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Restaurants: Non-Compliance Comes With A Hefty Price Tag

A U.S. Department of Labor Wage and Hour Division investigation recently resulted in Oklahoma’s historic Junior’s Supper Club having to pay out $52,487 for failure to comply with wage and hour regulations. That’s a hefty price tag for an entity which only has 31 employees, but Junior’s penalty for non-compliance is not an isolated incident in the industry.

Just this past June, Little Italy based in Kissimmee, Florida was ordered to pay back $40,979 in back wages to 15 employees. Also in June, the larger scale Hibachi City Buffet was ordered to pay a whopping $128,000 in wages and penalties to resolve allegations of federal minimum wage and overtime violations. These are just a few examples of what can happen when an establishment fails to comply with updated regulations. But one thing is clear: claiming ignorance or simply disregarding regulations will not keep the DOL out of restaurant pockets, if an investigation reveals non-compliance.

In the case of Juniors Supper Club (a well known destination since 1973), the punishment by the DOL was swift and severe. “Restaurant workers are among the most vulnerable workers we see in Oklahoma,” said Betty Campbell, regional administrator for the Wage and Hour Division in the Southwest. “If an employer requires workers to be ready to serve customers whenever they walk in, the employer must pay workers for the times when there may be no customers in the facility. The resolution of this case signals the division’s commitment to protecting restaurant workers, and leveling the playing field for employers who pay their workers legally.”

It can be quite easy for establishments to overlook certain state and federal guidelines; restaurant owners can easily boast expertise in business management, cost control, employee engagement, customer experience etc. But as the establishment grows or becomes more rooted in time, many owners/operators find themselves out of their element with payroll and human resources, unintentionally discounting the very same details that landed Junior’s, Little Italy and Hibachi City Buffet in DOL hot water.

If restaurant owners are concerned about their status regarding compliance, they’re highly encouraged to do a thorough review of all payroll activities including, but not limited to, record keeping, reporting, minimum wage laws, overtime rules, employee classification etc. Regulations don’t change often, but when they do all establishments must be in-the-know and take the proper actions to ensure the financial safety of their organizations. Perhaps the most important step a restaurant can take in order to avoid the fate of the aforementioned, is to recognize when it’s time to enlist the expertise of a payroll provider that specializes in the hourly work-force, and more specifically the restaurant industry.

Receiving updates and guidance from a trained payroll/HR professional will allow owners and operators the freedom to work within their talents, and have significantly less worrisome issues regarding compliance.

Valiant Solutions provides payroll/HR software and expert guidance for the restaurant industry. We also provide continual updates on new and current regulations, keeping your operations running smooth and free of costly compliance mistakes. Contact Us today to receive a free consultation from one of our experts.