Employers in the hospitality industry have been through it all in recent years – from the devastation of the pandemic to ongoing labor shortages to an impending recession. These challenges and dramatic changes have surely motivated you to come up with creative ways to recruit, retain, and reward employees. Unfortunately, however, your innovative solutions might also create wage and hour risks if you are unaware of certain legal requirements. Indeed, the adage “no good deed goes unpunished” often rings true when it comes to compensating your employees – but we’re here to help. What are the top seven wage and hour mistakes hospitality employers make and how can you avoid them?
1. Donating the Proceeds of The Tip Jar
While the concept is benevolent (hey, who doesn’t like donating to a noteworthy charity?), it’s risky to divert tips that are owed to employees to any source other than the employees themselves. Under federal law, tips are the property of the employees who earn them, and employers are strictly prohibited from keeping these funds (or in this case donating them on behalf of the employee). Employers that donate tips without employees’ consent could be responsible for repaying those tips to the employees plus an equal amount in liquidated damages.
Pro Tip: Maintain a proper tip pool and distribute the funds to all participants in accordance with a tip pooling agreement. You can provide a method for employees to voluntarily contribute funds to an employer-sponsored...
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