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May 18, 2020

Restaurant Wage and Labor Laws

In 2016, 99% of the restaurants inspected by the Division of Labor Standards Enforcement resulted in fines for wage theft violations. Labor laws in California can be confusing, and the resulting violations can often mean big fines and even lawsuits. Even global companies like Chipotle have faced class-action wage theft lawsuits. This article will give you a rundown of the most common wage and labor issues, and how to avoid them.

Sharing Tips

CA’s minimum wage right now is $12 for employers of 26 employees or more and $11 for employers of 25 or fewer employees. Different counties might set different minimum wages, but it cannot go below California’s state-wide standard. 

In California, tips are the sole property of the employee who served the customers or the employee the tip is left for. But California allows tip pooling, and the biggest violation comes when people who are eligible for the tip pool aren’t included, and people who aren’t eligible are. 

All wage-earning employees are eligible for the tip pool in California. This includes kitchen staff and wait staff. Management personnel are not eligible – management is defined as people who have the authority to supervise, direct, hire, or fire employees. Employers are also not eligible for the tip pool. The distribution of money from the tip pool must be fair, but it doesn’t have to be equal. If a wait staff employee has more face time with customers than kitchen staff, wait staff may be eligible for a higher distribution. 

Split Shifts

Having an employee work off-hours might not be economical. The time from 3-5pm is typically a slow time for restaurants with few customers. That’s why California allows split shifts. It would allow employees to come in for a shorter lunch shift and a dinner shift with a break in between. There are 4 rules for split shifts:

  1. Both shifts happen on the same work day
  2. The time between the shifts must be longer than 30 minutes apart. 
  3. The period between the shifts does not qualify as a meal or break period. 
  4. Employees are also eligible for an extra hour of pay at minimum wage. 

The 4th rule is the trickiest one. The extra hour of pay, known as the split shift premium, is paid to all minimum wage employees. If you make more than minimum wage, then you get paid up to what you would’ve gotten paid if you were making minimum wage. For example, say someone works an 8 hour split shift at $15/hour. That comes out to $120 for the day. They would not be eligible for the premium because her pay already exceeds what she would have gotten if she was making minimum wage plus the premium. In CA, minimum wage is $12, so $12×8 hours = $96/day. $96 + $12 premium = $108. An employee who voluntarily picks up a second shift is not eligible for the premium. 

Overtime

California’s overtime laws are tricky because California, unlike other states and the federal government, observes both weekly and daily overtime. Here is a simple breakdown:

Employees are entitled to 1.5x pay if they work:

  1. More than 8 hours in a day
  2. More than 40 hours a week
  3. More than 6 consecutive days out of the week

So if an employee works more than the hours and days listed above, they are eligible for:

  1. 1.5x pay for all hours worked in excess of 8 hours per day, and for the first 8 hours worked on their 7th consecutive workday
  2. 2x pay for all hours worked in excess of 12 hours per day, and for all hours worked in excess of 8 hours on their 7th consecutive workday. 

Employees cannot waive their right to overtime pay in contract or pay negotiations. It is mandatory! Salaried employees are also eligible for overtime unless they earn double the minimum wage. In that situation, they are ineligible for overtime pay. 

Shift Break Laws

In California, restaurant employees are entitled to a 10 minute rest ever 4 hours, and a 30-minute meal break every 5 hours. Failure to adhere to these will result in fines. There is an exception to the meal break rule – if an employee only works a 6 hour shift or less, they can come to an agreement with the restaurant to waive the meal break. 

Paid Time Off

CA does not require restaurants to offer paid vacation, though it can be a valuable perk in a competitive industry. California does require restaurants to offer paid sick leave. Paid sick leave accrues at 1 hour for every 30 hours worked. Restaurants can place reasonable restrictions on sick leave. For example, employers can say that they won’t pay out any sick leave for the first 90 days on the job. Employers can also cap sick leave at 24 hours a year, regardless of how many hours the employee has worked. 

Finally, California is one of the few states that mandates voting leave. The state allows employees to take voting leaves of up to two hours without loss of pay, and this leave must be taken at the beginning or end of the shift. Employees need to provide 3-day notice or else they will not be eligible for the pay, but employers have to post notice of voting leave rules at least 10 days prior to an election.  

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Alex Chen


Alex Chen is an attorney based in Los Angeles specializing in nonprofit and for-profit business startups. He graduated from UCLA in 2010 and earned his J.D. from Loyola Law School in 2014. He was admitted to the California State Bar in 2015. He previously worked in immigration law in private practice and for a public interest organization, helping clients with both visas and green card applications. He has been working at Law Office of Alex Chen since 2017 to help philanthropists fulfill their charitable goals and entrepreneurs realize their dreams of owning their own business.

Wilson Muh

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