In many locales, labor laws for the service industry severely limit the number of hours that a non-exempt employee can work. Hours worked can be limited by the industry, age, job description (position worked), hourly rate, holiday, length of shift, or even the day of the week. If your business works with service unions, these rules can become even more complicated, requiring that managers spend time tracking breaks and meal periods and indicating whether or not employees wanted to take their break. Some states and insurance companies perform regular Labor & Industries audits, imposing heavy fines or insurance premium increases for non-compliant businesses.
Example: A sandwich restaurant in California employs three sandwich specialists, all of which are scheduled to work less than 8 hours a day, six days of the upcoming work week. On the first day of the schedule one of the employees fails to show up for work and is terminated by management. The remaining two employees must work work the additional 28 hours at the business to cover the terminated employee. Neither employee receives a day off during the work week. Under California law, each of the employees must be paid 1.5x overtime for more than 8 hours of work in a given day, and 1.5x overtime for more than 40 hours per work week. Additionally, the two sandwich specialists will receive 1.5x – 2.0x overtime on the 7th day of their work week, as neither employee will receive a break this week. Failing to pay these increased wages is grounds for a lawsuit and an investigation by the state. Insufficient staffing may cost this California business several thousand dollars – in a single week!
Careful managers schedule around these frequently changing and complicated rules, ensuring that their business is compliant with all applicable labor regulations. However, businesses can inadvertently land themselves in hot-water when employees fail to show up, quit, or are terminated for otherwise legitimate reasons. Inexperienced managers, overburdened by other areas of schedule creation can forget about these rules, which are not core to the “making money” aspect of their business. Stiff fines and lawsuits are the result of failing to be in compliance.
In uncertain economic times managers must be able to schedule labor correctly in a consistent manner, keep employees happy, and reduce fines imposed by legislative authorities, such as the Department of Labor. Businesses should seek to use cost-effective computer systems, such as TimeForge, to ensure that proper scheduling techniques are utilized. Effective scheduling software will be able to schedule meal and break periods, accurately calculate overtime costs, and archive previous schedules for managerial review.
Example: The general manager at a car wash business needs to ensure that one manager is always on duty, as well as a number of attendants to apply soap to the vehicles before vehicles enter the automated car wash machinery. Each attendant is required to receive a number of breaks during their shift, and this particular business prefers to hire employees who are minors to fill “holes” in the schedule. During a normal work day, between five and seven employees are working. By not carefully scheduling the break and meal periods and minor rules, the manager may end up with a shortage of staff as multiple employees take breaks (or leave for the day) at the same time and minor employees leave for home. During the labor shortage, customers will not be serviced appropriately. Alternatively, the manager may choose not to send employees homes or allow breaks to proceed – grounds for heavy fines, a lawsuit, and/or increased insurance premiums.
Labor & Industries (L&I) audits are common in some US states (California, Washington, Oregon, and New York are especially common) in restaurant, food-service, retail, construction, and hospitality-related industries. These audits are performed by the state or by insurance companies to verify that the business has complied with all applicable regulations. Audits focus on unpaid overtime, minors working too late or too early, break and meal periods that are not properly documented, and other violations. Rule infractions can be punished with stiff fines and/or insurance premium increases.
Make sure that all employees are aware of the applicable rules for the city, county, and state / province. Follow federal / national rules (where applicable), corporate rules, and insurance regulations (if applicable). Where possible, automated scheduling systems should be utilized to enforce these rules reducing the administrative burden placed on managers – allowing management to work on other pressing issues such as training, customer service, and management tasks which cannot be automated by cost-effective technology solutions.
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