The U.S. Department of Labor (DOL) recently issued a press release stating that they have renewed a multi-year nationwide initiative to increase enforcement of federal labor laws amongst food service employers. The initiative would also provide outreach and education to food service workers in an effort to raise awareness of common labor practices and actions by employers that violate the Fair Labor Standards Act (FLSA). Examples of labor violations by food service employers typically include not paying out wages that are at the federal minimal wage level, not paying overtime wages, paying wages to illegal workers, and not properly reporting tips earned by tipped employees.
The restaurant industry has traditionally been a high target of non-compliance when it comes to violations of federal labor laws under the FLSA. While the DOL’s expanded enforcement is specifically targeted at restaurants, other industries such as hotels, food distributors, and retailers also have track records of violations in this area. Below is a list of specific action items employers can take to ensure they are in compliance with the FLSA.
- When hiring new employees, have them fill out Form I-9, Employment Eligibility Verification and consider using E-Verify to ensure the information the new employee provides is accurate and they are eligible to work in the United States.
- If a restaurant has tipped employees, the employer should enforce and educate their employees on how to report their tips, as this is considered taxable income to the employees and subject to payroll tax withholding by the employer.
- Stay current with both the federal and local minimal wage laws mandates for both tipped and non-tipped employees, as these are consistently changing.
- Implement a reliable point-of-sale system, automated employee time tracking solution, or mobile app that can accurately track employee hours for purposes of determining potential overtime pay.
- Restaurant owners with employees that work at multiple units or locations need a system or application that tracks the employees’ weekly hours on a consolidated basis. The FLSA mandates that the employees’ hours at all locations and units be combined in computing potential overtime pay.
Our tax specialists are available for consultation on this and other business management topics for restaurants, hotels, food distributors or retailers. Please contact Aaron Boker or one of our hospitality tax advisors at 301.231.6200 for more information.