunch but has to watch the door, that's a paid break.
Tip Rules
Tip Credits
- Federal minimum for tipped employees: $2.13/hour (if tips bring total to at least $7.25)
- Many states require higher cash wages or no tip credit at all
- You must inform employees about tip credit before using it
Tip Pooling
- Can include servers, bartenders, bussers, and runners
- Cannot include managers, owners, or supervisors
- Mandatory tip pools must be disclosed in advance
Service Charges
- Auto-gratuities (e.g., for parties of 8+) are not tips under federal law — they're service charges
- The restaurant controls how to distribute them
- Must be reported as regular wages, not tips
Scheduling Laws
Some cities and states now have predictive scheduling laws:
- Notice: Schedule posted 7–14 days in advance
- Predictability pay: Extra pay for last-minute schedule changes
- Right to rest: Minimum hours between closing and opening shifts (often 10–11 hours)
Currently applies in: San Francisco, Seattle, New York City, Chicago, Oregon, and growing.
Minors in the Workplace
- Under 16: Limited hours, restricted tasks, no late nights
- 16–17: More flexibility but still restricted from hazardous work (meat slicers, deep fryers in some states)
- Work permits: Required in many states — check before scheduling
What to Do Right Now
- Audit your exempt/non-exempt classifications — are your "managers" really exempt?
- Check your state's break laws — post them in the break room
- Review your tip pool structure — make sure no managers are included
- Post required labor law posters — federal and state, in a visible area
- Document everything — schedules, break times, hours worked
When in doubt, consult an employment attorney. The cost of a consultation is a fraction of the cost of a lawsuit.
Sideworks scheduling tools automatically track hours, flag overtime thresholds, and ensure compliant break scheduling — so you stay on the right side of the law.
