fbpx

Understanding Overtime, Holiday, and Vacation Pay for Restaurant Workers

Understanding Overtime, Holiday, and Vacation Pay for Restaurant WorkersRestaurants are often very open with their employees about their seemingly small profit margins and their struggle to keep their doors open every week. However, this is often a tactic used to keep restaurant workers from reporting wage, overtime, or vacation pay. Cutting out these costs only increases the profits for the restaurant. As long as restaurant owners can get away with these illegal practices, they will continue to line their own pockets. If you work in a restaurant, it is critical to understand the laws surrounding your pay. If you believe that you’ve been subjected to unfair or illegal pay practices, contact our offices today to get the compensation you deserve. 

The Protections that Cover Restaurant Employees

First, there are some distinctions for staff based on their positions within a restaurant. Depending on the physical location of the restaurant, laws can vary by state, and even sometimes by city. However, many employees who receive tips as part of their compensation have different minimum wages that apply to their position. 

While this issue can create significant financial differences based on an employee’s position, it does not change the requirements laid out in the Fair Labor Standards Act or FLSA. This act lays out some of the basic protections for all employees, including those in restaurants. Additionally, each state has different rules for how restaurants can operate. It is essential to understand your local requirements when researching the potential for illegal practices. 

Covering Overtime for Restaurant Workers

Generally, all non-exempt employees who work more than 40 hours in a workweek are entitled to overtime pay. This pay is calculated as 1.5 times their standard hourly rate. However, this calculation gets a bit tricker for tipped employees. While the FLSA lays out an exemption to the minimum wage for tipped employees, many restaurants can also claim a tip credit on these employees. That means that tipped employees still get paid at least the federal minimum wage, although some states require higher minimum wage rates. 

Calculating overtime for tipped employees typically consists of multiplying the tipped employee’s minimum wage by 1.5 and then subtracting the tip credit the restaurant takes, taking that value, and multiplying by the number of hours of overtime worked. Because these calculations can be a bit trickier than typical employees’ standard 1.5 times rate calculation, restaurants often take advantage of this confusion to underpay their workers. 

Other important issues relating to tipped restaurant workers include 1) which job tasks are eligible for tip credit and 2) which employees are legally permitted to share in a tip pool. 

Commonly called the 80/20 rule for tipped workers, this Department of Labor rule does not allow restaurants to take a tip credit for time employees spend on side work tasks such as rolling silverware or setting up for a shift – if that time exceeds 20% of the employee’s working time. While the Trump administration initiated changes to this rule in favor of employers, the Biden Administration has stopped such change, at least for now. 

Regarding the sharing of tips between “front of house” and “back of house” employees,  the federal wage laws have long held that such sharing is not allowed if the restaurant takes a tip credit for any of the employees involved. More recently, it has been held that tip-sharing with back of house employees, such as dishwashers or line cooks, is permitted as long as the restaurant is not taking a tip credit for any of the employees. This, however, does not extend to managers and supervisors who are prohibited from receiving employees’ tips as part of any tip pooling arrangement.

What to Do If Your Employer Doesn’t Cover Holiday or Vacation Pay

If you have been fortunate enough to work in a restaurant that pays its employees for holidays or vacation days, consider yourself lucky. This is one area where restaurants don’t have to provide benefits. However, your employer may be violating the agreement if your employment contract explicitly states that you have a set holiday or vacation pay that you are not receiving. 

Work With Lore Law Firm to Get the Compensation You Deserve

If you are a restaurant employee that has been subjected to unfair payment practices for your work, contact the Lore Law Firm today. Our legal team has the experience to take on restaurants and ensure that you and your fellow employees get the pay you already earned. Call our office at 866-559-0400 or fill out our contact form today to schedule your free consultation.