Tips on Tipping for Georgia Restaurateurs — Part 2: Navigating FLSA Compliance & Liability Avoidance
In this on-demand webinar, Larry Stine and Les Schneider offer crucial guidance on tip credits and the FLSA, helping attendees avoid legal pitfalls. They cover topics like posters, record-keeping, wage and hour attorney support, deductions, disciplinary actions, overtime calculation for dual-rate employees, and wage advances. Don't miss this opportunity to gain valuable insights and answers to common restaurant owner questions.
Click here to watch part 1 of Tips on Tipping.
Tips on Tipping: Part 2 Highlights
- Post It: Use detailed posters that comply with mandated notice requirements, including detailed explanations of any tip pool arrangements or overtime policies. A sample Fair Labor Standards Act (FSLA) poster is shown below:
- Deduction v. Discipline: Sometimes, employees will accidentally damage restaurant equipment or mis-ring orders, incurring costs to your business. If they are a tipped employee, you cannot deduct this cost from their tips because they are considered minimum wage workers at $2.13/hr. Instead, you may perform disciplinary action or assign the worker to another position.
- Keep a Record: Maintain a record of hours worked, including overtime hours, and report tips as taxable income. If you employ children under the age of 18, ensure that their schedules and job responsibilities are in compliance with the Georgia Department of Labor’s Child Labor Work Hour Restrictions.
- What to Expect in Times of Trouble: Should the U.S. Department of Labor’s Wage and Hour Division arrive at your restaurant to investigate a potential violation, it is important to prepare a plan with guidance from a trusted wage and hour attorney, who may be able to negotiate payment plans, review records, and more on your behalf.
- Overtime + Dual Rates: What if I have an employee that participates in tipped AND hourly work? How do I calculate overtime for tipped employees? Can I provide wage advances?
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Webinar Transcription
J. Larry Stine (00:00:00):
Alright. Hello everybody. This is Larry Stine and Les Schneider, and we're here for tips on tipping part two. We we started this last month, but we had to break it down into two parts because the issues get so complex that it's we have to do it in two hours. And so we're glad to share and we're gonna share our screen, but a PowerPoint. There we go. Okay. Well, Larry,
Les A. Schneider (00:00:29):
Last time, you know, we talked, we'll give a little recap of what occurred. We talked a little bit about the tip credit rules and the issue of do work came up in our last session and there is what we call a 20% rule and a 30 minute rule. You wanna kind of quickly go over, Larry, what those things mean. Sure. To the outside world?
J. Larry Stine (00:00:52):
Yeah. To the outside world. Well, basically what's happening is OSHA has changed the rules recently. Now, whether to be implemented by the courts, we don't know, but the 20% rule is that 20% of the time the server works can be used in a legitimate side work and you still retain your tip status. Wage hour recently added a 30 minute rule, which means that the, at the start of the shift and at the end of the shift, the time cannot exceed 30 minutes at the beginning or the end of the shift. So they give you an hour.
Les A. Schneider (00:01:28):
Right.
J. Larry Stine (00:01:28):
But if you take an hour at the beginning, the way the rule works is you only get 30 minutes. You take 30 minutes to the beginning and the end, you're okay. You take no time at the beginning and 30 an hour 10, they claim you don't get to do work. That's the dual work status for side work.
Les A. Schneider (00:01:44):
And when we talk about dual work, we're basically meaning work that is that away from the normal work of serving the customer. Sure.
J. Larry Stine (00:01:54):
Yeah. It's things like wrapping silverware, making salads, and making tea.
Les A. Schneider (00:01:59):
So they're not really at that point interfacing with the customer. And that's what they look at is the non tip work. And you can only spend 20% of your time. Right. Or as you indicated, in only segments of 30 minutes. Right. Not anything longer than that. Or they would lose the ability to have that employee qualify for the tip credit. Right.
J. Larry Stine (00:02:20):
And it has to be side work.
Les A. Schneider (00:02:22):
Right. It just
J. Larry Stine (00:02:23):
Can't be any job in the restaurant. They can't have them cleaning
Les A. Schneider (00:02:27):
Bathrooms, for example. Right, exactly. And again, as you say, wrapping silverware, making the iced tea, things like that. Right. All right. And on top of the do work, of course there's basic tip pool rules and there is three basically the traditional tip, the minimum, and then the service charge. So let's, let's talk about that a little bit. What exactly is the traditional rule? The traditional tip?
J. Larry Stine (00:02:53):
The traditional rule is fundamentally that you take search, you can pay them $2 and 13 cents an hour, take the remaining $5 and 12 cents towards the minimum wage for the federal minimum wage, and they have to retain their tips or they can share it with a oo, with traditional servers types. So like waiters, bus boys, food runners, bartenders, you can serve it with, but you can't serve it with the, the back half or you can't serve blue cooks, you can't serve it with a dishwashers and you can't never serve it. Share with managers. That's their traditional tip rule plan.
Les A. Schneider (00:03:41):
So in essence, again, people who are serving the customers mm-hmm. <Affirmative> who are not in the back of the house and who are not members of management, that's the traditional rule on TIP rules. Correct. Alright. And then we talk about, as we list here, the minimum. Correct. What exactly does the minimum mean?
J. Larry Stine (00:04:00):
Well, what happened in 2018, they amended the ACT and they now allow you to pay the tipped employees minimum wage. Right. 7 25. Right now, the federal and it allow, and they still have to keep the tips, but what happens now is the tips can be shared with all of the non-manager, non supervisor employees in the restaurant. So if you're at a high end restaurant and everybody's coming in because the cook is the pole, and yet the servers are getting all the money from the pole, the chef's not, it seems a little odd to a lot of people. So this rule allows you to share it, share it with the top, top chef, as long as he is not the manager or the supervisor.
Les A. Schneider (00:04:49):
And again, the problem there is, is that if you're gonna share it with that larger group of people, then you're no longer gonna get the benefit of only paying the employee two 13 an hour. You've got to pay the seven and a quarter an
J. Larry Stine (00:05:02):
Hour. Yeah, that's
Les A. Schneider (00:05:02):
Right. So it there, you may be able to, to spread the tips to a larger group of employees you may be able to retain and may easier to retain other employees in your employee, especially the ones that are contributing to the creation of the meal. The problem you run into, it's gonna cost the restaurant that much more money between the seven and a quarter and the two 13. Correct. Okay. Yeah. So then we have the final one, which is the service charge, which is basically an automatic mandatory charge that goes on the checks. And that can be shared by everybody. And anybody except in those cases, two things can occur. Number one, some jurisdictions on the state level will, will, will tell the, the restaurant involved that that service charge is subject to sales tax just as the rest of the meal ticket is. So it, so if the restaurant doesn't charge the sales tax, the state, the state, in this case, Georgia could come back and try to collect it from them. And the other side of it is, the flexibility of it is, is that the particular business can use that money across management, across everybody.
J. Larry Stine (00:06:19):
It's their money. It's, it's, they don't, it
Les A. Schneider (00:06:22):
Doesn't belong to the employee where the traditional and the minimum belongs to the employee.
J. Larry Stine (00:06:27):
Right. And there's another advantage to having the service charge. 'cause You can set your tipped employees up as commissioned employees to get for substantial that, and we'll talk to it, but there's any, there's an overtime exemption if you set it up correctly with the service charge. Right. You can't do it, the service charge. You can't.
Les A. Schneider (00:06:46):
Okay. So there's other stuff one has to worry about when it comes to the wage and hour oil. When it comes to tips, and this is some of the groups we have, the first one is you need to use detailed posters to comply with the notice requirements. And that would be if somebody is on a salary based payment and you are gonna pay overtime on the fluctuating work week as opposed to time and a half you would have to make sure that you have proof that the employee is aware of the arrangement. And in essence has it shown that there is an agreement to that arrangement. Right. And then the, is there anything else you think you need to add on that point, Larry?
J. Larry Stine (00:07:30):
The, the detailed poster is something that we were, we suggest it is not a requirement. The the notice is you've gotta give 'em certain notices about the minimum wage, the overtime. That's
Les A. Schneider (00:07:42):
The federal poster that would have to be posted, right?
J. Larry Stine (00:07:44):
No, there, there's a, there is a poster, but it is not detailed. Okay. The, the problem is, what happens is the fairly standard stack require that you give notices to the employees about the detailed explanation, the tip pool arrangements. And that's what they claim. And so what, what's happening is we're having proof problems because what happens anytime we get a lawsuit from Dr. Tip employees, they always throw in that you didn't give us any notice required by Section three M. And then what happens if you don't have it in writing and you don't have it done correctly? You end up with a he said, she said, I you did not tell me. Yes I did. And off we go to trial.
Les A. Schneider (00:08:30):
And, and in most cases, the juries and sometimes even judges really put a kind of the burden on the employer that they didn't give that type of notice. And if it's a swearing match, more often than not, I think juries and judges expect employers to be able to give that information, but show proof that they gave that information. And that's what we're running into with a lot of the litigation.
J. Larry Stine (00:08:58):
Yeah. And you're no doubt about it. One time we had a jury, we lost because it was a different slightly thing, but the jury punished us because their client did not have the documentation to support the testimony. And they punished us and they, they roof for the other side. So
Les A. Schneider (00:09:12):
They expect businesses to act businesslike to really be able to show that they ran the railroad in a way that the rules were clear and they were shown to the employees and the employees had notice of the arrangement. Right.
J. Larry Stine (00:09:28):
So for example, and this is related to which was the new policy is is what we had done is with a lot of people, we had a sign of notice, okay? Mm-Hmm. <affirmative>, I hereby certify that I was instructed about the tip. Well, and we give the manager to do it. Well, what happened happened to me in more than one case now is they don't do it all the time. So I've got sign-on notices that said, I gotta explain the tip pool from half the employees,
Les A. Schneider (00:10:02):
But not the other half, but
J. Larry Stine (00:10:03):
Not the other half. And now the other half comes in and says, I don't have it. And the jury's going, well, you did it for oh, so and so and so, but you didn't do it for them. That means we're gonna believe them because you didn't do your paperwork.
Les A. Schneider (00:10:13):
So there's two problems. Number one, having a complete absence of documentation. Right. And, and then the other one is having a policy and not having sufficient documentation to show that you were consistent in that policy and you treated all employees the same way.
J. Larry Stine (00:10:29):
Yeah. So, so what we have done for our clients is we have prepared a detailed poster that fundamentally lays out everything required by the statute. And it's a very, basically we've taken the provision of loss as you have to explain to them section three and blah, blah, blah. But we've built a poster that quotes it in Toto. Right. And then we've made modifications 'cause certain states have more detail than others. So we've modified it for the state. And what we proposed to do is put it up there and put a date on it right by the normal F L S A posters, which is
Les A. Schneider (00:11:04):
Right. That one. And again, you raise a, you raise a very good point. The problem with the people run into is that there is the federal law governing all this, but there are certain states that have requirements that go beyond the federal law or are different than the federal law. And if you're in one of those states, you gotta follow those procedures also, or you're gonna have a problem. For instance, in California, the whole issue of tips is totally different than it is in Georgia. There there is no tip credit,
J. Larry Stine (00:11:34):
There is no tip credit in California. So if we're talking about tip be you in California, guess what? They don't, they don't exist. They took it out in the state law, right? North Carolina, for example, has a certain requirement for TIP rules that you have to go back and look and they put a percentage on how much, much of their tips they can share. They literally say, you can only share this X percentage. Federal doesn't do it,
Les A. Schneider (00:11:58):
Do that. But the, the thing about the wage and hour law that is different than maybe other federal laws is the federal law is not always supreme, so to speak. No. In other words, it's the minimum standards that you have to follow. And states can put tougher standards on top of that. And that's why it's important to look at your particular state law to make sure you're not only complying with the federal law, but also the state law.
J. Larry Stine (00:12:23):
Yeah. I mean, there's a reason why we have supremacy because sometimes it gives us uniform application ability to comply. When the F L S A says, you can do it more superior, you gotta look at your state law and then you gotta look at your local ordinances, right? Because some cities have their own local wage R law, San Francisco and New York City, for example. Right?
Les A. Schneider (00:12:44):
The way the minimum wage would be higher, let's say in New York City than an upstate New York. Yeah. That could be one example. It's, and they could do a number of other things. So it is important not to just put your head in the sand and assume I'm gonna comply with the fail Labor Standards Act, but I don't need to worry about these state laws. You do.
J. Larry Stine (00:13:02):
You do and you do and, and make certain we, we propose. And if you want a copy of proposed, we've done, let us know. We'll send you the more detail when it was done. Last session, we, we put the poster up that we suggested,
Les A. Schneider (00:13:16):
Right? And I think it's also in our wage and hour book that west has published. So a lot of the forms relating to this law is, is included in that book. So if any of you have Westlaw or access to it, you can look at that information also. So you saw the F L Ss a poster. One of the other areas, of course, is this area of deductions where, you know, what it may west say, I can resist anything but temptation. So of course we've got so many employers sometimes that really get upset about the fact that an employee does something that they think is either incorrect or they think they have certain costs and they want to get reimbursement from those costs from the employees. And the ones that Larry and I run into very often, number one is charging employees for uniforms. And, and let's talk about that first. If somebody, if you have an employee, Larry, that is operating under the tip credit rules, can you take deductions from their checks for the uniform expense? If there is a certain uniform that's required?
J. Larry Stine (00:14:27):
The answer is no. Oddly enough. Which is so weird. They get to the restaurants. I think sometimes crazy is you can have somebody making four or $500 a day and they're still minimum wage employees.
Les A. Schneider (00:14:40):
That's right. So
J. Larry Stine (00:14:42):
The rules about deduction from minimum wage still apply. So you have uniforms. Now, uniforms. What's uniform? Like if I've got a shirt that says Stein Restaurant, right? And I make everybody wear my shirt that says Stein Restaurant, I have to pay for it
Les A. Schneider (00:15:02):
A hundred percent for the
J. Larry Stine (00:15:03):
Servers. Now if I've got the non, the non minimum wage employees, the cooks and all them, and make more.
Les A. Schneider (00:15:09):
So you cannot charge the employee for that uniform? No. Okay. No. So let's say Larry, you don't have stuff with your insignia or your name on it, et cetera. It's a basic white shirt. And in this particular black pants photo here, you see the the women and the men, they're, they're wearing a white, a white top, and a and a black bottom. Right? So if that's the case, and that's just generic clothing, can you charge them for that?
J. Larry Stine (00:15:37):
Well, you can set a rule saying you're, you've gotta come in and have a white shirt and black pants and you don't have to pay them for it because it's not a uniform. You can even provide black shirt, black pants and white shirts and saying, Hey, if you want to buy 'em from me,
Les A. Schneider (00:15:54):
You can, you
J. Larry Stine (00:15:54):
Can. And that, but it has to be voluntary. Right?
Les A. Schneider (00:15:57):
You cannot take it outta their check against their will.
J. Larry Stine (00:16:00):
Right. They have to, they have to say, yes, I wanna buy 'em from you. And then that's not considered a deduction because you're just selling it like anybody else for white, you know, long sleeve short. Well, Larry,
Les A. Schneider (00:16:11):
Lemme lemme get a little more specific with you. So nobody slips up. Let's assume that the employer is says, well I got this great deal on this white shirt and these and the black skirt and you know, it's $10 each. I can just take it outta your check. Is that the best way to handle it? Or is the best way to handle it? To get the employee, to pay the employee all the money they're owed and then get a check from the employee for that uniform? What would you suggest? Well,
J. Larry Stine (00:16:43):
If you could get 'em to do the other one, that's, that's the better one. Just because the, the paper trail is different. However, if you're gonna show the wage an hour that this is voluntary and they voluntarily did it, that's the key.
Les A. Schneider (00:16:57):
And, and that goes to my point then the voluntary part. If they sign something that says, I voluntarily agree that this thing, this amount of money can be taken outta my check or write a check, then you've got the documentation. Yeah. If it's just verbal discu discussion where the employee says, sure, you can take it outta my check, then we know what happens. The next thing you hear is, well, I never, I never agreed to that. Right. Or they, we were forced to do it. We thought that if you didn't do it, you'd be fired. Yeah. So what we're saying is either get the documentation clear that you have in the file, but if not, then let them just pay you for them after they receive their full wages. Right.
J. Larry Stine (00:17:41):
It, it's a little harder for them to argue that I signed a check and I was forced to sign a check, then you made a payroll deduction because they have nothing
Les A. Schneider (00:17:49):
To do with and they have no control over the deduction. Alright. Beyond uniforms, we have also, people break things or people make mistakes. So dropping, breaking the dish doing whatever else they would do. One
J. Larry Stine (00:18:05):
Of the ones that drive people crazy is, oh, I accidentally sold this a hundred dollars bottle of wine
Les A. Schneider (00:18:10):
For $10, 10. Right? So let's say we talk about breakage or errors and the employer is sick of it. Can they take that deduction out of the person's check before the person receives their check? And the answer to that is no. Correct? No,
J. Larry Stine (00:18:26):
You, the problem is, once again, these are minimum wage employees and any deduction except for certain limited things is called an improper deduction. The weird thing is, for the language, there's an improper deduction from minimum wage, not necessarily an improper deduction from wages above minimum wage. But for the problem with the servers is the, our minimum wage employee.
Les A. Schneider (00:18:49):
But because of its TIF credit, now let's say there's an employee and they're not a TIF credit employee, but rather their employee that makes $20 an hour,
J. Larry Stine (00:18:58):
Right? And the
Les A. Schneider (00:18:59):
Issue of breakage or error or mistakes like the wine issue we talked about, let's say they're not tipped and the employer says, well, you know something on the first 40 hours I'm gonna respect the minimum wage of seven and a quarter. Right? But I'm gonna take out the difference between the $15 and the seven and a quarter for the breakage or for the improper bottle of wine. So can they do that?
J. Larry Stine (00:19:27):
They can.
Les A. Schneider (00:19:29):
All right, that's for the first 40 hours, right? On the 41st or the 42nd hour, which would be an overtime hour. Does the Department of Labor wage and hour division treat that the same way? Or they treat it differently? They
J. Larry Stine (00:19:41):
Treat it differently and they say you can, once you get to overtime, you cannot make deductions that go into it. So,
Les A. Schneider (00:19:47):
So in our example, what would happen is that if somebody made a mistake on a bottle of wine and a hundred dollars made a hundred dollars mistake financially mm-hmm. <Affirmative> or broke $20 worth of dishes between the $15 and the seven and a quarter, they could take the deductions on the first 40, but on the 41st and the 42nd hour, they couldn't touch it. Even though that's time and a half and it would be a larger amount of money. They can't touch that at all. Correct? Yep.
J. Larry Stine (00:20:18):
So in the discipline, we got an example on the next slide.
Les A. Schneider (00:20:22):
So it, what what we're saying here is that if you can't take the money from them, what can you do so that the incident has an impression on the employee and it doesn't happen again, again and again. And now we're down to discipline and docking. And in this example that Larry has set out, the employer, the server in this case got $1,500 worth of, of tips and the employer is paid the two 13 an hour and he takes the tip credit, one check was rung up incorrectly with a hundred dollars error. The survey's been making this mistake a lot. What do you do? So Larry, what do you do? Well, you don't
J. Larry Stine (00:21:01):
Deduct it from tips because believe it or not, even though they were $1,500, they're a minimum wage employee and you just made an improper deduction. At a minimum, if you get sued, you would have to repay the a hundred dollars and then pay the additional $5 and 12 cents and power for that week for
Les A. Schneider (00:21:25):
Every hour that that person wants
J. Larry Stine (00:21:27):
That entire week. And it could be worse 'cause they could liquidate it.
Les A. Schneider (00:21:30):
Right. And that would be liquidating basically is just doubling the amount of money. Yep. Yep. Now Larry, do you lose the tip credit for that week and other weeks? Or just that one week?
J. Larry Stine (00:21:41):
Well, that's a little argument between plaintiff counsel and defense counsel. Plaintiff counsel's time take a position where that's something you do, you lose it all the time. Right. I don't think they're correct. And defense counsel argue it's a work week by work week analysis. Analysis. And that's the reason the deduction can be a work week. So you don't do this all the time. So you might lose it one week and then you have six weeks to do. Right. Get to keep it. So that's the reason the notices come down is because you don't give a notice. It, it, it impacts every guy.
Les A. Schneider (00:22:10):
Right. So at the end of the day, just taking the money out is gonna be a mistake. Correct. So is there disciplinary action that can be taken to impress upon the employees that this type of action is not gonna be acceptable?
J. Larry Stine (00:22:27):
Yeah. You can reprimand them. You can suspend them without pay for a number of days, but you can't take the money from them to repay. But
Les A. Schneider (00:22:36):
What you can do is assign them tasks that are not as lucrative in terms of perhaps in this case, making $1,500 in tips. They can do certain prep work that they could be paid minimum wage for. They can clean the toilets, the bathrooms, the parking lot, et cetera, and or they can be told not to come in, be suspended. Right. For a, a number of days. Yeah. Because of the error. That doesn't get you in trouble with wage out ne
J. Larry Stine (00:23:08):
Neither one, neither one of these do. And I kind of like the second one 'cause it's creative because it's kind of like I'm demoting you for the day. You're gonna GLE towards That's right. And it really makes the point to all, all the other servers that, hey, you know, he's still having to come to work. He's only making 7 25 instead of, you know, $500 or $300 for the day. That's a real punishment. Okay,
Les A. Schneider (00:23:36):
So and so <crosstalk>, so a different, a lower paying job a suspension mm-hmm. <Affirmative> or even termination is perfectly permissible. Yep. But not any docking of money. You do that you're being pennywise and pound foolish 'cause it's gonna come home to haunt you later on. It is. And then they're gonna look at not just that employee, but they're gonna check your records for other employees and what else you did as far as making deductions.
J. Larry Stine (00:24:05):
Yeah. Once they, you know, if you're docking people for something and you get sued, all of a sudden you're gonna be turning over all of your payroll records and all of your deductions. And if wage Java comes in for the investigation, they're gonna get you two years and they're gonna look, they'll find every one of them and charge,
Les A. Schneider (00:24:22):
And they can go back two years, three years for willful mm-hmm. <Affirmative> and again, liquidated damages, which is basically doubling, doubling what the shortage was.
J. Larry Stine (00:24:32):
Right.
Les A. Schneider (00:24:33):
Okay. All right. Next we look into the rules on credit cards. Obviously in the restaurant business today, it's changed dramatically over the years. So many businesses, such a high percentage of business today is paid with with a credit card. Right. Even the McDonald's of the worlds are taking credit cards. Oh yeah. Cash seems to be a a lost concept anymore between people wanting to get miles on their cards and points and other affinity benefits. So many people are playing with credit cards. So when the tips are on the credit cards, Larry, they still belong to the employee. Correct. But if the employer has a charge that he is charged by the credit card company for the, for the amount of money, can that money that charge be subtracted from the tips that that employee is to receive? They
J. Larry Stine (00:25:27):
Can, because the reality is that the company, let's just say it's a $10 tip with a 3% charge, 30 cents companies getting $9 and 70 cents back from the credit card for his tip. And you can really, all you're doing is taking the nine 70 and giving it back to him.
Les A. Schneider (00:25:46):
Right. So, so
J. Larry Stine (00:25:47):
You're not doing, you're not making anything.
Les A. Schneider (00:25:49):
You're giving him the net tip basically. Correct. And it, and it's not as if that other money is going into the restaurateur's pocket, it's going into the credit card company's pocket. Mm-Hmm. <affirmative>. So therefore, if it's not his money, it's okay to subtract it. Now, let's say you have master charge visa, discover American Express. If each of those have different percentages, do you have to be precise and make sure you take out the right percentage and can't just use an average percentage?
J. Larry Stine (00:26:24):
Well, you can't overestimate the credit card percentage.
Les A. Schneider (00:26:26):
So basically the answer is you gotta use the percentage that you're actually being charged.
J. Larry Stine (00:26:31):
Yeah. Either that which can be a be a hassle. It's gonna be a hassle of The problem is, as you well know, American Express charges more for their credit cards than a debit card does. There are different percentages taken out. But if you do it, you can do it precisely. But if you just wanna have a simple way to do it, the problem is what happens is they get a little greedy
Les A. Schneider (00:26:57):
And they take the highest
J. Larry Stine (00:26:58):
Percentage. They pay the highest percentage instead of the,
Les A. Schneider (00:27:00):
The lowest.
J. Larry Stine (00:27:01):
The lowest.
Les A. Schneider (00:27:02):
So again, for administrative sake, if the restaurant wants to, they could use the lowest credit card charge they have for all their cards and apply that to everything. To all the, all the charges they receive. But if they don't wanna lose whatever amount of money that is, they have to use the specific charge that they are charged by the credit card company.
J. Larry Stine (00:27:24):
Yeah. Yeah.
Les A. Schneider (00:27:25):
Okay. Alright. So now we go to the concept of overtime. Last time we spoke about people who are getting tip credit and obviously it was clear that a waiter or a waitress or a server just to be sexually neutral <laugh> a server is certainly subject to overtime. But there are other people who work in a restaurant who are subject to overtime and we have to make sure that those are done correctly. So as far as a manager or an assistant manager, Larry, are they subject to overtime or a not
J. Larry Stine (00:28:07):
Depends.
Les A. Schneider (00:28:08):
Okay. That's a lawyerly answer. It's
J. Larry Stine (00:28:10):
A very lawyerly answer. <Laugh>, but it's a very accurate, because it depends on how you pay them in the duties you give them. There is
Les A. Schneider (00:28:19):
A and what they do, right. And
J. Larry Stine (00:28:20):
What they do, there's a salary requirement right now that's $684 and wage an hour. And Department of Labor is currently considering raising that again.
Les A. Schneider (00:28:28):
But if you make below 6 84 an hour and you are
J. Larry Stine (00:28:32):
6 84 salary,
Les A. Schneider (00:28:34):
I'm sorry. I'm sorry. If they make 6 4, 8 hour, they'd really be doing well. Yeah. We, if they made 6 84 a week in salary Right. They could be eligible to be exempt if they're performing the right duties. Correct. Now, if they are paying less than that salary per week, no matter what their duties are, are they subject to overtime?
J. Larry Stine (00:28:57):
Yep. And there, and then you end up doing calculations for overtime for a non-exempt salaried employee, which we'll explain 'cause it's Right, it's different. And there's, and there's a good reason to use it sometimes. So,
Les A. Schneider (00:29:08):
So to put it simply, there are two things you need to do. First thing you need to do is say, what is the salary that I am paying for a manager or assistant manager? Secondly, when you look at the duties of those people right now, if I just, even though 6 84, and there's a reason I'm not an accountant, but let's assume that was 20 bucks an hour. If I pay somebody an hourly rate, Larry Yeah. But call them a manager even though it exceeds 6 84. Is that okay? Or do I have to have it as a salary?
J. Larry Stine (00:29:45):
Well, the, the regulations allow you to pay an hourly rate as long as you guarantee the number of hours work. So if I'm telling this guy I'm gonna pay you $20 an hour for 40 hours, the answer is yes. 'cause That's 800 bucks. What happens if you just say, I'm gonna pay you 20 bucks an hour and there's no guarantee. See, they lose the exemption immediately.
Les A. Schneider (00:30:05):
What would happen, Larry, if I say, okay, I'm gonna work you $25 an hour mm-hmm. <Affirmative> at $50 an hour and as long as they guaranteed and it exceeds the 6 84 that you talked about, is that acceptable?
J. Larry Stine (00:30:22):
Well, the funny thing is, the answer to that is no. Because what happens is the guarantee has to be reasonably related
Les A. Schneider (00:30:31):
To full-time work to
J. Larry Stine (00:30:32):
The work they're doing. And what happened was, there was some employer, a long time ago, they got really fancy and had some people in a casino and they ended up, you know, they're getting such a high hourly rate that they guaranteed them $13, mean 13 hours a week. And they met the minimum at that point. Right.
Les A. Schneider (00:30:50):
They
J. Larry Stine (00:30:50):
Did not get the exemption because the reality is the court looked at it and said, what you're really doing, it's just picking guaranteed 13 and they're never working that. And they came up with this concept of reasonably related to a normal work week, which was later adopted into the regulations.
Les A. Schneider (00:31:05):
And a normal work week normally is a 40 hour work week. Yeah. So in, in order to avoid the cuteness, the best thing that an employer can do is come up either with the sal the, the minimum salary that we talked about, but if they're gonna do hourly and it's gonna be a guaranteed hourly, it should be based on a guaranteed hour of 40 hours or 35 hours, et cetera, something. So they do it. Just to throw in, you know, nowadays, Larry, with, with Covid coming through the world, and most people, not most people, but a lot of people have decided maybe coming to work isn't all that important. That they can do a lot of the work that they're doing at home. Now in the restaurant business, I see that would be problematic, <laugh>, but in the event that somebody was able to work at a gig with their employer where they either were doing the books or doing stuff for the restaurant from home, the same rules apply as to the salary and what their position is and what they're doing. Correct.
J. Larry Stine (00:32:10):
Correct. Yes. That, that there's no difference between working from home. I mean, in a restaurant you may have your bookkeeper from Right, for example, and the bookkeeper, depending on the duties and the salary may or may not be exempt on the administrative.
Les A. Schneider (00:32:24):
Right. And, and it would be important if in case they're on the line of being non-exempt that there'd be some, some record of the hours work. Because if you don't have that, again, the employer employee could easily say, well, I work 20 hours that day, or I work 15 hours, and the employer really doesn't have anything to suggest that that's not the case. Correct. many times some employers have people log onto their computers, put a time in when they're starting and, and do a time out when they're, when they're either taking a lunch break or they're, or they're finishing their day's work.
J. Larry Stine (00:33:04):
That's actually what we do for our staff is we have put it on the computers.
Les A. Schneider (00:33:07):
Right. But the documentation, once again, needs to be there or the employer's not gonna have anything they're holding in their hand other than air.
J. Larry Stine (00:33:15):
But what happens is if you don't have the good hour rec records, you end up with a case of Anderson versus Cleon pottery, the Supreme Court from the 1940s decision that basically says that if you don't keep correct records, you can't be heard to complain that the employees have to estimate the reasonable hours. And I promise you, I've never had an employee give a reasonable estimate of hours. That is not a whole lot higher than what the company thinks they're working.
Les A. Schneider (00:33:43):
Especially when they're working from home.
J. Larry Stine (00:33:45):
Oh, when they're working from home, it's, it's, they're they're doing laundry, they're doing washing, they're doing childcare, but they're on the clock.
Les A. Schneider (00:33:51):
They're on the clock. Yeah. All right. Well, let's talk a little bit, Larry, about the we talked about overtime for the managers and assistant managers. What about for employees that have dual rates? In other words, they may be working for $8 an hour at a certain job and then in a different job they're working at $15 an hour. Right.
J. Larry Stine (00:34:13):
So
Les A. Schneider (00:34:13):
Is there more than one method of being able to do that? Sure.
J. Larry Stine (00:34:16):
And we're going to do the how to calculate the OT for the dual rates, the tipped employees, the bonuses is gonna be a problem. And then the non-exempt. So let's go to the page on
Les A. Schneider (00:34:28):
Okay.
J. Larry Stine (00:34:28):
Dual rates. So we have, here's an example. Our employee works as a server for 30 hours at two 13 an hour, takes $300 in tips, and then works 20 hours as a cook at $20 an hour. And overtime is calculated falling. That's not unusual in some of the smaller restaurants, they,
Les A. Schneider (00:34:45):
They, people
J. Larry Stine (00:34:46):
Have people who do cooking, people
Les A. Schneider (00:34:48):
Are jack of old trades. Yeah. So they're doing it all.
J. Larry Stine (00:34:50):
And you gotta keep up with whether it being a server or whether it being a
Les A. Schneider (00:34:54):
So let's look at the math. The fir the first 30 hours as the server, they're making the $2 and 13 cents an hour. So that takes care of the 63 90 mm-hmm. <Affirmative>, then they're having 30 hours at seven and a quarter. All right. And then 20 hours at $20. So that would equal 217 50 plus the 400, which would equal $617 and 50 cents for total straight time pay for that week. So, but they've worked 60 hours in the week. So now the question is how much overtime do they owe? In that case, you take the total amount of wages for that week, which is the 6 17 50 divided by 50, you're coming up with a regular rate for that particular week. In this case that's 1235 an hour. You multiply that times 10 overtime hours times one half, not time and a half, but one half. Right. And then therefore you get an additional $61 to 75 cents of overtime pay that would be added to the 63 90 plus the 400, which is the cook pay. And the 61 75 overtime that pay for that week is $525 and 65 cents. And the employee gets to keep all the tips they made that week. Right. Which is the additional $300. Right. So in that particular week, they got $825 and 65 cents. So that is the way you have to break it out. And although it appears tedious, it is the way, it is the profitable way to do
J. Larry Stine (00:36:45):
It, it's the easier way to do it. And
Les A. Schneider (00:36:47):
You think it's the easier way. Now there is another way, and we'll look at that example.
J. Larry Stine (00:36:52):
Okay. So what happens, and the o the other way you can do dual raise is you can keep up with what job they're doing between 40 and under and over 40. And then you can pay 'em at time and a half the rate for which they're working. So they're working at a server, they're basically 7 25, you can pay that as a code. They're 20.
Les A. Schneider (00:37:16):
So what you're really analyzing there is from the 41st, 41st hour on Correct, you're looking at the particular work that they are doing. And if they're doing the higher price work, they're gonna get more overtime that week than if they're doing the lower price work that week. Right. And we'll lay out the example for you here. We, they get four hours at seven and a quarter times one and a half. That equals $23 and 2 cents. They have the six hours at $20 times one and a half at 180. So the total overtime pay that week is 23.02 plus 180, which is 2 0 3 20. So therefore the total pay is 25 hours times two, 13 to 15 hours times 20 plus the $203 20 cents. Now Larry would, they may also would be getting the tips, correct?
J. Larry Stine (00:38:20):
Yes.
Les A. Schneider (00:38:20):
For that week. Yeah. They
J. Larry Stine (00:38:21):
Get the take the tips. So
Les A. Schneider (00:38:22):
You would be getting the 5 56 you would be getting, the other is 300, correct? Right.
J. Larry Stine (00:38:27):
Yeah. And I, we're gonna go to the tipped employees and we, we find that restaurants screw this up
Les A. Schneider (00:38:36):
All the time.
J. Larry Stine (00:38:37):
All the time. And I'll explain, I'm gonna show you how it's done and then I'm gonna explain what the restaurants and the places with tip credits do wrong. So we're gonna have it. One is a server working 50 hours at two 13 and there's a thousand dollars in tips. Once again, we, we we're using one of the higher price servers.
Les A. Schneider (00:38:57):
This, this doesn't happen in McDonald's.
J. Larry Stine (00:38:59):
No. Or
J. Larry Stine (00:39:02):
Straight time pay is 40 hours times two 13 an hour suite equals 85 20. That's simple. The overtime pay is 7 25 times time and a half times the 10 hours minus the five, 12 times the 10 hours. This is the place in which the mistake is made. Right. What happens is that a lot of restaurants go, oh, I'm gonna pay two 13 times time and a half times 10 hours. Right. And it's gonna come up with a lower amount of, of money because you only get the debt credit at 5 25. So when you take the overtime hours at two 13, do time and a half, you're taking too much tip credit, you're taking time and half to tip credit, which you can't do. Right. So you have to do it this way. You gotta subtract the, the maximum amount of tip credit you can get per hour is five 12 and the other math doesn't work. So then here you got the ten eight $10 87 5, which is 7 25 times 10 hours minus that five 12. And you come up to 51 20. And the overtime pay is 1 0 8 minus the 51 20. That's the tip credit, remember? And you come out with an overtime pay of 57.
Les A. Schneider (00:40:29):
So, so basically what happens is they get the 85 20 on the straight time mm-hmm. <Affirmative>, they're getting the 57 22 mm-hmm. <Affirmative>, which is the additional overtime. Right. And they're getting the 1 42 75 plus they're keeping all their tips. Correct. But as you can see in our example, that second line is where they make most of their mistakes.
J. Larry Stine (00:40:50):
Right.
Les A. Schneider (00:40:51):
Okay. All right. So now we'll talk to you a little bit more about some of the other common mistakes that over time we see among employers, especially in the restaurant business. And this, this is the example. This is somebody has 40 hours of pay, they're getting two 13 an hour, plus they're getting 10 hours at two 13 times one and a half. In that sense, they're saying, well, I'm paying two 13 and I'm paying one and a half of that. So that should be fine. So they come up with the $85 plus the 31 95 and they're gonna pay 1 17 15. What is wrong with that, Larry?
J. Larry Stine (00:41:36):
Well, they underpaid it is as we showed in the other slide, is 1 47, 1 42 75, they paid a hundred. 1715, they made a $25 and 60 cents error off the 10 hours of oversight.
Les A. Schneider (00:41:50):
So they should have corrected it. And where their mistake was, was in the additional 10 hours. Correct?
J. Larry Stine (00:41:58):
Correct. Yeah. And remember, if you get sued, you owe that $25, they're gonna double up much less the attorney fees that they're going to do.
Les A. Schneider (00:42:07):
All right, next, let's talk about the overtime. For a non-exempt salaried employee. Probably one of the biggest, most elementary points in wage and hour law is the fact that so many people believe that if you're on a salary, you're not subject to overtime. That is one of the biggest lies that ever has occurred in wage and hour law. So again, not ev you, although in some cases to be exempt, you have to be on a salary. It doesn't mean that if you are on a salary, you are automatically exempt from overtime.
J. Larry Stine (00:42:42):
Right. So a lot of times when I go in to do a wage hour at a place and I find that the receptionist is salaried
Les A. Schneider (00:42:49):
And therefore, and
J. Larry Stine (00:42:50):
Not being paid overtime that I'm in for a long day,
Les A. Schneider (00:42:53):
You, you, and you know that the, if the employer has made that mistake, oh yeah, they've made a number of others. Oh, and you can take that to the bank. We've been there before. Yeah. We,
J. Larry Stine (00:43:03):
We've seen that too many times. That's not it. Right. So what happens is you can pay overtime for a non-exempt salary. And believe it or not, it's a very employer friendly provision. And what we do in wage, our audits a lot of times is when we get to the gray area where we're a little worried about the exemption,
Les A. Schneider (00:43:22):
Right.
J. Larry Stine (00:43:23):
We move them to a non-exempt salary, salary requirement,
Les A. Schneider (00:43:27):
Which means they're still subject to overtime, but they, the manner in which the overtime is paid is not as expensive as paying somebody time and a half of an hourly rate. Yeah. And this is the example that we're going to give you, where you have a non-exempt salaried employee, let's say the bookkeeper or the receptionist, they're paid $800 a week and one week they work 50 hours. They normally just work a 40 hour schedule in the week that they work 50 hours. This is what you do. You take the $800 that they're at salary base and you divide it by the number of hours that they have worked that week. And that's the week, which would be an overtime week. In this case, the person worked 50 hours. Their rate, their regular rate for that week is $16 an hour. We take to figure the overtime, you take that hourly rate, you again multiply it by one half 'cause you've already paid the regular rate straight time and you multiply the 16 clo times one half times the number of overtime hours, which in this case is 10.
Les A. Schneider (00:44:40):
So that comes out to $80. That $80 is the overtime that they earn in that work week. And in this case, the total amount of wages would be $880. If they worked twice as many hours or they worked 45 hours, you would plug in the same denominator where the hour part is listed and come up with a different regular rate for that week. And you do the math the same way. This is perfectly legal. This is the fluctuating work week for purposes of using overtime. The important part is, we talked about in the beginning of the presentation is you should have some sort of documentation to indicate that this is the manner in which this employee is going to be paid. Right. As opposed to the traditional time and a half hourly rate.
J. Larry Stine (00:45:35):
There's a couple of other points. So the first thing is, is when they work less than four,
Les A. Schneider (00:45:40):
You have to,
J. Larry Stine (00:45:41):
You still have to pay 'em $800. Wage hour comes in and you're docking, they work 39 and you dock 'em $20,
Les A. Schneider (00:45:47):
You're in trouble. You're,
J. Larry Stine (00:45:48):
Well, they're gonna come out with a conclusion. You're paying them $20 an hour. And by the way, the overtime here is 80. If, if you're paying 'em 20 bucks an hour, it's 300. Right. So you say paying $220 in overtime.
Les A. Schneider (00:45:58):
That's an excellent point. The thing about having somebody on a salary in plain terms is you cannot bust the salary if you're committed to the $800 or the salary base. You do that. Now I say that, but of course if there is a sick leave policy and the person gets five days a year, and then after that they're docked for whole day absences, that's possible. But that may be a seminar for another day. But at the, but if you have a salary based employee, be very careful about documents even for a whole day absence if you don't have a policy in place that allows for that in some manner. And certainly do not dock for partial day absences. Right. That's also the kiss of death.
J. Larry Stine (00:46:48):
I will tell you one other thing that surprised me about this is my, after I was for the Federal Government Department of Labor, 15 years and I did an audit and I went in and found a couple of people, non-exempt upper management had no problem saying, okay, you're right. Right. And at that time, we went in hourly. The pushback I got was from the employees because they saw being moved from salary to hourly as a social demotion. It
Les A. Schneider (00:47:15):
Was an insult.
J. Larry Stine (00:47:16):
It was an insult. And believe me, I had one lady who called me for 18 months giving me hell every time she called me because she wanted to be salaried. This is based upon that. A lot of times we do audits, we now, now make 'em salaried, non-exempt, salaried in that gray area. Right. But they're still getting salary rather than reducing 'em. Because believe me, I learned a lesson and then hourly. So there is a benefit. The employees do actually see a benefit from being salaried. And it's just not a pure employer trying to take advantage of the employees. Some employees prefer it this way and they do like the fact they get a guaranteed
Les A. Schneider (00:47:53):
Amount. Right. They like the guaranteed check. And again, there are policies like sick leave policies and vacation policies, whatever that can be worked into this. But let us very, for people who have been doing this for a lot of years, be very careful. If you're an employer and you bust that salary in a week, it is, it, it is pain that you will, that it will be the gift that keeps on giving for you and it's gonna cost you a great deal of money. So make sure you do it correctly if you do do it at all. Now, some of the exemptions from over time are ones that are in various categories. First one, you see executive exemption rules and requirements. Many of your managers, assistant managers and cooks can possibly apply for Will, will be, will have that. We'll, we'll be, we'll have that exemption apply to them. But again, we need to be very careful and look at what they do. And if, and not every, not every assistant manager, even though they have the title, actually performs functions of an assistant manager. And even there are some people in the kitchen who may deem themselves a manager in the kitchen, but they really don't manage anything. And giving somebody merely a title is not enough. Right.
J. Larry Stine (00:49:14):
We, and we've already done a seminar just on the exemptions that took over an hour. Right.
Les A. Schneider (00:49:19):
So
J. Larry Stine (00:49:19):
<Laugh>, we can't spend a lot of time on it because this, it just, but be on, be aware that there are executive exemptions, administrative exemptions,
Les A. Schneider (00:49:27):
Exemptions. One that's very interesting though, Larry and I would like to spend a little time on, is what we call this section seven i exemption for commission employees. Can you chat with that a little bit?
J. Larry Stine (00:49:38):
Sure. So this is a very unusual exemption and it's called an exemption 'cause it's in Section seven I as opposed to exceptions. So what happens is, if you're in a retail service establishment, which a lot of the places will you see gift employees, that's exactly where they are. And if they're getting paid a commission and the commission exceeds 50% of their total compensation, right. And they get paid enough in their commissions to exceed time and a half the minimum wage, which right now is the $10 70, 72 5 amount they exempted from overtime. And you can supplement it up to get to the time and a half minimum wage rate as long as you don't exceed 50%. So
Les A. Schneider (00:50:25):
Which type of employee in a restaurant would actually, would that apply to Larry?
J. Larry Stine (00:50:32):
Actually you could use almost anybody that you pay them a commission. So it's not a your
Les A. Schneider (00:50:37):
Catering manager.
J. Larry Stine (00:50:38):
Your catering manager
Les A. Schneider (00:50:39):
Who the percentage of the take that would work,
J. Larry Stine (00:50:42):
Ma d mm-hmm. <Affirmative>, who may or may not be exempt on the tip credit your servers, anybody that's, that you decide that you're going, the event manager has, you don't wanna do it on a, a commission basis as opposed to an exemption with a salary. You can pay them commissions. The rules are more than 50% of their total compensation has to be in commissions. It has to exceed time and a half and they have to work in a retail or service establishment. If you meet those requirements you're exempt from overtime and you don't have to pay overtime for those.
Les A. Schneider (00:51:19):
So let's say I work at a restaurant, Larry and the restaurant wants to promote their gift cards Yep. So that people come to the restaurant. If, if a person is hired and is told, okay, here's their office and you go out and you try to sell, you know, packages told to businesses or whatever mm-hmm. <Affirmative> with the gift cards or whatever, you'll give them a discount on the cards to some extent. And their compensation is 50% of their compensation is based upon how well they sell and the revenue they bring in from those cards, would that be an employee who would, who would qualify for this exemption
J. Larry Stine (00:52:01):
As long as they make more than time and a half to minimum wage.
Les A. Schneider (00:52:05):
Right. And so if they were guaranteed that, or they actually have to do it in the commission
J. Larry Stine (00:52:11):
No, they, what happens is the reason it's a 50% rule, let's just say that they fell short one week.
Les A. Schneider (00:52:16):
Right.
J. Larry Stine (00:52:18):
But they did it there. The three, you can take the period that you assessed the commission at 50%. It doesn't have to be a paycheck. Right.
Les A. Schneider (00:52:26):
You can
J. Larry Stine (00:52:26):
Either do it about monthly
Les A. Schneider (00:52:27):
Or quarterly. Monthly or quarterly. And if they, and if they earn that much in those commissions from the sale of the cards mm-hmm. <Affirmative> that they could become an exempt employee even though they may do these things through telephone sales on the phone or any other way.
J. Larry Stine (00:52:44):
Yep. As long. And what happens is as long as you get that 50%, you true it up
Les A. Schneider (00:52:48):
Right.
J. Larry Stine (00:52:49):
To at least $10 the time and a half minimum wage with 10, 10 73 right now. Right.
Les A. Schneider (00:52:54):
But if somebody was strictly just an inside sales person for the gift cards Right. They didn't go out into the field, so to speak, and try to sell them. Right. They did it all on the telephone within the office. They have to make that 50% test on the commission in order to be eligible for seven i exemption.
J. Larry Stine (00:53:13):
And they, and they, they still have to work with a retail service establishment, which
Les A. Schneider (00:53:17):
Would be the restaurant
J. Larry Stine (00:53:18):
Restaurant which meet that criteria. So they, they could do it in a retail, but they couldn't do a wholesale.
Les A. Schneider (00:53:22):
Right. So if they were doing it at Bloomingdale's over at Lennox, that would be fine. Yep. But if they're trying to do it in a warehouse or a hotel, hotel which is not, or a hotel or whatever, that might not apply. Right. Okay. Yeah. All right. Let's talk about hours worked and recording time and pay, because these are the things that really bring nightmares of and serious financial liability to a restaurant owner. There are some basic rules. Keep track of the hours worked. It sounds simple, but it just needs to be done. And there are various systems that various companies have to do that, but at the end of the day, they have to keep track of those hours. Okay. Because if not, it's the liar, liar pants on fire perspective from the employee, or there can be a genuine misunderstanding on how many thing, how many hours somebody work it need.
Les A. Schneider (00:54:17):
You need to have that documented. Right. The second thing is, I see overtime for any hours worked over 40, you need to pay overtime. Whether it's the fluctuating work week method that we have shown you, or it's time and a half which is the traditional overtime way sec, thirdly, you have to report your tips as taxable income and putting it under the table or anything like that's not gonna work. And of course with credit cards today, so much of the tips are verifiable. Larry, how do you deal with employees that for the few places, maybe in the restaurant industry, that actually people leave a tip in cash, what responsibility is it for the employer to have an accurate amount of money that the employee has received since in many cases the employee would be, I assume, self-reporting to the employer? How does the employer handle that?
J. Larry Stine (00:55:17):
Well, it used to be a real problem when it was all cash because I r s has a rule that says, we expect you to at least have 8% reported to you. And when your employees reporting tips and cash, there's a tendency to underreport
Les A. Schneider (00:55:34):
For the, for the, for the self-serving reason that the employee doesn't want to pay tax on that tip.
J. Larry Stine (00:55:40):
Correct. So what happens nowadays with the tip credits being so much on the credit cards mm-hmm. <Affirmative> that we're not worried about the 8%. So when you have to have a system where you have the employee self-report and make certain they're self-reporting, you know, some cash tips, so you're least showing they're making some outside of that as long as you're making 8%, as long as you got a system in which you, the employees are reporting cash tips and you don't have to police them.
Les A. Schneider (00:56:10):
Okay. So basically what you're saying, and I I don't wish to be cynical about it, but let's say the employer, the majority of the tips are on the credit cards. Right? So it is way over the 8% that the i r s is asking for. Yep. And the employer actually probably knows that the people are getting another 50, 60, 70 bucks a night in cash, but the employees either don't tell 'em anything or tell 'em a very small amount of money. How much sleep should the employer lose over that?
J. Larry Stine (00:56:45):
As long as not much. As long as I got a system where they're reporting it, and if they're putting in problems, that's their problem, not mine as long as I risk is looking at the agents agency.
Les A. Schneider (00:56:54):
So should there be a form of some sort that the employee has to at least put in to, to verify that, well, I've gotten this much and they put their initials on it, and whether it's $1 or $40 or zero, we should they have, should they maintain a record like that?
J. Larry Stine (00:57:15):
Yeah. And what they're doing in a lot of those systems where they have the p o s systems now is they have them, when they close out on the P O SS system, they actually have a place where they can put cash tips.
Les A. Schneider (00:57:26):
Right. And if they leave it blank, then you assume that it was zero for the night. Yeah.
J. Larry Stine (00:57:31):
Which they doing 0, 0, 0, 0. I would talk to them if they were doing right.
Les A. Schneider (00:57:35):
But in today's world, the, it wouldn't be incomprehensible for somebody not to have any cash tips. No. All right. The other issue is, you can see on the screen, on the hours work and record keeping time and pay, there is a child labor issue today. And it doesn't happen perhaps as much in restaurants as in other industries, but an employee under age 18 can only perform certain tasks and only work certain hours. Right. And that's something that you have to adhere to because those penalties are serious. And
J. Larry Stine (00:58:10):
51 $15,000 per violation. Right.
Les A. Schneider (00:58:13):
And it's gone up over the years. It's, it's much more severe than it used to be. Yeah. As you can see here by this slide, there are certain things that you cannot have people do. One of 'em is the banning the operating motor vehicles. And then the 17 year olds, they can drive cars or small trucks during daylight hours for limited times. And under the strictly limited circumstances, again, make sure you know those very clearly. Obviously this gets a little bit away from restaurants, but in the, in slaughterhouse, et cetera, you can see vanning. No, it includes restaurants, but, but you no, I I know it includes restaurants. What I was saying is, is that in slaughterhouse or whatever, in meat packing plants, there's a lot of tools there that are a problem. Right. Even in restaurants, you have, as you can see, meat slices, saws and meat choppers. So you have to be careful for those people not to operate those pieces of machinery. Yeah.
J. Larry Stine (00:59:15):
Gen generally, in a restaurant, there's two things that they, they have to watch out for meat slices,
Les A. Schneider (00:59:21):
Right.
J. Larry Stine (00:59:22):
And then dough machines where they're actually making biscuits or something like that, those can get you in trouble. And we, we've, we've had to defend restaurants who've had 'em clean and it, you don't even have to operate 'em. You can clean them
Les A. Schneider (00:59:35):
And you got a problem
J. Larry Stine (00:59:37):
Even. Yeah. Clean 'em when you unplugged them.
Les A. Schneider (00:59:39):
Even if it's unplugged, you still have had a violation. Yeah. And of course in the bakery business, there's a lot of machinery there that you have to stay away from. And we have laid those out for you on the slide. Okay. So a final few items, again, these are things that no good deeded goes unpunished. It's very important that if employees are getting money from employers, it really needs to be categorized correctly. Obviously people get their wages and their pay, but there is a difference significantly between advances that somebody's getting on their salary or their wages as opposed to getting a loan from the employer. And Larry, you want to take a moment and talk about the distinction? Yeah.
J. Larry Stine (01:00:29):
Typically in advance is like somebody comes up and say, Hey, balls, I'm a little short. Can you gimme a hundred bucks? And I, I take it outta my next paycheck. That's one thing. Another one is I come up, Hey boss, I I need $3,000 to buy a car. Can you set it up and I'll pay you $50 a paycheck? Those are two very different things. Advances are easy and wager has no problem. They can see there's a hundred dollars check.
Les A. Schneider (01:00:57):
So, so even a tipped employee who was only getting two 13 an hour and he wanted to get an advance of 50 bucks on his paycheck, he wouldn't be, he wouldn't be affecting the tipped credit situation if he got that $50 in is advance, on the other hand, if it was a loan mm-hmm. <Affirmative> and then it was taken out of the check, that would be a problem, especially if interest was being paid on it, et cetera. Well,
J. Larry Stine (01:01:25):
No, no, you could, you, you can get the permission from the employee. Right. Get a loan document and have permission from him, written permission and authorization to take out so much per week. Voluntarily. What we do on loans like this is 'cause I'm so worried about it that I put a provision in our loan agreements with employees that they have the right to cancel the deduction from their pay
Les A. Schneider (01:01:53):
At any time,
J. Larry Stine (01:01:54):
But at any time, as long as they give a sufficient notice so that they don't give us notice one day before we run payroll and we can't run payroll because it's already set up. So they gotta give a sufficient amount of time where employers tend to get in trouble. Tends to be not if it started alone when the employee gets fired. Right. And they take the whole God during check
Les A. Schneider (01:02:15):
And let's talk about that. 'cause That is a problem we see time and time an employee has, perhaps whether it's in advance or whether it's a loan. And let's take the loan example. He owe, he has $400 left on his loan. Right. His last check is $500 and 48 cents. Right. Can can the employee or that week take out the entire amount of the outstanding balance of the loan? No. Okay. They would only be limited to the normal payment that was agreed to correct for that. All right. Now what about the advance, Larry? Let's say he had gotten an advance of $300 and now the last check is $500. Can he take out the entire advance? Yes. All right. So as you can see, it's important how you label that giving of money to the employer. E number two, whether the it, what factor does it play, Larry, about interest being charged?
Les A. Schneider (01:03:15):
Can interest be charged on an advance or not? No. So we don't charge interest on advances. We can't charge an interest on a loan, but the loan would have to have the express permission of the employee to have the whatever weekly amount or biweekly amount is taken out. Right. Okay. That's, that, that's an important lesson. And the worst thing, let's assume it's not just a loan, Larry. Let's say it is other monies that the employee own owes the employer, right? Let's say they bought a gift certificate for their mother-in-law for the restaurant and normally it's taken out of their check, right? And the employer says, gee, he's gotta balance, I'm gonna take it out right now. Right? Would you have a problem with that? Yep. So those are the kind of things that it's just not worth getting into a, a big argument. The next thing that's important is to get the work week basis. And Larry, what do we mean by that?
J. Larry Stine (01:04:18):
It's just me and we gotta hurry up 'cause we're five minutes over, right? The work week basis just means the F L S A, everything is done work week by work week by work week, every week A seven day period stands by. So andSo it becomes a very important concept in F L S A issues for the work week concept. And there are the concepts, like we talked about, the commission can be across a period of time, but typically when wage hour comes in and looks and figures out violations, they do it week by week by week. Whether you pay weekly, biweekly, or monthly they do that.
Les A. Schneider (01:04:57):
Right? All right. And you can see the last thing on a slide is gifts and bonuses. People give out gift cards. Gift cards is cash or check or just bonuses. Again we could, we could take a whole hour to talk to you about bonuses, but the biggest problem is sometimes people who are non-exempt and get a bonus, sometimes if that bonus is non-discretionary, it's gonna be subject to overtime in certain weeks. And if it, if it's, and if it's discretionary, it's possible that it won't be subject to that. But again, it is an area that we would probably have to take a lot more time to go over.
J. Larry Stine (01:05:36):
Yeah. I think at this time we've run over about five minutes already. Right. We think, and the problem is with the wage hour law is once we get going less than I could normally talk for hours on some of these concepts. We hope we gave you a good piece of information on this and we thank you for attending and
Les A. Schneider (01:05:58):
And if you have any questions and you wanna communicate them to us, we'll be more than happy to to answer them. We hope you enjoy the rest of your coming weekend and we appreciate you taking the time to listen. Thank you very much. Thank
J. Larry Stine (01:06:13):
You so much. Bye.
