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Q & A: Fair Labor Standards Act (FLSA) Basics

Q: How do I know if the Fair Labor Standards Act applies to my business?

A: Every business located in Wisconsin is covered by state law, and most restaurants are covered by federal law as well (or at least have employees covered by federal law).

  • All of a company’s employees are subject to federal law if the company has annual gross revenue of at least $500,000.
  • Even if the company as a whole isn’t subject to federal law in addition to state law, its individual employees are if they participate in "interstate commerce": servers handling credit card, chefs ordering things from across state lines, people unloading trucks from out of state.

Q: Recently a server had a really bad run. She dropped a tray of plates earlier in the week, calculated a check incorrectly and bungled opening an expensive bottle of wine by getting cork pieces in it. Can I deduct money from her paycheck to recoup some of this money that her carelessness has cost us?

A: You need to be careful about using paycheck deductions as a disciplinary measure. Whenever a deduction is made for breakage or errors on the job, the employee needs to give written permission prior to the deduction. No blanket agreements are permitted because the employee must give permission on a case-by-case basis. If the employee offers to cover the cost of a breakage or error out of pocket, this is considered a voluntary action, but owners must use caution when deducting money from paychecks.

Employers whose restaurants are covered by federal AND state law need to be aware that the employee’s pay can’t be brought below the minimum wage (currently $7.25/hr.). Employee’s tips may not be taken as payment for a breakage or error. Deductions may only be taken from the employee’s actual base wages in excess of $7.25 an hour.

For businesses subject to Wisconsin law only, tips may not be taken as payment for breakage or error, but there is no maximum amount that can be taken from the actual base wages. Again, written permission is required for both tipped and non-tipped employees.

If an employee makes a huge and costly blunder, like dropping an entire tray of expensive dishes, you can approach her and see if she will agree to have money withheld from future paychecks to cover a percentage of the loss. If the employee refuses to allow this, you must find another way to discipline her. Remember, the disciplinary action (up to and including termination) must be about the employee’s negligence or carelessness, and shouldn’t be about their refusal to pay for any of the damage. As always, it is important to keep accurate records in personnel files. Breakage/error employee permission slips are available in your HERO manual and in the Members Only section of the WRA website.

While deducting money from paychecks is permissible in some situations, you need to follow the proper guidelines and should not use this approach as a disciplinary cure-all.

Q: What kind of information to I need to keep on file about my employees?

A: Every employer covered by the Fair Labor Standards Act (FLSA) must keep certain records for each covered, non-exempt worker (however, much of this information needs to be kept on file for exempt employees as well). There is no required form for the records, but the records must include accurate information about the employee and data about the hours worked and the wages earned. The following is a listing of the basic records that an employer must maintain:

  • Employee's full name, as used for social security purposes, and on the same record, the employee's identifying symbol or number if such is used in place of name on any time, work, or payroll records
  • Address, including zip code
  • Birth date, if younger than 19
  • Sex and occupation
  • Time and day of week when employee's workweek begins. Hours worked each day and total hours worked each workweek
  • Basis on which employee's wages are paid
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime earnings for the workweek
  • All additions to or deductions from the employee's wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by the payment

Wisconsin has its own recordkeeping requirements and there is a lot of overlap. Visit docs.legis.wisconsin.gov/code/admin_code/dwd/272/11 for Wisconsin’s requirements.

 
 
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WRA Membership Contact:

Kim Burns
VP of Membership
kburns@wirestaurant.org

Request Membership Info

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