Regulatory Shifts in the Hospitality Industry

In a recent article for Restaurant Hospitality, Lisa Jennings covers three legislative snags currently facing employers in the restaurant and hospitality industries.

Firstly, in light of a recent court ruling, California employers with service charge policies need to pay particular attention to how they communicate about the nature of these charges. The issue at hand is the difference between a service charge and a gratuity, or tip. Service charges are payments included on a bill; they don’t necessarily get remitted to company employees. Conversely, gratuities are voluntary payments to servers or employees made at the discretion of the customer on top of their bill. The court case hinged on a situation where an employer did not communicate to guests that the mandatory service charge did not go to the employees. Though this particular instance only impacts California employers, federal laws governing service charges and gratuities mean that similar situations have the potential to occur in other states.

Next, Jennings addresses a proposed change to the Fair Labor Standards Act (FLSA). In November, the U.S. Labor Department proposed a new rule that would impact employees with fluctuating workweeks. It seeks to clear up confusion about current standards governing this type of employee under the FLSA.

Lastly, as 2020 approaches, hospitality employers should be aware of new regulations that will go into effect in January. Nationally, more workers will be eligible for overtime when the threshold for exempt employees to receive this type of pay increases. Two changes will impact employers in California: one regarding gig workers and the other regarding civil penalties for unpaid wages.

For more details, read the article in full at Restaurant Hospitality.