5 Payroll Myths That Can Land You in Hot Water

Video Transcript

Hi everybody. Okay so today I want to talk through five payroll myths that I see get owners

and operators into trouble from time to time. All right so myth number one: if I pay someone a

base salary, I don’t have to pay them overtime. If you have a non-exempt employee, even if you’re paying that employee a weekly base salary, it’s important that you pay them overtime for

anything worked over 40 hours in one week. It’s essential that you do that so you need to make sure you’re classifying employees properly and you’re paying overtime for anybody who is non-exempt. I have written an article that is really simple, and hopefully it’ll help you in understanding how to classify your employees; and, I’ve attached that link below so make sure you check that out. All right myth number two: you can pay your servers and bartenders tipped wages when they’re doing side work. There is some truth to that statement. You can have your tipped employees rolling silverware or cleaning off the tables or setting the tables or different things like that but it can’t exceed 20% of their workload in a week. So you need to make sure that you’re monitoring that and you’re not exceeding 20% of the time. All right, myth number three: service charges can be used for tips. Some restaurants have moved away from the traditional tipping and they are now charging the customer a service fee money distributed to

employees. This service fee cannot be counted as tips. All right, myth number four: it is okay to hire an intern and not pay them. This is actually very rare. You need to know if you want to have an unpaid intern, you need to make sure that the person interning in your company doesn’t benefit your company at all. It’s really for their benefit, it’s a training and educational setup and you need to make sure they’re not replacing any employees and they’re essentially not doing any work. Your company should be very careful and know how you set that up. And then, myth number five: if you pay a manager 1099 you don’t have to worry about paying their taxes. So if you have an employee that you will set up as an independent contractor or a 1099 employee or 1099 set up it is against the law so you need to make sure that if you are treating somebody like

an employee, if you’re dictating when they come to work, their schedule, and you’re treating them like an employee you need to have them on your payroll as an employee – a W-2 employee. An independent contractor has their own business and you wouldn’t be able to

dictate all of those things. All right that is it for today. I hope this was helpful. Have a great day.

Hi everybody, my name is Carrie Lux and I have dedicated my entire career to helping and supporting restaurant operators, and I started my business restaurant HR group where over the last eight years or so I have been partnering with restaurant groups throughout the country helping them set up their HR and people systems and processes. So now I am absolutely thrilled and excited to be partnering with Kabbage. They’re an online lending solution for small

businesses and they work heavily with restaurants so stay tuned, I’m going to be talking about a whole lot of other things. We’re gonna have a whole lot of fun around here so we’ll be talking about HR and leadership and culture and recruiting and hiring and a lot more so stay tuned. And if you need more information on how Kabbage can help you with some of your financial needs, reach out to them at kabbage.com/expert and they will certainly be able to tell you how they can help you. Alright, thank you so much for listening and I will be back soon. Thank you.

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