How U.S. Labor Laws Affect Restaurants

Provide a safe and encouraging work environment for your employees


Labor laws exist to protect workers from harmful practices and ensure a fair working environment.

Many motivating ideas come to mind when talking about opening a new restaurant: building relationships, providing a valuable service to your community, and working hard to grow your brand. These are all challenges that excite any entrepreneur’s senses. A not-so-exciting part of owning a restaurant is knowing and understanding the law.


Although reviewing your local and federal labor laws is probably not your choice of nightly reading, building trust with your current and future employees is of utmost importance. Attracting and retaining quality employees depends on compliance with these rules and guidelines.

Furthermore, violations can cost you not only some hard-earned cash but also your business. Here is an overview of the most important restaurant-focused labor laws in the USA and how they affect or could affect your business. For complete and relevant texts, consult your local labor board.

Minimum wages

The federal minimum wage in the USA in 2020 is $7,25. Exactly 29 states have a higher minimum wage than the federal standard. Businesses in those states must adhere to the state law and pay their employees above the federal standard. However, there are exceptions to the minimum wage for certain types of employees. This is where our next point comes in.

Fair Labor Standards Act

There is a flood of information in this document originally introduced as part of the New Deal. As it relates to the restaurant owner: workers who earn tips can be paid at a lower hourly wage providing they make up to the minimum wage in tips. Workers must receive at least $2,13 per each hour of work excluding tips. The FLSA also stipulates that employees under the age of 20 must get paid at least $4,25 per hour in their first 90 days of work.

Tips and bookkeeping

As outlined in the FLSA, tips may count towards getting an employee up to and beyond the minimum wage threshold. This is why it is especially important to count, document, and distribute rightfully all tips among employees. Avoiding fines and questions regarding legal wages are crucial for your business's survival.


Employees must receive one and one-half times their wage for every hour after the 40th hour in a week. Tipped workers must have all payments factored in when calculating their overtime wage.