When it comes to running a restaurant, payroll can feel like the most complicated item on the menu. Here is what you need to understand about managing payroll and tip distribution to stay compliant with labor laws and keep your staff happy.
Plan Out Your Payroll Schedule
As much as your staff may love the soup of the day and feel like a family, we all rely on a paycheck. When you are running payroll for your restaurant, it’s important to choose a payroll schedule and stick with it.
Paying your employees every two weeks is a popular option. Some restaurants pay their employees weekly. Payment frequency can help with employee retention, so whatever schedule you choose, being punctual is key. Thinking about transitioning payroll? Click here to find out when is the best time.
The U.S. Department of Labor qualifies tipped employees as employees who receive more than $30 in tips per month. Usually, employers are only required to pay tipped employees $2.13 an hour, as long as their tips bring them above minimum wage.
Some of your employees may make the majority of their income from tips, but you will still need to compensate them a certain amount. The minimum wage and regulations for tipped employees vary by state.
Tip Pooling and Payroll
If your restaurant has tipped employees, how you handle tip distribution is an extremely important part of payroll and restaurant management.
Tip pooling means dividing the days’ tips between employees. This method can be a great way to even out payroll and eliminate disagreements about which server gets which section, but it can negatively impact productivity and leave your staff unmotivated. Tip pooling laws do not allow you to use tips to pay back-of-house employees who do not directly serve your customers.
What is the difference between tip pooling and tip sharing? Tip sharing means that servers and bartenders pay out a certain amount of their tips to other restaurant staff who help them. At the end of the day, these employees may be required to tip out food runners, barbacks, or hosts.
Get Restaurant Payroll Right Every Time
Restaurant payroll can be challenging because restaurants have so many different categories of employees.
With tipped employees, back-of-house, bartenders, full-time and part-time workers, and minimum wage adjustments, payroll is enough to give any manager a headache. Click here to find out why more and more businesses are combining payroll and time-tracking to grow.
Don’t risk mistakes and lawsuits when it comes to your restaurant’s payroll. With PayWow, everything is taken care of. You can calculate payroll accurately, integrate tips, and even take care of your taxes. You have the option to allow employees to report their own tips, and easy time-tracking makes keeping up with employee hours effortless.