California restaurant payroll: A basic guide

If you own a restaurant in California, understanding complex labor laws is key. Your management team should also understand all the logistics and laws associated with managing employees. California restaurant workers have a number of protections that owners must follow. One of the biggest things to consider: payroll. Here are a few things you need to know.

Tip sharing

Every restaurant employee must be paid the minimum wage. One of the advantages of California law is that there are no tipped minimums. Employers who have over 26 employees have to pay $14 an hour, and 25 or less must be paid $13. An annual increase will occur until 2023, when the standard becomes $15 per hour, regardless of tips.

In California, restaurant owners must pay workers must the minimum wage in addition to tips. Frontline workers, cooks, waiters and waitresses, and bartenders can share tips. There must be a documented process in place to ensure each employee is fairly paid. 

Additionally, any credit card processing fees related to those tips are the responsibility of the employer, not the employee.

Overtime

Current restaurant regulations dictate that restaurant owners must pay employees overtime pay. Anything over forty hours in a week, or more than eight hours in one day, is subject to overtime. Double-time pay starts after the employee has worked more than 12 hours in one day. 

Additionally, restaurant workers who work seven days in a row must receive time and a half for the first eight hours of the seventh day, and double time for each hour worked over the eight.

Employees cannot waive their overtime pay. It is a requirement of the law that the employer must pay. Salaried employees must also receive overtime pay unless they are earning twice the minimum wage. If so, they fall into the exempt category and do not have to receive overtime.

One of the trickiest areas of payroll is when restaurant workers work at more than one location. Employees are still entitled to overtime even if their hours are split between different locations of your business. Anything over 40 hours is considered overtime.

Breaks

Restaurant workers must get a thirty-minute unpaid meal break for every five hours of work. A second thirty-minute break is required if they are scheduled to work for more than ten hours that day, unless the workday hours are less than 12. 

Some employers grant a thirty-minute paid break if the employee must work during the break due to limited staff. Additionally, a paid ten-minute break is required for every four hours of work.

Split shifts

When employees are scheduled to work and are sent home between shifts, the employee must receive one hour of premium pay. The premium does not have to be paid if the employee makes more than minimum wage.

Payroll schedules

Restaurant owners are compelled by law to have a standard pay schedule so employees will know when they will be paid. Those who choose bi-weekly payroll must pay employees within seven days of the last day of the pay period. For instance, if the pay period is from February 7 – 20, employees must be paid by the 27th.

Restaurants that pay employees twice a month must pay wages owed within ten days of the last day of the period. That means workers who are due wages for the period between the 1st and 15th must be paid by the 25th, and workers who are due wages between the 16th and last day of the month are due by ten days after the last day of the month.

Vacation and sick time

While California law does not make it mandatory for employers to grant paid or unpaid vacation time to employees, this is an incentive employees appreciate. The perk helps keep morale high and promotes the attraction and retention of the best workers. 

Under California law, restaurant employees are must accrue paid sick leave at the rate of one hour for every 30 hours worked. This also includes any overtime they have worked. While this is a requirement, restaurant owners can place certain parameters around how it is paid out, and it can be capped at 24 hours per year. 

There is a caveat – if the employee or a family member is sick or needs preventative care, restaurant managers must allow them to use their paid leave. 

Jury duty and voting leave time

California law requires restaurant owners to grant time off for jury duty and cannot fire or penalize them for abiding by the summons. They do not, however, have to pay employees for the time used during jury duty.

Restaurant owners must allow time off to employees who wish to vote in an election. This time must be at the beginning or end of their shift, they must provide three days’ notice, and “no more than two hours of the time taken off for voting is without loss of pay.” All employers must post the notice of voting rights for employees ten days before an election.

Payroll tax

California law requires employers to pay:

• Unemployment insurance tax
• Employment training tax
• State disability insurance tax (deducted from the employee’s wages)
• California personal income tax withheld (deducted from the employee’s wages)

There are a lot of regulations to remember, and having a system in place that can track and organize these laws and restrictions for accurate payroll is important. 

Homebase is an all-in-one management platform with robust payroll features to automate the payroll process, like self-onboarding and e-signing of forms; automatic calculations of wages and taxes; automatic payment to employees, the state, and the IRS; and keeping track of California’s payroll laws and tax necessities.

The best part? The employee app provides on-demand access to hours, schedules, earnings, pay stubs, and W-2s. Additionally, requests for time-off or shift coverage can be made within the app, along with payday notifications.

Keep your restaurant compliant and employees happy with the many features of Homebase. Sign up today!