Guest Post: Compliance in the Restaurant Industry

According to the National Restaurant Association, nearly 13 million people are employed in the U.S. restaurant industry. And even in our current economic climate, the industry is expected to hire more than 1 million additional restaurant workers in the next decade. That’s good news for such a risky business sector. Even during the best of times, the restaurant survival rate is low. One Ohio State University study found that 59% of new restaurants closed within three years.

With the odds stacked against them, the last thing any restaurant owner wants is to lose money – not from lack of customers – but rather from an imperfect understanding of the federal and state restaurant industry compliance regulations governing their employees.

The physically demanding work and reliance on tips as remuneration for employees places restaurants in a unique position when it comes to federal and state industry labor regulations. There are several key areas of the law of which restaurant owners should be aware to prevent expensive and time consuming audits or lawsuits.

The primary law impacting restaurants is the Fair Labor Standards Act (FLSA). The FLSA a federal law setting minimum requirements for the working conditions and compensation of workers.

All restaurant employees are entitled to certain wages and benefits. The federal minimum wage is currently $7.25 per hour for non-exempt employees. Be wary: individual states may have higher minimum wages. Check the laws of your state to be sure.

This minimum wage standard is uniquely applied for “tipped” employees or those who make more than $30 a month in tips. Many restaurant owners can take credit for a certain amount of money their workers earn in tips and apply it to the payment of the minimum wage. Different states regulate this area of the law in different ways. All employers must inform their employees in advance if they intend to count tips towards the minimum wage, and they must provide evidence to the government that the employees are receiving at least the minimum wage after combining wages and tips.

If employees are required to work more than 40 hours a week, they must receive overtime pay at a rate of at least 1.5 times the employee’s regular hourly pay rate. The National Restaurant Association’s website provides guidelines on How to Calculate Overtime for Tipped Employees.

Furthermore, if any of your employees are under the age of 18, there are special laws that apply to their working conditions. Minor and adult employees are both entitled to the same minimum pay and overtime protections. However, minors are also subject to federal youth employment regulations. More information about employing minor workers is available at the Department of Labor website that focuses on youths.

Navigating the maze of labor regulations that apply to the restaurant industry can be a daunting task. With careful planning and research, however, employers can minimize their risk in an already risky business venture.

(For more on risk management within the hospitality industry, check out the September issue of Risk Management.)

Fan Death Re-Emphasizes MLB Ballpark Safety

Rangers Ballpark, the site of a recent fan death that has caused all MLB teams to re-evaluate fan safety.

Risk, death and baseball: three exciting topics that have unfortunately converged to become a grave concern for Major League Baseball this season. One fan recently died in Rangers Ballpark in Arlington, Texas, while reaching over a railing for a ball. Last summer, another fan fell 30 feet and fractured his skull.

This, combined with some other high-profile incidents at ballparks in recent years, has led all teams to reconsider the height of their safety railings and ponder other potential solutions to keep spectators safe.

Yesterday, ESPN’s “Outside the Lines” program featured a great investigative report into the matter. You can watch Texas Rangers owner/legend Nolan Ryan discuss the controversy here. And below is the opening paragraphs of their written story.

Ronnie Hargis remembers his right hand brushing Shannon Stone’s shorts as he tried to grab the 6-foot-3-inch firefighter who went over a front-row railing in Section 5 of Rangers Ballpark in Arlington.

But Hargis missed. Stone’s 6-year-old son Cooper, who had been standing next to Hargis, saw his dad fall 20 feet to the concrete below. Stone, 39, died about an hour later.

Even though Hargis struggles to come to terms with the events of July 7, he does not believe that the 33-inch railing that Stone fell over was too low. He joins a cadre of fans who disagree with the Rangers’ decision to raise all front-row railings to 42 inches in response to Stone’s fall and two other falls before it.

As officials with other Major League Baseball ballparks say they’re currently reviewing their railings, baseball fans are divided on whether to raise the railings, keep them where they are, or implement alternative safety measures, such as nets.

It isn’t just the Worldwide Leader who is interested in how teams are keeping fans safe, however.

Our very our Morgan O’Rourke focused his September column in Risk Management magazine, “Last Word,” on the recent death. Look for that to go up online on Thursday.

The Elusive NYC Hurricane

Well, maybe it’s not so elusive after all.

All estimates have the projected path of Hurricane Irene heading straight for the most populated city in the nation. Just this morning,‘s Senior Meteorologist Kristina Pydynowski, predicted that the storm “is now on a path that could take it dangerously close to, if not over, the mid-Atlantic coastline and New York City on Sunday, posing a serious danger to millions of people.”

Following the almost-imminent brush with the Outer Banks of North Carolina, the storm will come extremely close to or directly over New York City. In preparation, the city’s Department of Environmental Protection is lowering the water level in some of its upstate reservoirs to make room for storm runoff while Mayor Bloomberg is urging residents to prepare for the worst. (Good risk management, Mike B!).

As The Wall Street Journal reports:

The latest European Centre for Medium-Range Weather Forecasts model shows a direct landfall on New York City of a Category 2 Irene, an outcome that would be likely to push a significant storm surge up the Hudson River and raise the level of New York Harbor by 10 to 15 feet. This would truly be a historic blow to the city should it come to pass.

Though it is necessary to prepare for the worst when it comes to any natural disaster, we must keep in mind that forecast error for hurricane projections this far in advance averages about 150 to 200 miles.

The NYC Office of Emergency Management lists 1999’s Tropical Storm Floyd as the last storm affect the area. It brought flash flooding that caused NYC schools to close for the first time since 1996 and led the city to open emergency storm shelters. But the deadliest and most destructive hurricane to hit NYC was the “Long Island Express” in 1938. The category 3 hurricane crossed over Long Island and into New England, killing nearly 200 people — 10 of those in NYC. The storm knocked out power in all areas above 59th street and in all areas of the Bronx.

Here’s is an amazing (and somewhat horrifying if you live in NYC as most of our staff does) video by the History Channel of what could happen if the 1938 hurricane made landfall here today.

Cavalcade of Risk: Global to Personal

Once again, the Risk Management Monitor was chosen to be included in the Cavalcade of Risk (CoR), a bi-monthly rundown of all things risk from the blogosphere. Hosting this weeks CoR is Nina Kallen, a Massachusetts attorney who practices general litigation with a focus on insurance coverage issues. You can find her selections of the best risk and insurance blog posts at:

Insurance Coverage Law in Massachusetts

Yours truly will be hosting the next CoR, scheduled to appear here September 7th.