Restaurant sidework: Pay now or get sued later

Another day, another law suit alleging malfeasance on the part of a major chain operator. While it seems like a regular problem for these big operators, most of the time is doesn’t apply to the rest of you small chain and indie operators. This time, however, it is very clearly something you should be aware of and ensure you have a strategy for managing. 

This suit centers on how much sidework can be assigned to service employees who are compensated via tip credit. Given that only five states have eliminated reduced wages for employees that are additionally compensated via gratuities, this applies to pretty much all of you. And even in states with no tip-credit statutes, this suit has elements of which you need to be aware. Specifically, the suit claims Ruby Tuesday employees were encouraged to work off the clock. In many cases, server staff was scheduled for a specific start time and asked to wait to clock in until they were seated their first party.

No matter how you feel about tip credit and the earnings potential of your service staff, you have to appreciate, the law is the law. Consequently, it’s your fiduciary responsibility (and moral obligation as well) to follow the laws pertaining to labor in your locale. It’s especially important in an increasingly litigious society where social media can fuel a storm that actually put your business at risk.

Hardly any full service restaurants in North America require no sidework from its tipped staff. Bartenders cut fruit, prepare mixers and stock fridges, while servers prep salad stations, fill shakers, stock glass ware and make iced tea. If you are in a state that allows tip credit, much of this work can be done at significantly lower rates than the minimum wage. 

The issue is how much is too much

The rationale has always been that their overall hourly wage, which is facilitated by the restaurants existence, more than compensates them for the time they spend doing non-service tasks. National labor regulations agree with that rationale, but only to a point. More than 20% of any shift that is spent doing non-service related tasks must be compensated at the state mandated regular minimum wage. If you review the link provided by the law firm bringing the suit again Ruby Tuesdays, it should be clear what FLSA regulations allow and preclude.

A quick look at the numbers make it clear that most of us are exposed on this particular regulation. Assuming a server shift averages about five hours that means that a server can’t be required to do more than one hour of sidework at their tip credit wage. Between setting up stations, resetting them and doing the additional work assignments, 60 minutes just isn’t much time. And for bartenders there is even more work that will easily push them over the time limits.

To be direct, you can probably get away with this a little. But when it gets to double and triple the time required to complete sidework, you are setting yourself up for trouble. This is especially true of bartenders, who routinely have a large workload associated to restocking, cleaning and resetting the bar.

Here I will take a moment and reflect your personal outrage and likely that of your non-tipped employees. Many of these servers earn significantly more than the state-mandated minimum wage. In fact, it’s often the case that they earn more than you as a manager. So why should you give a “bleep” whether they have sidework assigned that might take some time away from their direct service responsibilities? 

It’s a fair question, but frankly, completely irrelevant. As small business operators, it must feel like someone is reaching into your pocket every time you open your doors. Staff, guests, the government… when does it stop?

What are restaurants to do?

Don’t waste a minute of your valuable energy lamenting that which you can’t change. It’s fairly simple to avoid these issues through better scheduling and a more organized approach to sidework. 

You may want to consider allowing servers to clock out and clock back in as a different position, so you pay them for their sidework at the federal minimum wage of $7.25. It will cost you far less to pay to them for their time than to defend yourself against a law suit. It also shows your staff that you are committed to being as fair to them as the law requires without being forced to acquiesce.