The Most Easily-Remedied Mistakes F&B Employers May Not Know They Are Making

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INTRODUCTION. Restaurateurs spend months (and sometimes years) working with attorneys and other professionals preparing to open, dedicating countless hours to paperwork-intensive processes such as corporate formation, leases, permits, and the like. Unfortunately, by the time they are ready to hire employees and open their doors, they often do not cross the finish line with the same zeal. As a result, many employees start work by signing a rudimentary handbook consisting of cobbled-together policies, and their employers altogether fail to account for some of the most important paperwork.

EXAMPLE #1: EMPLOYEE HANDBOOKS. Though payroll companies and the Internet have made it easy to create an employee handbook, all restaurants and bars would benefit from crafting an employee handbook specific to their needs. Working with a professional who knows your company ensures a familiarity with the employee handbook that becomes invaluable when, inevitably, matters involving discipline, investigations, employee benefits, drug testing, alcohol policy, and termination arise.

EXAMPLE #2: TIP CREDIT NOTIFICATION FORMS. While the restaurant knows it is taking a tip credit in calculating a tipped employee’s wages, and the tipped employee (almost 100% of the time) knows the restaurant is taking a tip credit in calculating his or her wages, that is not enough for the U.S. Department of Labor (“DOL”). The regulations require that an employer specifically tell each employee about the rules regarding the tip credit – and any tip pool – in detail. While the regulations allow notification to be made orally, there is no way to prove oral communication in court. Because DOL enforcement guidelines state that the generic FLSA poster does not meet this obligation, employers should have a written tip credit and tip pooling notification policy before hiring their first tipped employee. Liability for this failure can be astronomical – up to $5.12 per hour for each hour worked by a tipped employee during the previous two years. Multiplied by two!

EXAMPLE #3: RESPONSIBLE ALCOHOL SERVICE POLICIES. Most retailers are well-aware of the fact that they should only hire employees who have received certification from state alcoholic beverage commission-approved courses (or require their employees to obtain certification promptly after hire). However, in Texas, retailers can only invoke the Safe Harbor (preventing the TABC from suspending or revoking their license) in the event of a server’s TABC violation if the retailer has written policies regarding “responsible alcohol service and consumption, and ensures that each employee has read and understands these policies.” Thus, failing to include a straightforward Responsible Alcohol Service Policy for new hires to review and sign could result in significant liability down the road.

EXAMPLE #4: WAGE DEDUCTION AUTHORIZATION FORMS. The FLSA does not permit any employer to deduct an employee’s wages below the minimum wage. Many states, Texas included, only allow wage deductions (for reasons other than taxes and court-ordered garnishments) if an employee has authorized the deduction in writing. Thus, even in Texas an employer cannot legally deduct an employee’s pay for stealing company funds absent a written authorization. This makes a Wage Deduction Authorization another very simple, but very important, document to include with new hire paperwork. Notably, because an employer cannot deduct any wages below the minimum wage, that necessarily means an employer cannot make any deductions for employees that are paid $7.25 per hour or less (such as servers and bartenders). This includes branded/non-generic uniforms, cash register shortages, breakage, walkouts, etc.

EXAMPLE #5: DOCUMENT TRANSLATION. Finally, it is important to mention that even the best employee documents do nothing for an employer if the documents are not translated into a language the employee can read. If an employee cannot read the employer’s documents, the employer is treated as having no employment-related documents at all, and it cannot take advantage of numerous defenses afforded to it in all manner of employment-related disputes.

Paul Denney

Mr. Denney joined the Law Offices of David T. Denney, PC in January, 2008. Prior to joining the firm Paul was an associate with Hughes & Luce, LLP from 2004-2007. Before working with Hughes and Luce he served as a law clerk for the Honorable Ed Kinkeade, U.S. District Judge for the Northern District of Texas from 2003-2004. Paul’s practice focuses on labor and employment matters as well as commercial litigation. Paul has represented clients in employment disputes involving a variety of claims, including age, sex, race, national origin, disability, the Family Medical Leave Act, the Fair Labor Standards Act, retaliation, misappropriation, gross negligence, breach of contract, defamation, tortious interference, covenants not to compete and other employment laws and related torts. He also represents employers in negotiations and/or proceedings with the Department of Labor, the Equal Employment Opportunity Commission, the National Labor Relations Board, and the Texas Workforce Commission. In addition to handling litigation matters, Paul frequently prepares employment agreements and employment-related policies; works with clients to ensure compliance with state and federal wage and hour laws; and counsels employers on various issues concerning hiring, disciplining and terminating employees, investigating harassment and discrimination complaints, social media-related employment issues, covenants not to compete, and training employers.

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