‘Tis the Season for holiday parties and celebrations. Whether it’s a planned event or just a casual get-together of family and friends, bars and restaurants are usually inundated with these types of gatherings in November and December. Though this is supposed to be a time of good tidings and cheer, restaurant employees may not feel the love. If you are a restaurant owner or manager, here are some of the typical issues that may plague your workforce during the holidays, and how to prevent these scenarios.

Problem: Instances of sexual harassment abound—Though we know sexual harassment can be an issue any time of year, this time of year seems to bring it out more than any other time—especially with overserved customers making wait staff feel uncomfortable.

Solution: It starts with a sexual harassment training for all employees. This training should adequately address how to recognize illegal harassment from co-workers and customers, alike. It should also include a reporting procedure so that employees know who to go to when they witness or fall victim to harassment. Further, all servers should be up to date on state required alcohol serving certifications in order to effectively recognize when a customer should be cut off and potentially escorted out.

Problem: Service Charge Problems—Large groups and events often call for a service charge or mandatory gratuity instead of a regular tip. Employers can get into wage and hour trouble if those funds are not handled properly.

Solution: Don’t treat service charge like a tip, because technically it isn’t a tip. The IRS and Department of Labor (DOL) view automatic gratuities and services charges as wages earned rather than “tips.” The employer has complete discretion in choosing the manner in which the service charge is used, including whether to use it to pay his/her employees. However, in the event that an employee IS paid by the service charge, the payment to the employee is considered more like a commission. As a result, restaurants must: No. 1, tax these service charges like regular wages, per the IRS; and No. 2, include the wages in the employee’s regular rate of pay for purposes of calculating overtime, per the DOL (if choosing to pay employees with the service charge).

Problem: Commission only employees—Some hospitality employers prefer to hire a seasonal event planner or sales person and pay them on a commission only basis. This could get them into trouble if they aren’t checking local wage and hour laws for compliance and handling payroll accordingly.  

Solution: Before hiring a commission-only employee, make sure to check whether it is illegal in your state to pay on a commission-only basis without providing some sort of minimum hourly wage. Further, some state laws mandate that you need a clear-cut commission agreement in writing that specifically outlines the terms of their pay. Further, if you part ways because things aren’t working out, you could owe that person money should some of the deals come through post-termination. These are all things to consider, and are usually worth talking to an attorney about before you extend a commission-only offer of employment.