Restaurant payroll management can be complicated, especially when some employees are tipped employees, some are paid hourly, and some are paid a salary. Hourly vs salary employees in restaurants have their own payroll considerations.
Knowing the payroll guidelines for restaurants regarding restaurant staff compensation can help your restaurant stay in compliance and avoid running into trouble with your employees and the regulations that guide your business. Understanding the distinction between hourly and salaried restaurant employees is crucial for accurate payroll processing, compliance with labor laws, and effective financial management. Managing restaurant payroll is important. Here's what you need to know.
What is An Hourly and What Is a Salaried Position In a Restaurant?
Most of the time, restaurants run on a combination of hourly and salaried positions. You'll need to know the difference between these positions to compensate your employees properly.
Hourly
An hourly position is someone who is paid per hour and eligible for overtime. These workers are paid the regular rate for up to 40 hours per week. When they work over 40 hours a week, hourly employees are paid for time and a half (1.5 times the usual rate). Hourly workers in restaurants either make minimum wage, or they make tipped wage.
Tipped wage is paid to an employee who makes more than $30 of their wages in tips each month.
Unless your state laws specify otherwise, employees who are paid tipped wage must be paid at least $2.13 per hour in direct wages from their employer, and when combining their hourly rate with their tips, must make at least the federal minimum wage ($7.25 per hour). If your employee does not make the federal minimum wage by combining their tipped wage with their tips, your restaurant must pay them the difference.
Salaried
Salaried positions earn the same monthly amount, no matter how many hours they work. Not that many roles in restaurants are paid a salary. Executives, administrative staff and professionals may all be paid salaries, but just who qualifies for a salary depends on their roles.
For example, an executive must earn a certain amount (or more) each week and be in charge of a recognized division or subdivision of the enterprise (for example, they must be responsible for the kitchen or the dining room). They must also have the ability to hire and fire personnel. General managers at restaurants usually fall into the category of employees who do not qualify for overtime.
Professionals are another category of salaried positions at restaurants. This category is someone whose primary duty must involve an advanced degree, which may include an executive chef. Usually, line chefs are not salaried because they simply take direction from the executive chef.
The definitions of executive and professionals of salaried positions above are not comprehensive, and there may also be other salaried roles in your restaurant. You can learn more about the salaried positions in the restaurant industry by reading about them on the US Department of Labor website.
Overtime and Minimum Wage Considerations
When you're trying to determine who is paid minimum wage, who is paid a salary and when overtime will be applied, it's very important to:
- Know the federal laws and laws in your specific state. States cannot mandate a minimum or tipped wage that falls below federal, but they can make stricter guidelines and require workers to be paid more than federal minimums.
- Familiarize yourself with salaried roles. Know how to define the various salaried roles in the restaurant industry to ensure that your salaried positions meet the qualifications.
Impact of Tips on Payroll for Hourly Employees
Hourly employees who earn tips must track their tips and hours worked. Have a process for such tracking to ensure that your restaurant complies with federal laws.
Some restaurants pool tips, and people who do not earn tips (like line chefs) may earn a percentage of the tips collected by table workers. Laws vary on how this is handled, so know the laws in your state to ensure that your restaurant remains in compliance.
Need Help With Restaurant Payroll Management? Contact Exact Payroll to Learn More
Need to know more about payroll laws in your state for your restaurant business? Contact Exact Payroll for expert advice on payroll management.
We offer services for the restaurant industry through our restaurant payroll services. We also offer in-depth informational publications about payroll and HR in the restaurant industry. Download our Complete Payroll and HR Guide for Restaurants or our Free HR Guide for Restaurants to learn more about paying your restaurant employees.