From fluctuating schedules to continuously changing regulations, restaurant operators face a myriad of challenges when it comes to compliance. Labor laws are growing increasingly complex, with a labyrinth of regulations at the federal, state, and local levels. Whether it's break requirements or Fair Workweek regulations, understanding and adhering to these laws can require a deep understanding of legal nuances and intricacies that operators are not prepared for.
For many restaurant owners and managers who are already juggling multiple responsibilities, maintaining compliance can be a daunting task But as a restaurant operation grows and scales, compliance becomes harder to ignore. Opening stores in new jurisdictions presents even more complexity, as growth brings more employees, more laws and regulations, and ultimately, more risk.
Labor laws can vary significantly from one jurisdiction to another. Schedules that are compliant in one state or city may not meet the requirements in another. This means that restaurants with multiple locations must navigate a patchwork of regulations, often leading to confusion and inconsistencies in compliance efforts. This variability adds another layer of challenge for restaurant operators who are striving to grow profitably.
Fair Workweek in the United States
One major setback to compliance is that many restaurant operations lack the resources, tools, and expertise needed to effectively manage labor law compliance. Manual scheduling processes, outdated technology systems, limited access to legal resources, and inexperienced management, can all hinder compliance efforts.
The dynamic nature of the restaurant industry also presents a significant hurdle for compliance efforts. With high turnover rates, seasonal fluctuations and unpredictable demand patterns, scheduling staff while complying with all labor laws is no easy feat. Without the proper support and tools in place, restaurants can inadvertently introduce the risk of non-compliance.
The partnership between franchisors and franchisees is a cornerstone of the restaurant industry, but laws like the 2023 Joint Employer Rule have introduced new legal challenges for this dynamic duo. The ruling potentially creates more shared legal risk between franchisees and franchisors in regards to labor laws. The legislation also raises serious questions about the extent to which franchisors should involve themselves in the labor practices of their franchisees.
For many restaurant operators, this increased liability is far from ideal. Sean Kennedy, executive vice president for Public Affairs at the National Restaurant Association, expressed deep concern that the ruling could have adverse effects on entrepreneurship and economic growth, particularly for franchisees in the sector. "The Joint Employer Rule threatens the foundation upon which nearly a third of the restaurant industry is built," said Kennedy.
The 2023 Joint Employer Rule has faced stark opposition and ongoing challenges by different groups. After being delayed, the ruling was recently blocked by a federal court in Texas. President Joe Biden then vetoed the measure to overturn the ruling in May 2024. With the Joint Employer Rule in legal limbo, it’s no surprise that this legal exposure has created confusion and questions for many restaurants operating under the franchise model.
Here are several steps that restaurants can take to avoid non-compliance.
Restaurant operators should understand that the compliance dilemma is multifaceted and cannot be solved with one simple solution. Given the complexities of labor laws, varied requirements across jurisdictions, workforce dynamics, and limited resources—a holistic approach to compliance is necessary.
By leveraging technology solutions, staying informed, providing training, and seeking guidance, restaurants can navigate the compliance maze more effectively and ensure they are prepared for growth.
Click here to learn more about achieving labor law compliance for your restaurant operation.