Operating a Restaurant Business: Quick Reference Guide to Regulations

Business owners take on many challenges when they choose to open a business within the restaurant industry. Restaurant and food service employers contend with many unique legalities and regulations that set them apart from other industries. For example, employers are required to comply with detailed hour, tip, and overtime wage reporting. In addition, the industry historically hires more minors and immigrants than any other sector, so requirements must be carefully understood and implemented.

For restaurant and food service employers, there are also many food safety mandates. From food safety regulations, to nutrition labeling laws, restaurateurs must thoroughly understand food codes and specific germs that cause food illnesses, as the food and drink they service directly affects the health of their customer. Overall, compliance requirements within the industry include:

• Wage Laws. As mandated and regulated by the Fair Labor Standards Act (FLSA), workers within the restaurant industry are entitled to wage standards. This includes payments made to workers for minimum wage, tips, overtime, meal and rest breaks, and food credits where applicable. Keep in mind that some states maintain a higher minimum wage than the federal rate. When this is the case, workers are entitled to the higher of two wages. In addition, note that tip standards also fluctuate from state to state. Make certain you understand requirements for your state, and how they these regulations affect your operations, and worker pay.


• Employing Minors. More than most other U.S. industries, businesses within the restaurant and food service industries employ a substantial volume of young workers. Child labor laws mandate what youth workers can perform while at work based on age, and the volume of hours that can be worked. Although minors are entitled to the same wage standards as their adult counterparts, there are exceptions to this rule. Exceptions include paying a minor an “opportunity wage” during the first 90-days if the minor is younger than 20 years old, or paying a “sub-minimum wage” rate which requires a special certificate from the Department of Labor. For more specific information on child labor law compliance requirements, visit Employing Minors Within the Restaurant Industry.


• Employing Immigrants. Restaurateurs and food service employers hire more immigrant workers than any other industry within the U.S. Although immigrant workers offer a viable employment option for employers, there are numerous legal hurdles for an employer to overcome. When hiring new workers, employers must thoroughly understand and comply with the employment eligibility verification process, which includes Form I-9 completion or the automated E-Verify service offered by the U.S. Citizenship and Immigration Services (USCIS). Remember that regardless of citizenship status, all workers are entitled to wage standards. For more information, visit Employing Immigrant Workers.


• Workplace Safety Requirements: Businesses within the restaurant industry have numerous safety requirements to comply with on a local, state, and federal level. This includes Occupational Safety and Health Administration (OSHA) compliance mandates, as well as compliance with the Health Department. As one of the nation’s top sectors employing more than 13 million workers, businesses within the restaurant industry tend reside under OSHA’s microscope when it comes to inspections. As an employer, know what is expected to so you can avoid unnecessary hazards or costly penalties, and maintain a safe and healthy workplace for your workers.


• Food Safety Laws. On a federal level, The Food and Drug Administration (FDA) mandates food safety regulations required for safe preparation, manufacturing, labeling and distribution. In addition, local governments enforce food and safety hygiene standards. Although the FDA, The Center for Disease Control (CDC), and local authorities primarily regulate food borne illness prevention, OSHA enforces water mandates related to food borne illnesses. Employers should encourage workers to be proactive when it comes to food safety by following the Hazard Analysis Critical Control Points (HACCP). As a restaurateur, you must thoroughly understand health food codes, and how germs cause food illnesses so you can best protect those who eat and drink in your establishment.


• Nutrition Labeling Requirements. As mandated by The Nutrition Labeling and Education Act (NELA), all food within the food supply must include a label, which provides information on nutritional standards as well as health and content claims. Although there are some exceptions within the restaurant industry, a nutritional label is still mandatory in many instances.


• ADA Compliance. As mandated by the Americans with Disabilities Act (ADA), employers within the restaurant and food services industry must avoid discriminating against individuals with disabilities who apply for employment. These employment provisions apply to businesses within the restaurant and food services industry that employ more than 15 employees on the payroll, whether the total number applies to one business location or multiple locations. Make certain your establishment is ADA compliant.


• Tax and Permit Requirements. As with any other business operation, restaurant and food service businesses must comply with permit requirements such as applicable tax permits and registration, state and local licenses and permits, and business entity and fictitious name filing. In addition, businesses must comply with industry-specific permit requirements, such as obtaining a restaurant license, liquor license, or permit from your local health department to verify that your establishment is in compliance with local, state, and federal regulations.


• Insurance Requirements. As mandated by The U.S. Department of Labor, all businesses are required to pay Unemployment Insurance Taxes (UI), a program that provides temporary payment for those who become unemployed through no fault of their own. Additionally, some states mandate that business owners carry Disability Insurance, and Workers’ Compensation insurance.


• Labor Law Compliance Posters: By law, all businesses are required to post mandatory state and federal labor law requirements in a prominent workplace location. In some cases, this may include posting bilingual posters, in both English and Spanish. Workers must know their rights, and understand what is expected of them while at work. For more information on compliance program options with the LaborLawCenter, visit Compliance Management Services.

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