As you build your brewing business, you will ultimately hire employees to help you with the daily operations workload. There will be employees working on the brewing side, helping in making the beer. Then there will be sales employees who will look after the sales of your product to other retailers like restaurants and bars, or even wholesale distributors. The sales team may also be responsible for sale of other branded products such as promotional items or other products sold in the retail store portion of the taproom. Lastly, the front of house staff that work your taproom such as the bartenders, servers and front of house managers.
This entire team of employees is very crucial to the image of your establishment, as they are the first people the clients interact with. Loyalty to a brewery is built on the experience at your brewery as much as it is on the quality of the beer products. Your staff is responsible for the image of your company to the community. These individuals create the atmosphere and experience that brings back repeat customers and results in positive reviews of your establishment and your beer. Let’s look at a few of the rules regarding employee compensation for these various team members.
Independent Contractor or Employee:
Employees who work at your establishment in the brewing or taproom operations are almost always going to be deemed employees. Independent contractors make their own hours and get paid by the project rather than an ongoing hourly compensation model. They have the ability to work for many places and to pick and choose which projects to accept or decline. (The Labor Department will look to see that they bear risk in the profitability of the project. That is the sign of an independent business.) Independent contractors may work the same positions or some other position at other establishments as well. In the end, the level of control your company has over the methods and means of work for these team members will render them as employees in almost every case.
Salespeople, on the other hand, may be independent contractors and paid a commission based compensation rather than hourly wages if their job is limited to sales functions. They generally get to make their own hours if they are independent contractors and can work from home or the road rather than be expected to be at the brewery. If their job involved several different responsibilities, if any of them are more like employees, it is best to treat the team members like an employee for all of his or her work.
Exempt or Non Exempt:
Non-exempt employees are generally paid hourly and are entitled to overtime and meal and rest breaks. Exempt employees, on the other hand, are paid a flat rate salary regardless of the number of hours worked. Under federal and state law, the default classification is non exempt status. Most of your brewing staff and front of hours staff will always be non-exempt. The managers, however, may qualify for the ‘executive’ exemption category if they meet certain criteria including supervisory authority and responsibilities and oversight over a certain number of direct report employees.
Front of house employees generally receive tips for the service they provide. These are provided voluntarily by the customers and are property of the employee, especially when the employee is paid the lower minimum wage for tipped workers and this tip forms an essential part of their minimum wage earnings. Employers are legally forbidden from keeping anything from these funds. Some places have a combined tip pool in which back of the house staff are permitted to participate in this pool as long as the front of house staff are paid minimum wage. While, the FLSA permits this practice, numerous state laws only permit individuals involved in table service to participate in the tip pool. Oregon, Massachusetts and California are among the states with specific laws about tip pooling and tip sharing. Exempt managers should almost never be part of the tip pool – if they are providing direct table service as a primary job duty, they likely should not be designated as exempt.
Minimum Wage for Tipped Employees:
In some cases, the tip compensation is used as part of the minimum hourly wage to be paid to non-exempt employees. The FLSA permits employers to pay non-exempt, tipped employees only a portion of the minimum wage so long as the employee retains all tips and customarily and regularly receive more than $30 per month in tips. In the event where the direct wage plus the tips do not meet the federally required minimum wage, it is up to the employers to make up for it by increasing the base wages.
There are often mishaps like walk-outs, breakages and shortages that your staff has to deal with. Can you dock the employee’s pay? Probably not a good idea. The FLSA does not allow the employer to deduct the cost of this mishap if it falls below the minimum wage requirement.
If the front of house staff is required to wear branded gear and uniform during work shifts to make it easier to identify employees and reinforce branding and marketing, the employer generally can’t deduct the cost of uniforms from the employee’s wages if it results in the employee making less than the minimum wage. As restaurant workers tend to be paid minimum wage or close to it, the best practice is to issue one at the employer’s cost and permit the employee to purchase additional ones at it cost if he or she desires additional uniforms.
These are some of the most important issues to know about. Check with your accountant, attorney or payroll company for additional issues in your state or city. Labor is one of your most important resources for success and one of your biggest costs. Paying attention to this detail is time well spent.