The number of wage-violation lawsuits for restaurants has doubled over the past decade, with employees across the U.S. taking employers to court over wage-and-hour claims. Some of these claims include overtime violations, withholding tips and falsifying records. These claims won’t go away anytime soon. Employers should expect wage-and-hour disputes to continue to rise along with enforcement from the Department of Labor’s Wage & Hour Division. Therefore, it’s critical that restaurant employers are more aware of employment wage regulations, and continue to be in compliance with the various laws.
Employers should expect wage-and-hour disputes to continue to rise.
Wage-and-hour laws are complex. It’s easy for employers to not fully understand and adhere to the various laws. Although it’s easy for an employer to make a mistake, wage-and-hour claims don’t have to put their restaurant business down. There are simple solutions for employers to decrease their chance of facing wage violation claims.
Classifying Employees Correctly: Employers can sometimes be confused when it comes to classifying workers. Under the Fair Labor Standards Act (FLSA), employees whose jobs are governed by the FSLA are either exempt or nonexempt. Nonexempt employees are eligible for overtime pay, but exempt employees are not. Most employees that are covered by the FSLA are nonexempt, but whether employees are exempt or nonexempt also depends on how much they are paid, how they are paid and what kind of work they do. This can be confusing for employers who do no fully understand the classification system. It’s best to take precaution and review positions carefully.
Keeping Accurate Time Records: Having an accurate time record of each employee can help dispute claims. Have employees punch in-and-out, especially during lunch.
Do Not Pay Employees with Cash: Paying with cash is always a slippery slope. There are too many risks, including cash payments that do not withhold proper taxes to the government. It’s better to stay safe than to be sorry later.
Training HR Staff: Training human resources personnel on how to deal with potential issues, such as unapproved overtime, can reduce the chance of a lawsuit occurring. Well trained HR staff can help resolve various wage problems before any lawyers need to get involved, saving the employer time and money.
Seek Legal Advice: Getting legal advice can save an employer from spending thousands of dollars in unnecessary legal fees and settlements.
Coordinate a Wage-and-Hour Audit: Have a law firm conduct a confidential audit. Audits are a great way to review current practices, identify any flaws and help restaurant employers take the necessary steps to becoming fully compliant.
Liability Insurance for Restaurants: Having a restaurant insurance policy can be an essential element to keeping your restaurant afloat and can help pay for your legal fees, court settlements and bond premiums as well as any hidden expenses that could be hidden. You can use liability insurance to fight off a lawsuit in court while still building up the success of your restaurant.
Restaurant Programs of America (RPA) is a national restaurant insurance agency focused solely on providing quality business insurance products and services to restaurants throughout the United States.