Executive Summary: For a foodie, there’s no greater place to be than in New York. Owning or managing a New York restaurant, however, has never been so complicated. With ever-changing state wage-and-hour regulations specifically geared toward the restaurant industry, a simple employee misunderstanding or a minor employer omission can lead to costly litigation. One way to limit liability, or to avoid it altogether, is to create an employee handbook. Below are five reasons why every New York restaurant should have one.

  1. Creating a Handbook Allows for a General Check on Compliance with Current New York Wage and Hour Laws. For established restaurants, creating an employee handbook is a great opportunity to ensure that your current time record and pay practices comply with New York law. For instance, owners may wish to review the accuracy and reliability of their time-keeping systems, including an assessment of whether such systems comply with New York’s call-in minimum wage rule for workers who are sent home early during a slow shift. Creating a handbook also enables restaurant operators to reinforce an employee’s agreed-upon rate of pay and reaffirm whether that rate is subject to a tip credit, in addition to the various wage and tip notices New York law already currently requires. Owners of certain fast food establishments, in particular, need to be sure they are complying with the recently enacted minimum wage rates, which are set to rise on December 31, 2016 to $12 and $10.75 for qualifying fast food establishments in New York City and New York state, respectively.
  2. A Handbook Can Help Limit Potential Damages in a Wage-and-Hour Suit. New York’s onerous tip credit requirements have long been a boon for the plaintiffs’ bar, especially with respect to tipped restaurant employees who may spend a portion of their shift performing non-tipped work. Under New York law, if a front-of-the-house worker spends a certain portion of his or her shift performing non-tipped work, the restaurant-employer is not entitled to take the tip credit for that employee on that day. This issue becomes problematic in the litigation context because there are often no records to support what tipped or non-tipped work was performed in a particular day by any one employee. An employee handbook might alleviate some of a restaurant’s exposure in this instance by requiring tipped employees to self-report in the event that they perform excessive non-tipped work during a shift.
  3. A Handbook Can Provide Clarity on Uniform Maintenance Pay and Tools of the Trade Reimbursements. Beyond the minimum wage and overtime obligations under New York law, there are other costs that a restaurant-employer might be responsible for, including uniform maintenance and any tools required for work. With certain exceptions, New York law mandates that restaurant-employers pay and/or provide for the maintenance and cleaning of any uniform required to be worn on the job. For an employer who wishes to provide laundry service to its employees in lieu of providing payment, the employer must give written notice of such service to its employees. An employee handbook is a great opportunity to set forth a clear and comprehensive policy regarding whether a uniform is required and what laundry service is available for employees. A handbook can also provide guidance with respect to a restaurant’s reimbursement policy for tools or equipment required on the job.
  4. A Handbook is Often a Prerequisite to Obtaining an EPLI Policy. Employer Practices Liability Insurance (“EPLI”) is becoming increasingly more common as a way to help employers limit their exposure for claims brought by their employees. Often, a prerequisite to obtaining an EPLI policy is having an employee handbook.
  5. A Handbook Helps An Employer and Employee Foster a More Transparent Relationship. At the end of the day, it is in the employer’s best interest if an employee who feels that he or she may have been improperly paid brings the issue to the employer’s attention, rather than an attorney. To this end, an employee handbook that sets forth a precise procedure for the submission and review of employee wage complaints could be extremely helpful in resolving matters quickly and on an individual basis. An employee handbook should also provide reassurances that any employee making a wage complaint will be not be subject to any retaliation and provide steps for an employee to report any resulting retaliation.

Bottom Line: An employee handbook is a useful tool for restaurant-employers to clearly communicate their pay and timekeeping practices and to provide employees who have wage-and-hour complaints with an alternative to litigation. By creating a transparent process for employees, employers have a greater chance of resolving any pay discrepancies without the expense and uncertainty of litigation.