“An ounce of prevention is worth a pound of cure” – Labor Law Risks

19 Mar

In one of my recent projects, the restaurant had devised a home-grown tip disbursement sheet. One of their executives had put together the mother-of-all-spreadsheets to track the tips, tip-outs, and net tip payments to each server, bartender, busser, barback, foodrunner, and expo. Staffers did not take their credit card tips home in cash every night. They had to wait two weeks till payday. This spreadsheet had a number of mistakes that are in violation of labor law. Oops!

There are many issues these days where restaurant owners don’t even know they are risking their business and their hard-earned money. For this reason, restaurant consultants scan the business practices not only for ways to make more money but to reduce risks like these. Read the excerpts below and check the full article. Afterward, consider if you should make an appointment with one of our experienced restaurant counselors at Destination Restaurant Consulting.

Here’s an article on Mario Batali’s restaurants in NYC from Kluger Healy LLC. I excerpted parts below so you can get an idea of the dangers many restaurant owners don’t even known they have. 

Last week, celebrity chef, Mario Batali, agreed to pay $5.25 million to settle a wage and hour litigation involving his restaurants in New York City. The settlement will end a class action lawsuit and establish a fund for over 1,000 captains, servers, waiters, bussers, back waiters, runners, barbacks and bartenders. The principal claim was that management deducted, from the tip pool, an amount equal to 4 to 5% of each shift’s wine and other beverage sales.
The Chef Batali settlement, which has received a great deal of media attention, demonstrates how vulnerable restaurants are to employment lawsuits and audits. In addition, while the publicity may empower employees to file claims against restaurants on their own, several plaintiff-side law firms – citing the Chef Batali settlement – have already begun trolling for new claimants.

And here’s a list of current common snafus with restaurateurs.

  • Sexual harassment and discrimination, combined with inadequate policies and complaint procedures
  • Impermissible wage deductions, especially relating to cash register shortages
  • Invalid tip credits and tip pooling arrangements
  • Improper charges or reimbursements relating to employee uniforms
  • Misclassification of the “exempt” status of managers, resulting in liability for overtime compensation
  • Insufficient meal breaks, particularly as to minors
  • Inappropriate use of employer-provided meals to offset wages
  • Discriminatory hiring practices as to servers and other front-of-the-house employees


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