California Labor Laws Cheat Sheet for Restaurants

On top of managing staff, inventory, and customer satisfaction, restaurant managers in California face a very real, pressing, and potentially costly issue every single day – complying with California overtime law and other 2024 labor laws.

10% of California’s jobs are in the foodservice industry. Failing to comply with California’s 2024 restaurant labor laws — particularly California overtime law — can cost your restaurant millions.

Let’s look at a few examples:

• In July 2023, a Bay Area restaurant owed $469,000 in back pay for denying workers overtime pay.
• In 2018, the Labor Commissioner’s Office fined Cheesecake Factory restaurants $4 million for not giving overtime and breaks to janitorial staff.
• In 2021, the DOL famously uncovered that a NorCal restaurant hired a fake priest to extract confessions from their workers (along with other violations). They slapped the restaurant with a $140,000 fine.

Whether these injustices to workers are intentional or not, these situations cause tension in the restaurant and create a bad name for your brand, which could cause potential workers and customers to shy away from your restaurant.

Employee Pay Regulations

Minimum Wage

As of January 2024, California’s minimum wage is $16 per hour. Fast food workers will also have a minimum wage increase to $20 as of April 1, 2024.

Be sure to double check your local minimum wage, as this supersedes the state’s minimum wage if it’s higher. Some parts of the state — like San Francisco — require an $18.07 minimum wage for all roles (again, yes, including servers).

Overtime

In California, employees are entitled to at least 1.5x their regular rate of pay if they work:

• More than eight hours in any workday
• More than 40 hours in any workweek
• More than six days in any workweek

When employees work overtime, they must be paid at least:

• 1.5x the employee’s regular rate of pay for all hours they work over eight hours up to and including twelve hours in any workday, and for the first eight hours they work on the seventh consecutive day of work in a workweek.
• 2x the employee’s regular rate of pay for all hours they work over 12 hours in any workday and for all hours they work over eight hours on the seventh consecutive day of work in a workweek.

This might sound confusing. Basically, California’s restaurant 1.5x overtime pay regulation kicks in if employees work more than 40 hours per week or if they work more than eight hours in one day. However, if employees work six days straight and then more than eight hours on the seventh consecutive day, or if they work more than 12 hours in one day, you owe them 2x their regular rate of pay.

A couple more quick notes on overtime:

• Employees cannot waive their right to overtime pay. You must pay them what they worked for.
• You do owe employees for overtime pay even if you did not authorize the shift, so consider using a software like 7shifts, which alerts managers when employees are nearing overtime eligibility on schedules.
• Salaried employees are still eligible for overtime unless they earn at or above 2x the state’s applicable minimum wage. In that case, these employees are considered exempt employees in the eyes of California.
• Don’t forget to take into account if your employee works overtime at two of your restaurants. For example, if an employee works 25 hours at each of your restaurant locations, you owe that employee 40 hours at the normal rate and 10 hours at the overtime rate.

Overtime is one of the stickier employment laws to deal with. When you need your staff, you need them. But there are a few ways to see if you can save money. For example, you could conduct a cost analysis to see if it’s more cost-effective to hire more staff to work fewer hours per week rather than having a few team members work overtime.

Scheduling less of your employees for overtime shifts means they get a chance to rest as well, which is important for their mental health.

Tipping Laws

Under California law, tips belong to front-of-house staff and must be paid fully to them.

• Tip Pooling is legal, but must be done fairly. Make sure you have a clearly developed and documented process for tip pooling, (for example: 85% to servers, 10% to bussers, and 5% to bartenders) and use tip pooling tools to help.

• Managers and Owners taking servers’ gratuities is illegal, so don’t get caught with your hand in the tip jar.
• Credit Card Processing Fees on tips can’t be charged to the employee by the restaurant under California law. So, if a credit card company charges $0.15 + 3% to process the payment, your restaurant must pay that amount to ensure the server gets their full tip amount.

Use Tip Pooling Software to easily manage employee tip pools and make sure your team gets paid the right time, every time.

Recommended Reading: [Updated for 2023] The State-by-State Guide To Tip Pooling Laws

Split Shift Fees

Split shifts are a great way to lower labor costs during slower parts of the day, but they still cost you. If you send a minimum wage employee home between shifts, you’ll need to pay them one hour at the state or local minimum wage (whichever is higher).

This means that if you schedule an employee who works for the current minimum wage of $16 for a couple of three hour shifts, you owe that employee $112 (6 x $16 + the $16 premium).

However, if that employee makes more than minimum wage, you may not have to pay the premium. Say you schedule a cook making $19 ($3 above the minimum wage) for the same shift as above. That employee’s pay for the day would be $114 (6 x $19), which is above the minimum pay required for this split shift ($112). As such, this employee would not be entitled to a premium under California law.

So, if you decide to schedule employees for split shifts, consider asking the more skilled employees to work them. They’ve likely earned their higher wages and can produce more for the restaurant, and you won’t be spending on premium pay.

Payday Schedule

Restaurants must establish and stick to a routine pay schedule.

• If you pay employees weekly or bi-weekly, they must receive owed wages within seven days of the last day of the period. For example, if your pay period covers March 8 – March 21, payment must be given by the 28th.
• If you pay employees twice a month, they must receive owed wages within ten days of the last day of the period. Therefore, workers must receive pay for work done between the 1st and 15th of the month by the 26th, and ten days after the last day of each month for the time between the 16th and the last day of the month.

Employee Break and Benefit Regulations

Shift Break Laws

Restaurant employees must receive:

• A 10-minute paid rest break for every four hours of work, starting at 3.5 hours worked.
• A 30-minute unpaid meal break for every five hours worked.

These breaks must be offered to employees, with the laws surrounding meal breaks laid out in California Labor Code 512. However, Code 512 also specifies that employees and employers can mutually agree to a meal break waiver if:

• The employee is working six hours or less.
• The employee is working 10-12 hours and took the first meal break.
  Note: in this circumstance, only one meal break may be waived, but the employee is still eligible for both

Lactation Accommodation Laws

Restaurant employees who want to express breast milk for their infants must receive a reasonable amount of break time and space to do so.

Breaking this could result in one hour of pay for each violation and a $100 fine for each day the employee was denied.

Time Off Laws

Vacation Time

California law doesn’t require employers to provide paid (or unpaid) vacation to employees. However, this can be a point of concern to your restaurant staff. Paid vacation is a valuable perk in the restaurant industry, so offering it to your employees will help you attract and retain some of the best talent in California.

If it isn’t feasible for your business, work with employees to manage their schedules and time off requests a few weeks in advance. This way, you’re more likely to get coverage for all of your shifts and you encourage your employees to take personal time. Keep your restaurant staffed by satisfied, well-rested employees who feel appreciated.

Recommended Download: Free Restaurant Staff Availability Excel Template

Sick Time

A new update to California law requires employers to give 40 hours of paid sick leave (or five days, if it’s more) to their employees.

Those hours aren’t available right away, however — employees start accruing paid sick leave 90 days after their first day, at a rate of one hour per 30 hours worked.

You must post the paid sick leave poster for employees to view.

Holiday Time Off

California law does not require any business to provide time off for any holiday. Employers also don’t have to pay employees a premium holiday or overtime rate (unless the hours worked during the holiday qualify as normal overtime).
So, in the eyes of the law, holidays are just like every other work day. As we mentioned before, though, allowing employees to take some holidays off is key for good work-life balance.

Jury Duty

Restaurants need to give employees time off for jury duty, but do not need to pay them for that time off during their jury service. Additionally, restaurants cannot penalize or fire employees who appear for their summons.

Jury duty can last anywhere from one hour to one year, the latter being a rare circumstance. To accommodate the employee, see if they would be willing to fit in extra shifts in the weeks prior so they don’t lose out on too much pay.

Voting Leave

California employers must allow employees to take time off to vote in elections if they don’t have sufficient time to vote outside of working hours. Employees can take as much time as they need to vote, but they’ll only be paid for two of those hours. They must take the time at the beginning or end of their shift.

Employees must also notify their employers if they plan to take time off at least two days before the election.

Employers must post a "Time Off to Vote" notice at least 10 days prior to an election.

Processes to Follow

Predictive Scheduling and Fair Work Week Laws

While there are no statewide predictive scheduling laws in California, these locales have their own laws:

1. Los Angeles
2. San Francisco
3. Berkeley
4. Emeryville

Los Angeles

LA’s Fair Work Week Ordinance applies to businesses with 300 employee worldwide and states the following:

• Employers must post employee schedules two weeks (14 days) in advance
• Employers must give new employees a good faith written estimate of the shifts they can expect to work in a month. Existing employees can request a good faith estimate as well, and must receive it within 10 days.
• You must offer extra work to current employees before hiring new employees or using contractors.
• No clopens. Employees must have at least 10 hours between shifts, unless the employee has given written consent.
  • You owe the employee 1.5x their pay rate for each shift less than 10 hours apart.
• When you change an employee’s schedule with less than 14 days notice, they have the right to decline the changes. If they accept:
  • If they don’t lose any hours or gain more than 15 minutes of work, you owe them one hour of pay.
  • If they lose 15 minutes of work or more, you owe them 1.5x their pay rate for the lost work time.
• If you ask an employee to be on-call but do not call them in for work, you owe them 1.5x their pay rate for the lost work time.

There are scenarios where you are exempt from paying extra, like if the employee asks for the schedule change or if they fill a shift for a no-show.

San Francisco

The Formula Retail Employee Rights Ordinances apply to chain stores with over 20 employees in SF and 40 locations globally.

• Employers must post employee schedules two weeks (14 days) in advance
• Employers must give new employees a good faith written estimate of the shifts they can expect to work in a month
• You must offer extra work to current employees before hiring new employees or using contractors
• If you change an employee’s schedule with less than seven days notice, you owe them one to four hours of pay
• If you ask an employee to be on-call but do not call them in for work, you owe them two to four hours of pay

Of course, if these happen due to factors out of your control, like an earthquake or an employee not showing up, you are exempt.

Berkeley

Berkeley’s Fair Workweek Ordinance applies to restaurants with over 10 employees in Berkeley and 100 employees worldwide, including franchises.

• Employers must post employee schedules two weeks (14 days) in advance
• Employers must give new employees a good faith written estimate of the shifts they can expect to work in a month
• You must offer extra work to current employees before hiring new employees or using contractors.
• No clopens. Employees must have at least 11 hours between shifts, unless the employee has given written consent.
  • You owe the employee 1.5x their pay rate for each shift less than 11 hours apart.
• When you change an employee’s schedule with less than 14 days notice, they have the right to decline the changes. If they accept, you owe them one hour of pay.

• When you change an employee’s schedule with less than 24 hours notice, they have the right to decline the changes. If they accept:

  • If they lose hours, you owe them 4 hours of pay or the number of lost hours, whichever is less.
  • If they gain hours or the shift changes to another date or time, you owe them one hour of pay.

Emeryville

This Fair Workweek Ordinance applies to fast food restaurants with 20 or more employees in Emeryville and 56 or more globally.

• Employers must post employee schedules two weeks (14 days) in advance
• Employers must give new employees a good faith written estimate of the shifts they can expect to work in a month
• You must offer extra work to current employees until they reach 35 work hours in a week before hiring new employees or using contractors.
• No clopens. Employees must have at least 11 hours between shifts, unless the employee has given written consent.
  • You owe the employee 1.5x their pay rate for each shift less than 11 hours apart.
• When you change an employee’s schedule with less than 14 days notice, they have the right to decline the changes. If they accept, you owe them one hour of pay.
• When you change an employee’s schedule with less than 24 hours notice, they have the right to decline the changes. If they accept:
  • If they lose hours, you owe them 4 hours of pay or the number of lost hours, whichever is less.
  • If they gain hours or the shift changes to another date or time, you owe them one hour of pay.

There are a few exceptions to these rules, like if shift changes are 10 minutes or less to the start or end of the shift, or if the employee asked for the shift swap. They also account for factors outside of your control, like acts of nature or utility failures.

Scheduling takes up an enormous amount of time for restaurateurs, who then have to juggle countless shift swap requests. One solution for this is a scheduling software like 7shifts, which ensures compliance in this area by posting schedules online for employees to access. Employees can communicate with each other and coordinate shift swaps between themselves so you don’t have to lose any more sleep (or money) over scheduling.

Recommended Reading: Shift Schedules: The Ultimate How-To Guide

Employment Records

California requires businesses to keep records of all employees for three years. Examples of personnal records include:

• Employment application
• Payroll authorization form
• Notices about job performance, like performance reviews, recognition, warnings, and termination
• Notices about time off, like vacations, leaves, and layoffs
• Notices of wage attachment or garnishment
• Notices of education and training
• Attendance and payroll records

While this seems like a chore, it can be immensely helpful if you are faced with litigation. For instance, these records can prove whether or not an employee has grounds for overtime back pay.

Charging Your Employees

Restaurants can’t force employees to pay for their uniforms or pay to maintain them. For example, if you require cooks to wear chef hats with your restaurant logo on it, you must provide those.

Additionally, employers can’t hold staff responsible for register shortages or customer walk-outs unless the shortage is a result of a “dishonest or willful act, or by the gross negligence of the employee.”

Classifying Your Employees

Calling your full-time employees independent contractors may seem like a good way to save money — but it’s actually not. Misclassifying your employees as independent contractors in California can result in fines of $5,000-25,000 per violation in addition to unpaid payroll taxes.

Workers can only be considered independent contractors if they meet all of these:

• They perform the work without the employer’s control and direction
• They perform the work work outside the usual course of the business
• They customarily engage in an independently established trade, occupation, or business of the same nature

Independent contractors fall under the category of exempt employees, in addition to employees whose hourly rate of pay is greater than or equal to 2x the hourly minimum wage. It’s worth noting that exempt employees may not be eligible for overtime or the breaks that non-exempt employees are.

Health & Safety Laws

Maintaining safe working conditions for your employees is an often overlooked part of California labor laws. The Department of Industrial Relations notes that California restaurant owners should avoid violating health and safety regulations by taking measures like:

• Keeping the floors and platforms free from danger, obstruction, and – reasonably – oil, grease, and water.
• Establishing a written Injury and Illness Prevention Program and Hazard Communication Program.
• Making first-aid kits available.
• Failing to provide proper equipment or necessary protective clothing.

Payroll Tax

California requires four types of payroll taxes to be paid:

• Unemployment Insurance Tax (Paid by Employer)
• Employment Training Tax (Paid by Employer)
• State Disability Insurance Tax (Deducted from Employee Wages)
• California Personal Income Tax (Withheld from Employee Wages)

Strengthening Compliance with Technology

That’s a lot of labor laws. That’s why 7shifts has developed solutions to help California restaurants reduce the risk surrounding restaurant labor laws in the state and adhere to California’s labor compliance.

Built-in Compliance Tools

Developed to help restaurateurs abide by California labor compliance, 7shifts has multiple features that can save your restaurant thousands.

With 7shifts, restaurant managers can easily share schedules two weeks in advance, preserve records of all employees, and alert employers when an employee is approaching their break.
7shifts also alerts you when your employees are approaching overtime eligibility to control spending and save money. Learn more about 7shifts’s Restaurant Labor Compliance Software.

Recommended Reading: The 11 Employee Scheduling Best Practices + Tips for Restaurants

Optimizing the Punch-In/Out Process

The 7punches Time Clocking Software app is the best way to hold employees accountable for their breaks and their clock-ins. 7punches allows managers to set limits on early clock ins, enforce breaks, prevent unauthorized punches, and auto punch-out employees after a certain time. Even the most well-intentioned employees won’t be able to come back early from breaks or clock in early to show their dedication to the job — which means you’ll save money and have a better-running staff of employees.

Now that you know how to comply with these labor laws, you can use your new knowledge to empower your restaurant’s team and run your restaurant without getting fined.