Changes to Tip Rules

Who gets paid tips and who doesn’t? Can you force an employee to share tips? Can a supervisor take a share of tips? Well, the rules for tips are being revised (and hopefully simplified).

PLEASE NOTE: These changes in Federal regulations are not yet finalized, so there may be some changes to them. However, any restaurant or hospitality manager should be aware of what’s coming because it affects how tips are distributed and how tipped staff are paid.

According to law firm Littler, Mendelson P.C.,

Over a year after Congress amended the Fair Labor Standards Act (FLSA) to clarify tip ownership questions, the U.S. Department of Labor (DOL) finally published a Notice of Proposed Rulemaking on October 8, 2019…  The proposed regulatory changes address two key areas.  First,… clarified who can, and who cannot, receive tips when a tipped worker does not receive a tip credit.  Second, the proposed regulations adopt the DOL’s 2018 opinion letter that outlined the proper scope of the dual jobs regulation and the so-called 80/20 Rule involving work done by employees receiving a tip credit.

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The regulations will reinforce that tip pooling requirements are okay, but cannot include supervisors or business owners. The law firm FordHarrison states, “If the proposed rule is finalized, employers who do not take a tip credit will be permitted to include “back-of-the-house” employees who usually do not receive tips (such as cooks and dishwashers) as part of a tip pool. Lastly, the existing rule prohibiting employers from keeping employees’ tips or participating in tip-pooling arrangements will remain.” Who qualifies as an owner or supervisor is also clarified, defining a supervisor as one who meets federal guidelines for salaried “exempt” classification.

The part of this tip rule change that is getting the most attention is the 80/20 rule, which could become very complicated for employers to track. Basically, you had to prove that your tipped staff spent less that 20% of their day working on duties that weren’t tip generating (like cleaning, prepping settings, etc.). As explained by the law firm Jackson Lewis P.C.,

The 20% Rule… requires employers to pay tipped employees the full minimum wage, rather than the lower cash wage applicable to tipped employees, if an employee spends more than 20% of his or her time performing allegedly non-tipped duties (which were undefined).

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The proposed changes will allow for side work done while also doing tip-based work, such as prepping sides or cleaning or polishing utensils. According to Ogletree Deakins,

The proposed rules also modify the frequently litigated 80/20 rule related to side work performed by service employees. The proposed rule explains that an employer may take a tip credit for any amount of time that a tipped employee performs work related to non-tipped duties contemporaneously with his or her tipped work, or for a reasonable time immediately before or after performing the tipped duties.

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All of this raises the question of whether you have your employee policies set in writing to prevent any confusion about your restaurant’s rules and procedures. Are you a California hospitality business looking for an employee handbook? If so, learn more about Custom Employee Handbooks.


(This article provides an overview of certain federal, state, or local laws. It is not intended to be, and should not be construed as, legal advice by New Wind. We do not provide any legal advice, financial advice, or tax advice. Please see an appropriate professional for such services.)

Why Have a California Employee Handbook?

Custom Employee HandbookAs a business owner or manager in California, you have to ask whether your organization needs an employee handbook.  How does it help me run the business?  What kind of businesses should have an employee handbook?

1. Avoid costly policy mistakes.  Having your employee policies in writing helps the boss(es) do the right thing.  Know when overtime begins, understand how vacation time is calculated, learn the difference between exempt and non-exempt employees, and so on. Does OT start at 8 hours and/or 40 hours?  Who qualifies to be salaried?  A California employee handbook would answer all those basic policy questions.

2. Stop employee claims of ignorance.  Employees will have your policies in writing, so they can no longer claim that they did not know breaks only lasted 10 minutes or that smoking is prohibited indoors. Do all of your employees know what your rules are?  When everyone gets a copy of the “rule book” they can no longer claim ignorance.  With a California employee handbook, your policies will be clear and consistent.

3. Written Policies help to defend against lawsuits.  Getting your policies in writing can help when someone claims you were discriminatory or unfair in your labor practices.  Does an employee handbook make you immune from court cases? Of course not, but having your policies well-defined and properly distributed to all employees can sometimes be a great aid when having to defend yourself.  An employee handbook offers protection for your business.

4. Get all your supervisors on the same page.  If you have more than one manager, then it can get confusing.  One boss might contradict another.  However, when everyone has the same written policy to refer to, then the confusion is much less.  You will lower the chance of misunderstanding or frustration among staff and you will equip your supervisors with a good HR resource.

What policies are typically included in a California employee handbook?  Expect a comprehensive handbook to be about 30-40 pages in length and to include the following rules and regulations:
+ at-will employment
+ non-discrimination
+ anti-harassment
+ vacation
+ sick leave
+ overtime
+ employee classifications
+ jury duty
+ smoking
+ social media
+ introductory period
+ leaves of absence
+ bereavement
+ pay dates
+ driving while on duty
+ parking rules
+ drug testing
+ dress code
+ employee conduct
+ termination
+ holiday pay
+ customer service
+ workplace security
+ confidentiality
+ and much more

Customized Policies– In addition to standard employee policies, some services provide customized policies for your specific business or industry. You may want to consider adding custom policies covering topics such as HIPAA, driving safety, money handling, hygiene, or telecommuting.

What is not included in a typical handbook?  A typical handbook does not cover job procedures, which are too intricate and job-specific.  Other topics not covered include  job descriptions, day-to-day work procedures, and so forth.

How do I get a California employee handbook?

You have 3 basic options for designing a staff handbook:

1. Do-It-Yourself. If you are going this route, we would recommend using a lawyer-vetted template or software program, such as the excellent one provided by the California Chamber of Commerce. Pricing starts at about $250, plus all the hours you’ll need to spend completing it.

2. Get Assistance. Hire a professional consultant to help you complete a software program, costing more but saving you dozens of hours of your precious time. Consultants aren’t cheap per-hour, but they can put a handbook together much faster than you ever could, so the actual cost might end up being less than if you take the DIY path.

3. Hire a Labor Lawyer. This is the ultimate level and is recommended for those who have concern of legal issues or complex labor relations, such as a unionized shop.

Do Employees Get Paid during Shutdown Caused by Power Outage?

Are businesses required to pay employees during power outage shutdowns?   Many companies have faced an emergency shutdown due to power blackouts, so it is important to know whether you need to pay employees during those shutdowns.  Pay requirements differ by employee classification and by state law.

Do you pay employees during an emergency closure?

You’ve lost power to your business and are unable to stay open. Not only do you lose income from the lack of sales or the lack of productivity, you need to decides what to do with your employees. Are you required to pay them even though they can’t do their regular work?

The answer is “yes”,  ”no”, and “sometimes”.

It really depends on the employee’s classification and if you’ve been able to get them advanced notice. So let’s break it down by employee type:

Hourly Employees

You do not have to pay hourly employees who cannot work their shift when your business is closed down due to an extended emergency like a power outage due to high winds. To prevent confusion on this point, it is best to have a written policy stating that you do NOT pay during closures due to inclement weather or natural disaster. But there is an exception in certain conditions, so read on.

Some states do insist on Reporting-to-Duty pay that says you must pay any employee who shows up to work as scheduled even if there is no work available.  Among those states are CA, CT, DC, MA, NH, NJ, NY, OR and RI, though some limit it to certain industries while others only to minors (OR).  So even if the business is closed, if the employee makes it to the worksite you have to pay.  The rules differ by state on Reporting-to-Duty Pay, but they usually require a half-day’s pay: 2 hrs minimum, 4 hrs maximum.  Some states also limit Reporting Time Pay to just those who are scheduled to work 4 or more hours.  See your particular state’s website for details on applicable labor law.

In California, you do NOT have to provide Reporting Time Pay  if the utilities are off:

Q. Are there circumstances where reporting time pay doesn’t apply?
A. Yes, there are a number of instances whereby an employee reports to work as scheduled and is sent home immediately, or works less than half his or her usual or scheduled day’s work and is not entitled to reporting time pay.No reporting time pay is due:

  1. When the employer’s operations cannot begin or continue due to threats to employees or property, or when civil authorities recommend that work not begin or continue.
  2. When public utilities fail to supply electricity, water, or gas, or there is a failure in the public utilities, or sewer system.
  3. When the interruption of work is caused by an Act of God or other cause not within the employer’s control, for example, an earthquake.

Want to read more? Link to the rest at the California Department of Industrial Relations.

Salaried Employees

Salaried exempt employees must be paid if they work anytime during a workweek and are available to work the remaining days, whether they actually work or not.  You cannot cut an exempt employees pay just because you cannot get your full 40 hours out of them this week, just like you do not have to pay them OT during those busy weeks when they work more than 40 hrs.

Be sure you have your employees correctly classified.  Some businesses think they can classify anyone as Exempt, but that is not true.  Generally, these jobs demand an advanced degree, pay in commissions, or are an executive position.  The usual employees who can be exempt are:
1. Upper Management
2. Certain Other Management
3. Certain Creative Professionals
4. Certain Advanced-degree Professionals
5. Certain High-Paid Technical Employees
6. Certain Highly Commissioned Sales People

Plan Ahead for Possible Emergencies

Be prepared in case of an emergency shutdown by having an up-to-date contact list for your employees.  If your business must close, especially for more than a day, then call all employees and revise their schedules as needed.

Have the correct policies in place: Once again, this is an area where a good Employee Handbook can help.  Set up your employee policies for OT, Exempt Employee Deductions, Inclement Weather, Natural Disaster, and Report to Duty Pay.  Consider a professionally designed Employee Handbook, customized to your business.

Typical call-in procedures:  Your written bad weather policy  should tell your employees what is expected of them.  Usually, it will state that they are to call-in (if phone system is operating).  The call-in is considered an excused absence.  If you pay for bad weather days, you should state the amount of hours and who is eligible (full-time? part-time? temp employees?).

What is considered “bad weather”?  Your written policy should give examples of what is considered inclement weather.  Some typical weather reasons are: snow, whiteout, ice storm, severe flooding, dust storm, hurricane, tornado warning.    (You should also add a paragraph on closure due to such as earthquake, explosion, fire, utility outage, or terrorist attack.)

Have your policy in writing. It is important that you let your employees know what your policy is whenever a shutdown should occur. The best way is to get your Bad Weather Policy in writing before the event happens.

As part of any Employee Handbook, you should have a policy for inclement weather, stating your pay policy (usually it is “day off without pay”), call-in procedures, and examples of what is considered “bad weather”.

Promo: Employee Discipline eBook is Free for Limited Time

Target the Work, Not the Worker bookAmazon is promoting Eric Lorenzen’s eBook Target the Work, Not the Worker: Effective Employee Discipline for Managers, Supervisors, and Business Owners today through Friday (Oct. 9-11, 2019).

Get your copy of this e-book for FREE.

Target the Work, Not the Worker is a concise, step-by-step guide on how to warn employees, write up troublemakers, and fire those employees who can’t be salvaged.

  • Learn the 4 steps of discipline, what progressive discipline means, and how to document poor performance.
  • Understand how to control your own attitude and responses.
  • Get a better understanding of why employees sometimes fail and the importance of not guessing at what might be their motivations.
  • Master the when, where, how, and what of any disciplinary meeting.
  • Understand what laws to watch out for when firing an employee.

“Target the Work, Not the Worker will help you become a more effective leader for your team.” Target the Work, Not the Worker is part of the How to be a Better Boss series and is intended as a general business guidebook, addressing the needs of managers, supervisors, and small business owners in the USA.

News Link: Targeted Help Wanted Ads Can Get You in Trouble

One of the key features of advertising on sites like Facebook is the ability to target your ads to a particular demographic. You can aim at millennials or city-dwellers or those who like dogs. The ability to get that granular in your ads can often greatly improve your click-through rate and, more importantly, your sales rate.

Unfortunately, some rather big companies have recently been busted by the Equal Employment Opportunity Commission (EEOC) for targeting their Help Wanted ads at particular demographics. As reported by Xpert HR:

The EEOC said that the following companies posted job ads excluding older workers:

  • Capital One;
  • Enterprise Holdings;
  • Edward Jones; and
  • Drive Time Auto.

The agency also found that three other companies excluded women and older workers from viewing job ads:

  • Nebraska Furniture Mart;
  • Renewal by Andersen; and
  • Sandhills Publishing Company.

Want to read more? Link to the rest at Xpert HR.

Why are these ads wrong? Well, this is a new version of the old newspaper ads that declared things like, “Looking for a strong young man to work in warehouse” or “Due to travel requirement, applicants should be unmarried” or even more offensive Want Ads that declared minorities shouldn’t even bother applying.

Instead of spelling out their apparent bigotry, the companies were making sure their Want Ads weren’t even seen by undesirable job-hunters.  They may not have meant to discriminate, but the EEOC states that is exactly what they were guilty of doing.  By their ad-targeting, they were seeking out only a particular type of job applicant (young, male, etc.) and were excluding all others who might have been interested in working for them.

News Link: Employer Credit for Paid Family and Medical Leave

Here’s a bit of government news that could benefit some business owners. You might be able get a tax credit for the FMLA benefits you give your employees. Of course, there are numerous restrictions and requirements, like that the employee must have been with you at least 1 year, they can’t earn above a certain amount, and you must be offering a certain minimum amount of paid time off.

According to the IRS,

“Internal Revenue Code Section 45S provides a tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they’re on family and medical leave.”

The article is done in a Q and A format, and is rather lengthy.

Want to read more? Link to the rest at the IRS Newsroom.

Questions to Ask BEFORE Signing a Website or Marketing Contract

Talk to New Wind before signing a contractHere at New Wind we have talked with numerous business owners who are stuck in a bad contract for their website and/or marketing. Contracts that cost a lot of money for services that are mediocre at best.

We’ve seen some of the worst contracts from large national corporations (Nationals)* that focus their “services” on small businesses. They claim that they will do it all for you- that you needn’t bother taking precious time trying to get a website and marketing going. However, in the end, that business owner was stuck with a site that was very generic, poor performing, and uninspiring. The marketing offered was costly and not specific to that particular industry/ community/ client.

(* We purposely do not list the names of the various Nationals in this post because they have a tendency to change names as they merge with other national corporations or change names as they create new brands for the same type of services. We feel it is more important to educate others about these general business practices and how they can hurt your business.)

You can do much better than these business owners. Don’t follow in their footsteps. Instead, ask the tough questions up front and insist on getting answers. Don’t sign until you know things like total set-up costs, total ongoing costs, and who is in control of it all. Keep reading for a list of Top 10 Questions to Ask.

This is your business. Don’t let some other company take over. Would you ever hand the keys to your physical business to some stranger? If not, then why would you hand over the keys to your Online Presence to a stranger? That’s what happens with many contracts from national companies that provide website design and marketing services. Too many of them will demand a lengthy commitment to what ends up being a very mediocre product. Learn the facts and avoid the pain.

Eric Lorenzen
New Wind Business Solutions

Top 10 Questions to Ask before Signing

1. Who controls your domain name? Some Nationals will register (in their own name) a website domain for you. This should be a deal killer for any business owner because it means that they control the website domain, not you. When you finally decide to leave their services, you might be able to buy the domain name from them (for a steep price), but there is no guarantee that they’ll sell it. You might have to create a whole new domain name for your business.

2. Who owns your website? Some Nationals will claim ownership to all the content on your website, even if you are the one who provided the photos or text. If so, then when you finally leave their services, you lose all of that and have to start over from scratch. You’ll walk away with your domain name but nothing else. Make sure the contract states that you retain ownership to all the content. Otherwise, they will keep it.

3. How long is the time commitment with this contract?  Many Nationals require at least a one year commitment, with some implementing automatic contract renewals unless you actively opt-out within the prescribed window. At New Wind, most of our services are for a one-time fee. Some of our ongoing services require a 90-day commitment, but after that you can cancel anytime you want. Before you sign, make sure you know how long you will have to stay in the contract- just in case it doesn’t work out.

4. Can you edit your own website content? Will you be able to easily update or alter the information on your website? Many Nationals will not give you administrative access to your own website, forcing you to go through them to make any changes. At New Wind, we give you full access even if you hire us to manage your website. Should we part ways, we give you all the passwords so that you can take over.

5. Whose phone number will be listed on the website, online listings, and/or marketing material?  Some Nationals will create a new phone number for your business (or insist that you transfer your current number to them), claiming that they need to control that number so that they can track the effectiveness of their marketing and to provide you a log of all lead calls. This tracking can be somewhat helpful, but we believe it’s not worth losing your phone number over. When you finally decide to leave that National service, you’ll be leaving the phone number that everyone knows. They might sell it back to you (at a steep price) or they might redirect that phone number somewhere else entirely. Do you want to risk that?

6. Who controls your online presence at places like Google Business and Facebook? If you hire a National to manage your business listings and/or social media presence, be sure they give you administrative access to those sites. Otherwise, you might be forced to abandon everything when you decide to discontinue their services.

7. Do they understand marketing in your area? Most Nationals will offer Facebook ads or Google ads because they can do that without really understanding your specific market. At New Wind, we take the time to understand you and your goals, and we offer help finding the right mix of marketing that is cost-effective and gets the best ROI for you. We’ll even propose direct mail or print ads, if they are right for you. Those Nationals have a marketing team that is on the other side of the country (or in some other country), so they don’t understand the local market. We do.

8.  Who writes the text that appears on your website or ads? Most Nationals will offer to write the text, but it will usually be a bland, generic text that could apply to any similar business. Their service is the sort of cookie-cutter, fill-in-the-blank text that’s boring and un-informing.  In addition, they often will claim control of that text, not allowing you to use it should you decide to leave their services. At New Wind, we include text writing in our services, and that writing is done by a published author who customizes it to your particular business. That text is custom to your business and it belongs to you.  Why choose bland when you can get something beautiful?

9. Will they actively market your business? Every National offers some type of marketing plan, but often it is nothing more than setting up your Google Business profile and then directing that traffic through their own site. Google offers business listings for free but Nationals will charge you a monthly fee to “maintain” it. This is NOT active marketing. Some Nationals will even claim special or exclusive relationships with Facebook or Google. If they claim that, ask them to prove it in writing because it’s probably not what you think it is.

10. How much will they customize? And at what price? Nationals make their money on volume. They seek to attract lots of small business clients and sell them a template for their industry. Own a construction company? Great- here are your 5 options to pick from. Own a dental office? Wonderful- here are your 4 options. The more they can automate it, the better. If they offer customization, it will usually cost much more than the original low price they quoted. At New Wind, our prices include customization of your website to your specific needs and wants. Nationals can’t do that when they have to generate hundreds of sites all over the world, at least not at the prices they advertise. Make sure that the product their offering is what you really want. Maybe an overpriced, cookie-cutter website works for you.  For most, it would be a disappointment. That’s why we created this list- to warn prospective clients so that they can avoid getting a bland site with a lengthy contract. Expect more. Talk to us.

New Wind Business Solutions

#localmarketing #smallbusinesswebsite #businessmarketing #webdesign

Marketing Strategies

At New Wind, we can help create and run your marketing plans, including:

  • Email Marketing
  • Online Marketing
  • Print Marketing
  • Direct Marketing

From print ads to direct mailers. From online ads to lead generating services. We can craft a marketing strategy unique to your business. We take the time to understand your needs and wants, because we want your business to thrive.

To learn more, see our Marketing Plans page.

Marketing Plans by New Wind

Connect with Customers Online

Develop your online presence with our help. Don’t go unnoticed by everyone any longer. We can help you to be the obvious answer to online searches and win more customers, through

  • business listings
  • local landing pages
  • product pages
  • ad landing pages

We can help you to become much  BIGGER online and help you to get noticed by others. Go to our Online Presence page to learn more.

Online Presence by New Wind

Websites for Business

We design rich yet practical websites for small businesses, non-profits, and individuals. Your new website will be a based site, making it very affordable, easy for you to maintain, and simple to update. Your site will have robust SEO, excellent site visitation analysis, and a beautiful appearance.

We don’t make super-fancy websites, but we do make sites that are practical and professional in appearance.

Visit our Website Designing page to learn more.

Website Design by New Wind