The compliance rules that multi-units get wrong with Felice Ekelman, JD | 075

Getting workplace law advice after you get a complaint is like fixing a schedule after the shift's over. In this episode of The Pre-Shift Podcast, we sit down with Felice Ekelman, a principal at Jackson Lewis who leads the firm's restaurant industry group, to talk about the compliance mistakes that catch multi-unit operators off guard. Felice walks through why state and local rules don't travel with you from one location to the next, what "audit-proof" really looks like on paper and on the floor, and what the no-tax-on-tips provision means. Whether you're running two locations or twenty, her approach to hiring, classification, and training offers practical steps for operators looking to reduce risk as they grow.

Key Takeaways

• Call Early, Not After: Hear why the operators who end up needing a workplace lawyer are usually the ones who consult one before opening.
• Not All State Rules Are Alike: Discover why assuming your California playbook works in New York (or vice versa) is one of the most common mistakes multi-unit operators make, and why highly regulated states like California, New York, Illinois, and Massachusetts require their own separate approach to wage transparency, scheduling notice, and break penalties.
• What "Audit-Proof" Actually Means: Learn the checklist Felice runs with clients: an updated handbook, the right posters, compliant I-9s, matching time and pay records, and clocked meal breaks instead of automatic deductions.
• The Title Never Decides the Case: Understand why calling someone a manager, a sous chef, or a shift lead doesn't determine whether they belong in the tip pool or qualify for overtime exemption. What matters is what the person actually does on shift, not their title.
• Transparency Builds Trust in the Tip Pool: Hear why the biggest tip pool problems come from staff not understanding who's in the pool and how much they're getting, and why showing the math every shift cuts down on disputes.
• Training Is Where the Real Risk Sits: Discover why Felice sees management training on EEO, wage and hour rules, accommodations, and consistent discipline as one of the highest-value investments an operator can make, since most legal exposure comes from a manager's split-second call.
• What New Rules Require From Your Payroll Provider: Learn why tax only applies to a portion of overtime pay, and why your payroll provider needs to be told, specifically, to separate that line item since it won't happen automatically.

Resources

• More about Felice https://www.jacksonlewis.com/people/felice-b-ekelman
• Contact Felice at Felice.Ekelman@jacksonlewis.com

Chapters

00:00 Meet Felice Ekelman
00:55 Call Your Lawyer Early
02:55 Multi-Unit State Law Traps
04:27 Staying Ahead of Changes
07:34 California Compliance Minefield
09:22 Audit Proof Your Operation
13:49 Misclassification and Accommodations
16:07 Hourly vs Salary Exemptions
19:16 Tip Pool Rules and 80/20
23:41 Training Managers for Compliance
28:20 Insurance and Prevention Mindset
29:16 No Tax on Tips: What to Do
33:17 Contractors and Noncompetes
36:44 Top Priorities: Pay and I-9s
38:31 Key Takeaways

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7shifts is a restaurant platform that helps operators and managers hire, train, schedule, pay and retain their restaurant teams. With an easy-to-use platform and industry-specific solutions, 7shifts saves time, reduces errors, and helps keep costs in check for over 55,000 restaurants.

Transcript

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SPEAKER_01 0:00

I'm Felice Eckelman. I'm a principal at Jackson Lewis, a national law firm.

SPEAKER_00 0:10

Felice Eckelman has spent her career on the defense side of workplace law, which means when a restaurant operator calls her, something has usually already gone wrong. She's a principal at Jackson Lewis, one of the largest employer-side law firms in the country. And Felice leads their restaurant industry group. 200 attorneys focused entirely on the issues that make this business uniquely complex. Today, Felice walks us through the most common compliance mistakes that multi-unit operators make, why state lines create legal quicksand, how to audit proof your operation before anyone comes knocking, and what the no tax on tips revision in the big beautiful bill actually requires you to do right now. My name is DJ, and you're listening to the Pre-Shift. Felice, how are you today? Thank you for uh hopping on the podcast.

SPEAKER_01 0:51

Thank you for uh having me. It's good to be here.

SPEAKER_00 0:54

Absolutely. So um I'll just jump right in. You have spent most of your career on the defense side. Um so a restaurant group calls, Jackson Lewis calls you. It's usually because something has already gone wrong. Um when you look across, you know, the clients you've represented, cases you've worked on, um, you know, what's the thing that restaurants always wish they did differently before they call you?

SPEAKER_01 1:15

That's an easy one. Restaurants always wish they'd called me earlier. Um the best time to consult with a workplace uh law expert is before you get started. As you are starting up, you're gonna need to know what kind of policies that need to be put in place. You're also going to want to have an appreciation about how legal compliance needs to marry with your operational protocols. And it's much easier to understand what those obligations are as you're putting together your protocols and your operation than to go in afterwards and fix what's wrong. So the advice I always give employers in the hospitality industry is get advice from an expert about workplace law obligations as you are starting to put together your team and your project so that you don't get caught unawares six months into the project.

SPEAKER_00 2:13

Yeah, so I'm not putting together my standards, right? And then after I'm like, well, let me make sure this actually is compliant, you know, and then you're working backwards. So reaching out when you're building out those standard procedures.

SPEAKER_01 2:23

From from everything from who's gonna be in the tip pool to how you're gonna charge people for special events and banquets, and you know, what are you gonna do about tips or service charges or administrative fees? And um, what I'm sure you're gonna touch on as we continue this conversation is there are new law nuances in state law. And so just because you've worked in one state doesn't mean you know what's going on in another state.

SPEAKER_00 2:53

Yeah, and that's the next question I had. So, you know, multi-unit restaurants, I think is where we want to focus today because it is much more complex than just one. So is there a pattern that you'd kind of say is like a classic mistake when people have more than one location, especially across maybe two different concepts, they have a quick service and they have a full service or different markets.

SPEAKER_01 3:12

Yeah, the pattern is you need to be aware of the state laws because they're different. And and no matter what a great operator you might be, if you don't know what those laws are, you're gonna step in mud. So, you know, some states um are highly regulated. California, Colorado, New York, New Jersey, Illinois, Massachusetts, those are some of the increasingly Virginia, those are states that have a labyrinth of regulations, and you're gonna mess up unless you know what you're walking into. Doesn't mean you can't operate successfully in those states. That's not what I'm saying. You just need to know what's going on there before you walk in. And even, you know, I'll tell you, even as far as wage transparency, so that's you know, the new range wave of laws that we're seeing, which requires that you post the wage rates. So as you're hiring, you need to do the right thing and know whether you have to post wage rates in your help wanted ads. Um, because if you get that wrong and you're in the wrong jurisdiction and you haven't complied, depending on the jurisdiction, you could be stuck with serious liability.

SPEAKER_00 4:27

What does it look like in practice in the variables that you have to manage to be able to operate successfully?

SPEAKER_01 4:35

It's really tough because some of these laws get passed on a very local level, county, city, state, and there's not necessarily a lot of publicity or outreach by the by the local governments. And so you might not even know that there's been a change in the law. So usually you'll know ahead of time that there's an uptick in the minimum wage or the tip credit changes. But if there is a requirement that you have to have a poster about lactation rights, for example, or that a scheduling uh ordinance is on the books, you might not know whether your your venue is uh covered. Because, for example, and I'll always use New York as the example because that's where I sit and that's where most of my practice is, although I manage lots of nationally based clients. In New York, you could have a single franchise of a national franchise, and you could be subject to the uh laws that require scheduling notice and penalties if you change schedules without notice, even if you just have one franchise because you're part of a national or a larger franchise. And and none of these laws are based on intuition. You know, you have to read them, you have to consult with somebody who knows. Um, so how how do you keep abreast? You know, it's expensive to have a really well-trained human resource or people person. You might be best served to have a consultant who's really tuned in. Uh, you might be best served to have someone like me who's an advisor that you can call, because in the end, getting advice, as I said from the get-go ahead of time is going to save you money in the long run.

SPEAKER_00 6:31

Yeah, that was my next question. Absolutely. It's like, how do you just keep track, right? You know, you're trying to serve people, take care of staff, and you know, manage orders and inventory, right? As you know, maybe a smaller company. Is that your recommendation just to have someone on the phone?

SPEAKER_01 6:45

Yeah, you need a trusted advisor, whether that's an HR consultant who knows your industry, because again, there are unique requirements in the hospitality industry, and so much litigation uh arises from the misunderstanding of tips and the tip credit and how to manage tip pools and how to manage service charges, that you you don't just need an HR person, you need an HR person who knows this industry. So I I can't emphasize that more. And it's a lot to ask your GMs, you know, to know what's going on, because as you said, they've got a lot to do. And um being keeping abreast of changes really these days requires somebody who's doing that full time.

SPEAKER_00 7:34

Is there like a particular state uh, you know, maybe outside of New York or a market that's tricky right now? Is there one that you're noticing is coming around?

SPEAKER_01 7:42

California. California is tough. California is tough because they have not only no tip credit. Yep. Okay, and that's got holds true for Nevada, so you need to know that. But um, California has meal and rest break legislation on the books, which requires excellent record keeping, and you have to know when penalties are to be paid for a missed meal and rest break. And that is um that is a law that's highly litigated. Lots of plaintiffs' attorneys are out there. I gotcha. And so if you haven't planned uh for how you're gonna monitor meal and rest breaks and how you're gonna ensure that your penalties are paid if they're missed, then you're gonna get in trouble in California. So, you know, it's such a unique thing that Jackson Lewis has developed uh an annual uh booklet, so to speak, that that's called Welcome to California. Because there's so much in California uh that employers who have been successful elsewhere won't even know to look for.

SPEAKER_00 8:56

I think in California, two different cities and municipalities have different laws as well. Uh San Francisco and LA are different if you have locations. It's just a big, it's a headache to say the least.

SPEAKER_01 9:07

Um, San Francisco, LA have their own ordinances. Listen, New York City has a very robust statutory scheme that impacts employers in the hospitality industry as well.

SPEAKER_00 9:21

I want to, you know, honey a little bit back to you know, in-house, in into the restaurant. So audit proofing, um, you know, making sure that you are actually compliant, you don't just feel compliant. Um, you know, so if someone is listening now and they're like, I want to make sure I'm not, I don't have to call police. Um, you know, what would you recommend?

SPEAKER_01 9:41

That's an excellent question. First, uh, is your handbook? And every employer these days really needs an employee handbook, because you need one spot where you compile all your legal notices. So you're gonna need notices of anti-harassment policies, you're gonna need notices about wage and hour compliance, and there are other notices that are mandated in different jurisdictions from you know lactation to rest breaks to uh pay time off that are mandatory. So the first thing you want to do is make sure that your handbook is up to date. Second thing you want to do is make sure that you got the right posters up. This is actually a big deal. Um there are um, you know, if you get audited by the Department of Labor, they're gonna look at your posters. Next thing is we haven't talked about immigration laws yet, and these are national law, not local. But today, employers in the restaurant business, regardless of what city or state you're operating in, need to make sure that your I-9s are compliant. I-9s are those documents that employees have to uh complete within the first 72 hours of employment, which demonstrate that employees have the right to work in the United States. And Homeland Security is the the first stop is usually looking at I-9s. There are very specific rules associated with I-9s. You need to make sure that you know what you're doing, and if you don't know what you're doing, you go online. There is a very long detailed manual, but you want to make sure that your I-9s are in audit, that's part of an audit. The next thing is making sure that your time and pay records match. One of the things you want to make sure is that if you are uh requiring employees to take an unpaid lunch that they clock in and out for that meal break, it is um a practice uh that I would say uh should be disfavored of deducting time from uh pay for meal breaks without a clock out. So you want to look at that. And under federal law, state laws are different. Any break of under 20 minutes must be paid. So you need to be very careful about that. So you want to match your time and pay records. Next, you want to make sure that the right people are in the tip pool, and the right people will be based on not just federal law but also state law. Generally speaking, managers cannot be in a tip pool. Okay. Now, what is a manager and what's not a manager is not uh always clear. Titles are not determinative, it depends on what the person does and doesn't do. And then um the last thing you want to do is you want to make sure that you've probably designated folks as exempt from overtime and salaried. So there are very specific regulations, federal regulations, and some states have layered on top of that, who can be salaried and exempt from overtime, and who must be paid overtime after 40 hours of work and a work week. So I would say if you're gonna do a basic wage, uh a basic compliance, you're gonna touch on all those things. The other last thing, and I think it's too much to talk about in this conversation, but safety regulations, you cannot have underage minors performing many jobs uh that are dangerous, and that's also a very local requirement. There's all kinds of enforcement requirements as to heat and operating machinery. Not a lot of machinery, but I've had uh inquiries from the Department of Labor where underage miners are operating bailers, can't do that because it's considered dangerous. So you need to uh also factor in health and safety regulations as and in particular how they might impact minors.

SPEAKER_00 13:49

What's something that you know restaurants think is normal or common, reasonable, that's actually, you know, maybe the most common violation that people make by mistake?

SPEAKER_01 13:59

Ooh, one of the things they don't always think about is who should be hourly and salaried. Okay. Depending on your venue, your sous chef may or may not operate as a manager. And it's very fact-intensive, and calling someone a sous chef does not solve the problem. The other issue is a floor manager or a first-level supervisor. So a first-level supervisor may not meet the requirements of an exempt uh executive. Um, and so you could be walking into an issue if you're paying them on a salary. I I think that's a a big issue, a very big issue. The other tricky thing that I think restaurant operators are facing these days, and and many in in all industries, I think this is becoming increasingly tricky, is what to do about accommodations.

SPEAKER_00 14:57

Okay.

SPEAKER_01 14:58

Restaurant work is physical.

SPEAKER_00 15:01

Right.

SPEAKER_01 15:02

And there are obligations which vary uh by jurisdiction about what to do when somebody says, I can't perform all the functions of my job. I need an accommodation. That overflows into what happens when a female employee becomes pregnant. Because now we have a new federal law called the Pregnant Workers' Fairness Act, which is much, much more restrictive on employers uh than um than what federal law had been. Uh, and while some states had laws on the books about accommodating pregnant employees, this is now a national law. And a lot of operators don't understand it. So um again, managers need to be trained on what to do when an employee approaches them with um a need for some kind of an accommodation, whether it's due to physical, mental, or uh uh issues relating to pregnancy.

SPEAKER_00 16:07

I definitely want to get into the training, and I just want to dig in a little bit on like this hourly versus salary debate. So, you know, you mentioned a um, you know, first-level supervisor. Let's say, oh, I'm a shift lead, I'm the head server on the shift tonight. Would your recommendation be to just be very distinct about, you know, we have a very set number of managers, these are our salaried employees, they're exempt from the tip pool, they're exempt from overtime, and then you know, just having very clear lines because it seems like when there's not clear lines like I've been here for a while, I'm on salary, but I work, you know, overtime and things like that. So, you know, what would your recommendation be there?

SPEAKER_01 16:43

So this the standard because of the amount of lib litigation on this issue is has evolved. So there was a time when first line shift supervisors were treated as exempt and you know they were vulnerable to litigation because to meet that exemption, you have to be involved in hiring, in firing, you have to spend a predominant amount of your time actually supervising. So if you're in a quick serve and there's only two people, you're working the line. You're not sitting in your office for the shift. And um now the standard, I believe, in at least with clients I've worked with, is you know, AGMs are often deemed non-exempt and overtime eligible. And that's just because employers want to avoid litigation. So I I I would say um in all matters involving workplace regulation, tolerance for risk is a big factor. So some employers are gonna say it's a little bit gray, I'll run the risk. Some employers are gonna say it's a little bit gray, I am not running any risk. And you know, in many of these situations, it's um it's a little bit gray. The trend these days is certainly uh shift supervisors and floor managers are very often hourly, and uh AGMs in some instances are hourly as well. Certainly in California, you're gonna see that because the requirement in California is even more strict than the federal requirement. Um, GMs are typically deemed exempt, and then you have area and regional managers when you are dealing with multi-location operators. Go into your decision making knowingly so that you know if you're taking a risk. Um, as far as the back of the house, look very carefully at what your sous chefs are doing.

SPEAKER_00 18:53

In terms of how they're spending their actual time at a desk versus on the line.

SPEAKER_01 18:58

Exactly. The title is not determinative. In some venues, a sous chef is definitely a member of the management team. In many venues, they're really just experienced line workers. And so um it's a very factual inquiry, and the title, again, is not going to determine liability.

SPEAKER_00 19:16

And I imagine a lot of that comes up, this blurred lines comes up with the tip pooling as well, like who is eligible for the tip pool. Yes. And that varies in jurisdictions as well. So let's dive into that a little bit um before we kind of get into some of the training here. Um, what's the most common issue you see with tip pool administration?

SPEAKER_01 19:36

The wrong people being in the tip pool is number one. And then the second is a lack of transparency about tips, who's in and how much everybody's getting. If I'm in the service staff and I don't understand how the tip pool works, and I don't understand who's getting what each shift, I'm gonna be suspicious. If you are transparent and you know, you show all your front-of-house staff uh the tip distribution from the ship before every shift, if you make sure that um tips are uh any cash tips are distributed, you know, instantly, very quickly at the end of the shift. If you're transparent, there's going to be much more trust in the process and much less questioning of the process. Because a lot of time litigation arises because folks don't understand and because they think the employer is taking their tips. Um, there are certain positions that get litigated a lot. Um is the expediter. If the expediter is not serving, they're probably not going to meet the tick pool requirement of being directly engaged in service. There are issues with respect to uh hidden barbacks who are not engaged in service. There may be issues with respect to um uh hosts who spend their time on the phone and don't get involved in service. You know, there are porters in some venues, um, stalkers, polishers. And again, unless those folks are dealing with customers, remember the title is not determinative, it's what folks are doing. The other issue with Tippool is this thing called 8020. 8020 is a federal regulation, but it's also on the books in some states like New York. Right now, I'm not going to go into the nitty-gritty. There's been a lot of litigation over whether the DOL's interpretation of 8020 is enforceable. You know, it's still in limbo in many jurisdictions, but a best practice is to make sure that uh your service staff are not spending a lot of time uh performing tasks that don't lead to Okay. So prep work, setup work, that should really, really be uh minimized. And if you need setup work done, you know, one solution is have somebody who just does setup work and pay them the minimum wage.

SPEAKER_00 22:17

It's interesting just lit L hearing this because I imagine from an operator perspective, employee perspective, it it the frustrating thing almost to me is it's coming from a place of you know, the hidden bar back, for example. I they're working hard. I want them to earn tips because they're contributing to you know the service that people are tipping for. So you know, it's it's not coming from a place of malice or like no, you know, trying to you know get one over on somebody. It's you know, wanting to take care of your people. So I think maybe framing it in that way is um, you know, you're not doing them any favors by including them in the tip pool because you know it could end up, you know, badly for you.

SPEAKER_01 22:51

Yeah, there may be solutions to that problem. You can rotate the position during the shift. There's like a lot of things you can come up with, and this is where my point about operational uh considerations. Um, you know, if you think about these things, um, and you need to have an extra bartender or bar back that's hidden because they're doing prep work, um, you might want to rotate that position, you might want to have that position rotated, you know, one shift during the week at one rate, not in the tip pool. And it's like there's a lot of solutions to these problems. And the the point is to be creative and to consult with somebody who knows what the regulations are so that your solution actually solves the problem.

SPEAKER_00 23:40

Right. So I I want to, you know, dive into some of this a little bit and what I think prevents a lot of this. We talked about audit prevention, but um in the day-to-day, it's really the thread that connects it is training people, right, to do the right thing, to make the right decisions. So, yeah, what would you like to see in a training program, you know, from an operator to show that they're taking compliance seriously?

SPEAKER_01 24:01

I think you need a multifaceted training program. So you're gonna need one training program on equal employment, opportunity, compliance, and that may be regulated by state or local law. So in New York, you have to do it every year, and the curriculum is basically predetermined. You can't have your folks sit in on that and then layer it with other things because there's, first of all, it takes too much time. Second of all, they're not going to remember everything. So, you know, that is one kind of training that's mandatory. Another kind of training, which is also really important, is wage hour compliance. Understanding the importance of having excellent timekeeping records, understanding that it's important to respond to inquiries regarding pay, understanding why the rules are the rules, you know, what to do when somebody misses a lunch, what to do when someone tells you they stayed late 15 minutes and they weren't authorized to do that. You know, under giving your managers uh the ability to understand why your directives are what they are. So I would do one on wage hour compliance also. And then I would handle another two different pieces, one on accommodation, like what to do when an employee says, you know, I hurt my knee skiing and I can't really climb stairs anymore or carry trays, or have to sit down every hour for 10 minutes because I'm now pregnant. Like those decisions have impact, and those decisions are made by supervisors in the moment. And if they don't know what to do, they're not gonna make they're gonna make the wrong decision 50% of the time. And the other one, um, in addition to the accommodation issue, is how to discipline. And this is the thing that's really important as well, because it's when employees feel that they're being treated differently from co-workers and that they end up filing claims of discrimination because they think that their treatment is based on a protected class, what they look like, their age, their gender, their national origin. And so consistency matters. And when you're when you're dealing with multi-location situations, it's very hard to be consistent. Um, and the only way you're gonna do that is to get folks together in a room every so often to talk about like what to do when someone's late. What do you do? What do I do? What's our expectation? What's our standard? You know, and you want to view um discipline as something to improve the quality of your staff, not to weep people out, because there's still challenges recruiting good staff. Anyone who has a decision that can impact an employee's conditions of employment needs a lot of training. The employees themselves need training on how to treat one another.

SPEAKER_00 27:05

Right.

SPEAKER_01 27:06

In addition to safety training and protocols and service and and of course all that. But I would say that uh management training is worth the investment always. You know, your managers want to learn.

SPEAKER_00 27:21

Yeah. And they don't want to be caught on the end of a mistake either, right? No, yeah.

SPEAKER_01 27:26

No.

SPEAKER_00 27:27

There are bad actors, of course, um, in any industry, and you know, there are people that are deliberately taking advantage of employees, but I I've had you know a majority of folks are just you know trying to make honest, uh honest business and making mistakes because the laws were just that complicated.

SPEAKER_01 27:42

A decision about how you word your contract for your special event or banquet. But do you need to look into that before you have your first banquet or before you book your first special event to make sure that the language is not going to get you in trouble with respect to tips or service charges and what you say about them to the customer. So um prevention is is really the key because we all know that the industry is a tough one, not always the greatest margins. And um, you know, one litigation could be a debacle. Now, one of the things I want to mention is that in the states at least, there's something called employment practices liability insurance, and that's something every operator should look into. Okay. Not selling insurance, but um policies may not be terribly expensive, and the policies uh provide coverage in the event of a loss due to uh an employment discrimination claim. There's also policies for wage hour violations, but those policies tend to not cover settlement, they tend to cover just attorney's fees. But that's something operators should look into as well and decide if that's right.

SPEAKER_00 29:04

Yeah, I mean the common you know narrative I think throughout our conversation is really just you can never be too careful, you can never call too many you know consultants, you can never have too much protection as form of insurance, like you just mentioned, um, and just being maybe overly um cautious in these senses because you know it really is the difference between you know being compliant and owing and owing a lot of a lot of money back. I'd like to shift a little bit just into you know, as we're coming up on time, big beautiful bill, the no tax on tips provision that's been everywhere. I think people are still misunderstand it. I think there's a lot of questions about it. So um, you know, what does this mean in practice for restaurants right now?

SPEAKER_01 29:43

They should be talking to their payroll providers about splitting up overtime comp and um non-overtime comp. Tip income has always been a separate line item, but depending on what you're doing with your payroll provider, you might not be able to see uh the overtime. And here's where it gets a little crazy because the tax impacts only the halftime. So in the United States, you get overtime after 40 hours of work at time and a half, your regular rate. But often the line item is for the overtime at one and a half times. The tax relief is only for the half. And so you want to have your operator, your payroll processing company, you know, do that for you. And um uh typically you have to direct your payroll uh processor to do that, they're not gonna do that automatically. So, same thing uh with respect to minimum wage and tip credit. Don't assume that your payroll processing company is staying up to date on all these rate changes. You have to direct them as to what the rates are, and if you direct them in incorrectly, they're not going to be responsible because most of the contracts you sign uh with your payroll processing companies, at least the ones I've seen, uh you don't assume liability. So that's very important as well. So tips have to be a separate line item, and then the halftime has to be a separate line item. And depending on the state you're in, some states don't really have much in the way of payroll taxes, but um, some states uh are gonna tax that halftime, and you're only gonna get relief under the federal law. Now, whether the employee gets a tax benefit is gonna depend on their individual tax situation. So employers should not advise about that. The other thing is some states are requiring, like New York, you have a 401k plan. So that is uh uh a plan by which employees can save money pre-tax for their retirement. Um, employers don't have to match it, but they have to provide the option for the plan. So that's new, that's coming across in states. Um it would be a great benefit uh to do that because you always want to encourage folks to save. The Pregnant Workers' Fairness Act, that's something that's fairly new. It's from 24, but um you know takes a long time for compliance. Um and and those are some uh key issues. But as far as what I see from our national practice across the country, we are still seeing a lot of wage hour litigation with allegations that folks are not being paid for all the time that they work, that they are being charged for pay for unpaid meal breaks that they didn't take, that they're not being paid for meal breaks. Um the last issue is there are still a lot of harassment claims. Yep. Usually gender, but not exclusively.

SPEAKER_00 33:09

Yeah, and it goes back to you know the training and making sure that your culture and and your values are well communicated, and you know, like you mentioned, discipline as well is important.

SPEAKER_01 33:18

And one of the big issues we talked about as well that I haven't mentioned is misclassifying folks as independent contractors. Okay. And that's that's something that operators who are starting up need to understand that there's no such thing as a 1099 employee. You're either a consultant, an outside contractor with a separate contract or an employee. And the other thing that we haven't talked about is um non-compete restrictive covenants. Those are not subject to uh federal law, those are state laws, and they're changing because some employers, I would say, overuse them, and a non-compete is really not supposed to limit someone's ability to get a job. I would not look at this except at the manager level. I would not go out and just take a form document. I would make sure that it's uh personalized for your particular situation.

SPEAKER_00 34:20

So don't have uh Chat GPT generate a contract for you.

SPEAKER_01 34:24

No.

SPEAKER_00 34:26

You don't know what you're gonna get. Uh when uh would someone might use a 1099 in a row, like obviously you said you're not supposed to do that, but in what cases may are people doing that?

SPEAKER_01 34:36

Let's say you're starting up and you hire someone to help you with design, with menu design, marketing, um, you know, your look, your signage, also social media assistance, which is part of PR. Um, those are clearly um gonna be folks who are appropriate for a consulting relationship. And I would recommend an independent contractor agreement with anyone like that. Um maybe someone who comes in and does training, um, who's not part of your team on a regular basis. Um someone who helps you design your beverage group. That would be a consultant. Yeah. And you should have an agreement with them, making clear that they're not an employee, they're not entitled to benefits, because a lot of these situations come up with an independent contractor files for unemployment. And then the state unemployment um agency says, employer, you didn't pay unemployment um taxes for this person. Why not? We haven't really focused on leave and sick leave. Um and there are a lot of states with a lot of laws, and you need to know how to navigate them. So, for example, in New York, depending on the size uh of your workforce, you may or may not have to pay X number of hours of sick leave versus Y. And in the city, there's now an obligation to provide unpaid sick leave from the first day of work. So you could be hired today, Monday, call out sick on Tuesday, and the law requires that you get that day off without pay.

SPEAKER_00 36:22

I see.

SPEAKER_01 36:23

So, you know, back in the day you would say you're sick on your second day of work, what is this?

SPEAKER_00 36:29

Right.

SPEAKER_01 36:31

Now in New York, you're protected.

SPEAKER_00 36:33

That's interesting. Someone's listening to this, maybe they're a little bit scared. I hope they're not scared. I hope they're they feel informed and and and armed with information to you know be more compliant um and feel better about what they're doing. That being said, um, you know, if someone is not sure, they're like, oh, maybe I need to get my stuff together. What's the one thing you want them to do differently after this tomorrow?

SPEAKER_01 36:54

Make sure you're paying your people properly. Okay. Um, that is the most important thing. That's critical. And depending, you know, I I can't even predict what next city might be um an ice target, but you gotta get those I-9, they have to be filled out perfectly. You wanna be able to um feel that your staff are gonna be safe, and that that's important today.

SPEAKER_00 37:26

So having those I-9s on file, properly, you know, ready to go, um, and just having them in a place that's easily accessible in case someone's asking for them right away.

SPEAKER_01 37:36

Exactly. And know your rights. We have a little brochure or a little handout we've we prov provide to our clients, you know, what to do when ice comes knocking, just so that your managers know what they can and cannot do. Um it's really again, knowledge is power and um knowing what your rights are and feeling confident in all aspects of your operation that you're doing the right thing.

SPEAKER_00 38:06

Absolutely. I think that's a a nice place to kind of put a cap on it. Um, if folks are looking to get in contact with you, what's the best way to do so?

SPEAKER_01 38:14

My name, felise.ecoman at jacksonlewis.com. So I really appreciate the opportunity to speak to you today and to all your listeners. And I hope folks have uh learned something.

SPEAKER_00 38:31

As I listened back to my conversation with Felice, three things stood out. First, the most expensive compliance mistakes are the one you accidentally build into your operation from the start. Felice's opening point that she made really fast is that the restaurants who end up calling her are the ones who didn't call her before they opened. Getting a workplace law advisor involved early, or your policies, tip pool structures, and hiring practices are set costs far less than fines or litigation. Second, in this industry, the job title is never the answer. Whether it's deciding who's in the tip pool, who qualifies as exempt from overtime, or who can be classified as an independent contractor, what matters is what the person actually does on a given shift. Your sous chef might be a manager or line worker, your expeditor might or might not be in service, your barback might or might not belong in the tip pool. The law doesn't care what you call the role, it cares what the role does. And lastly, most of the legal exposure in a restaurant does not come from the operator. It comes from the manager making a split-second call. It could be about a pregnant employee asking for accommodations, a shift that changed without notice, or a disciplinary decision that wasn't documented. Training your manager specifically on EEO, wage and hour accommodations, and how to discipline consistently is one of the biggest investments you can make. One bad decision can have an outsized impact. And that's the show. Thank you to Felise Eckelman of Jackson Lewis for joining us. You can reach her at felise.eckelman at jacksonlewis.com. If you enjoy the episode, please leave a review and share it with someone who needs it. Reach out to us at podcast at sevenshifts.com. I'm DJ, and this has been another episode of Appreciate.