The Payroll Blog

News, tips, and advice for small business owners

Tax and Safety Laws for Restaurants

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Stephanie Davis

As a restaurant owner, you know that there are specific rules you need to follow, for both your restaurant safety and properly paying your employees.

A restaurant bill with cash to pay the bill in the envelope.

Violations in the restaurant industry can be costly and even dangerous, depending on the scenario. To ensure that you are staying compliant in all areas, we have gathered a list of a few things you’ll want to be aware of while operating your restaurant.


We have previously discussed OSHA and what it means for your small business in our blog post on workplace safety. As a quick reminder, OSHA stands for The Occupational Safety and Health Administration, which is an agency run by the U.S. Department of Labor that protects employees from becoming injured or ill on the job. When it comes to the restaurant industry, OSHA has regulations that must be followed, such as having a certain number of fire extinguishers present or setting age limits for employees. Additionally, it’s common to have rules in place for how clean the floor of the restaurant must be during operating hours and the signs that must be visible, such as “employees must wash hands before returning to work” in public restrooms.

Health Codes

In addition to staying OSHA compliant, restaurant owners need to be aware of food service codes and regulations that are mandated by the U.S. Food and Drug Administration (FDA). The FDA is responsible for ensuring that restaurants are safely preparing and handling food. Remember when Chipotle was in the news for E. coli outbreaks? The FDA was involved with investigating what was happening at the restaurants and determining how E. coli was spreading. To ensure that your employees are properly handling food, it may be worth having them take a course on proper practices. This is a course that may be mandated by your state rules, but if not, it’s something you should consider having employees due to ensure that your customers are staying safe.

Wage and Hour Laws

The restaurant industry is unique in the way employees are paid. When a restaurant employs individuals who are tipped, they typically receive a lower hourly wage and have the opportunity to make up wages with the tips they earn. The Fair Labor Standards Act (FLSA) is responsible for regulations surrounding tipped employees to ensure that they are receiving the wages they should. Sometimes, tips aren’t handled properly by employers, and that can lead to problems such as paying back missed wages, and in serious and extreme cases, lawsuits started by employees.

For restaurant owners who do not have tipped employees, it’s important to be aware of minimum wage regulations. Minimum wage rates vary by state, so you’ll want to check in with the rules for your state to understand what you should be paying your employees. It’s also worth noting that local, state, and federal minimum wage rates may differ. If any of your employees are covered by all three rates, you must pay them the more than if they were not.

In most cases, your restaurant employees are going to be considered non-exempt employees because they follow an hourly format. A non-exempt employee is eligible for overtime wages when they work more than 40 hours in a week, so it’s crucial to have your employees classified correctly to ensure they earn the proper wages.

Restaurant Payroll Tax Laws

Payroll in the restaurant industry can become slightly more complicated due to the nature of the employees hired. The biggest thing to be aware of with restaurant payroll is accurately accounting for your tipped employees. Tipped employees have special tax obligations that require compliance and oversight by managers. If tips are shared among team members via a tip pool, these regulations can get even more complicated. If you properly follow tip reporting codes, you can benefit from the FICA Tip Tax Credit. To qualify, managers must complete IRS Form 8846 to receive the credit and IRS Form 8027 to report tips if the restaurant employes more than 10 tipped employees.

Between running a restaurant, managing employees, and calculating payroll, you may be looking for some extra help. Choosing an online payroll software for help with restaurant payroll can leave you with more time to focus on your business, instead of handling complicated payroll and tax laws.

When you choose SurePayroll to help with your restaurant payroll, you will have access to:

  • Minimum Wage Alerts: We can notify you when employee wages and/or tips do not reach the minimum wage requirements.
  • FICA Tip Credit Report: This report will calculate and track how much you are entitled to claim on your annual business taxes.
  • Tip Sign-Off Report: This report provides written proof of employees’ tips received and declared, which helps you stay compliant as a business owner.

Outside of restaurant-specific help, you’ll also have access to:

For more information on how SurePayroll can help with your restaurant payroll needs


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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.