Common mistakes with restaurant payroll
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Common mistakes with restaurant payroll

| Jul 31, 2020 | Administrative Rule |

Many people dream of owning a restaurant, but it is one of the most difficult and competitive types of businesses. The challenges include various liability issues, staffing, finding the right space, and developing a loyal clientele. Compliance is also an ongoing challenge, but this is something that owners can avoid if they are vigilant.

Common costly mistakes

Restaurants often get dinged for the following errors:

Misclassifying employees

Owners and managers may try to misclassify workers in hopes of avoiding overtime pay. However, the IRS rarely views cooks, waitstaff and even assistant managers as exempt from overtime.

Calculating overtime for tipped employees

The basic combined cash and tip minimum wage rate in Florida is $8.56 and the maximum tip credit is $3.02. The tip credit goes against the minimum wage, which brings the pay down to $5.54. That base wage is then applied to the overtime formula of 1.5 for a total of $8.31. If the tipped employee does not earn $3.02 per hour in tips, the employer must make up the difference to meet the minimum wage requirements.

Incomplete paperwork

Correct paperwork on all restaurant employees has never been more critical. This includes job descriptions, employment applications, a completed and signed W-4 from the IRS as well as an I-9 form and verified identification of all employees. The government’s E-verify system is useful for this.

The small things add up

Owning and running your restaurant here in South Florida can be extremely rewarding and fun, but the owner needs to do everything in their power to remain compliant. There are many milestones along the way, and the best way to do this is to attend to the above issues and others. Those with questions or concerns can often get answers from an attorney with experience handling clients in the restaurant and liquor industry.

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