In many locales, labor laws for the restaurant industry severely limit the number of hours that a non-exempt employee can work. Hours worked can be limited by the specific type of business, age, job description (position worked), hourly rate, holiday, length of shift, or even the day of the week.
Labor Regulations Are Complex and Constantly Changing
If your business works with service unions, these rules can become even more complicated, requiring that managers spend time tracking breaks and meal periods and indicating whether or not employees wanted to take their break. Some states and insurance companies perform regular Labor & Industries audits, imposing heavy fines or insurance premium increases for noncompliant businesses.
Example: A sandwich restaurant in California employs three sandwich specialists, all of which are scheduled to work less than 8 hours a day, six days of the upcoming work week. On the first day of the schedule one of the employees fails to show up for work and is terminated by management. The remaining two employees must work the additional 28 hours at the business to cover the terminated employee. Neither employee receives a day off during the work week. Under California law, each of the employees must be paid 1.5x overtime for more than 8 hours of work in a given day, and 1.5x overtime for more than 40 hours per work week. Additionally, the two sandwich specialists will receive 1.5x – 2.0x overtime on the 7th day of their work week, as neither employee will receive a break this week. Failing to pay these increased wages is grounds for a lawsuit and an investigation by the state. Insufficient staffing will cost this California business several thousand dollars – in a single week!
Careful managers schedule around these frequently changing and complicated rules, ensuring that their business is compliant with all applicable labor regulations. However, businesses can inadvertently land themselves in hot-water when employees fail to show up, quit, or are terminated for otherwise legitimate reasons.
Inexperienced managers, overburdened by other areas of schedule creation can forget about these rules, which are not core to the "making money" aspect of their business. Stiff fines and lawsuits are the result of failing to be in compliance.