Working Conditions in the Restaurant Industry

I would like a little advice or some opinions and feedback from any of you who have worked in the restaurant industry. A friend of mine (Steve) was recently offered a job in a new diner (open 24/7) as manager of the night shift. (He had no previous restaurant experience). He was told he would be expected to handle the cash register and oversee 3 or 4 employees. It was his understanding that the pay would be $10/hr. The owner said he would get $400/wk and was told that he would work 4 nights per week. So he assumed he would be working 10 hrs/day. This was OK with him. Steve was unemployed and been unable to find any decent employment for awhile, so he did not question anything. The opening date dragged on for a few months and by the time it was ready to open, he was quite broke, so he told the owner he would be willing to work 5 days since he needed money badly, to which the owner agreed.

Well, when they finally opened, he found out that he was scheduled for 12 hour shifts, or 60 hrs/wk. So he assumed he would be making $600/wk, which was OK since he needed money badly. When he got his first paycheck, it was for $400. The owner said he had only agreed to pay him $400/wk, and ignored the fact that that agreement was made for a 4 day/10 hr schedule. Steve protested that that was ridiculous because it didn't even work out to minimum wage, and the owner said fine, quit if you don't like it. Steve dropped the issue and has been working 60hr weeks, while trying to figure out what to do. The conditions at this place sound awful to me. The other employees (kitchen help) are all making $7.50/hr. None of them have filled out any tax forms, etc., and just get a check for their pay with no deductions for Fed, State, FICA, etc. They have no formal timekeeping system and everyone is complaining that their checks are always a few hours short. They do not get any overtime pay, extra pay for night or weekend work, and no holiday pay. Anyone who complains is told to quit if they don't like it. Is this kind of scenario at all typical in small restaurants? Some of these practices sound illegal to me. Any opinions?

Years ago, I had a similar circumstance at a restaurant - where they got behind on bills and made up the shortfall by implying there was a problem with their accounting company. I was not a tipped employee, and I finally told them that if they didn't get me a check on time, I would look for employment elsewhere, which I finally had to do.

In another situation involving a retailer, I was considered "salaried" but was required to work 60 hours/6 days a week during busy times (with no extra time off) - and my resulting salary was well below minimum wage. I eventually left, and apparently this company was later required to restructure to prevent this from happening.

I doubt these scenarios or the one you describe are uncommon, but that doesn't make them legal. Your friend can call the Illinois Department of Labor and report his employer, but, yes, it's not unlikely that he will lose the job in doing so - although he might get some protection as a whistle-blower, I doubt the business could remain open if (as it would appear) they owe taxes for all their employees. Though I think the long workweek is standard, I don't think all restaurants operate illegally in terms of compensation, either...maybe your friend can parlay this experience into a better job elsewhere.

I just wondering what will happen at the end of year? Will the employees get 1099's and have to come up tax payments on what they have made, or what? It sounds like the owner is evading paying his Fed, State, FICA, and Worker's Comp payments?

Did your friend fill out a W-4 when they started?

In general, the owner cannot randomly call everyone who works for him independent contractors and give them 1099s just because he doesn't want to withhold and pay employment taxes. Tax courts have held that if someone is treated as an employee (has hours set for them by owner manager, etc) then that is what they are. This IRS form will give you an idea of the things the IRS looks at to determine if someone is an employee or an independent contractor. The owner cannot dodge employment taxes and pass them off on employees just because he wants to.

Your friend should call the IL Department of labor, like Mhays said.

Agree with all of the above.

I would say that the circumstances described by the OP is not uncommon. Most operators are generally honest people but there is a small percentage of small operators who do not feel compelled to "follow the rules".

Personally, I would have been out the door after the first paycheck. I don't care if I had to go to a place like Labor Ready and work temp jobs. I refuse to be abused or lied to. (For the record, once two of my siblings and myself were working for a restaurants where the owner "did not have the money to pay us." We told him, that "we did not have the time to work for him" and headed for the exits. The money came pretty quickly.

I would complain to the IL Department of Labor but I doubt that will do much for your son as long as he earned above the minimum wage. They will spend a lot of time looking at the lack of a timekeeping system.

ALWAYS, ALWAYS, get any promises in WRITING. Funny, I have only had problems when I did not follow that rule.

Good luck.

Annabelle wrote:Did your friend fill out a W-4 when they started?

No. That's why I'm wondering how the income tax issue will work out. Aren't all employers supposed to withhold Fed and State Income Taxes? These are hourly employees, not waitstaff.

Cogito wrote:No. That's why I'm wondering how the income tax issue will work out. Aren't all employers supposed to withhold Fed and State Income Taxes? These are hourly employees, not waitstaff.

First, even the waitstaff are classified as EMPLOYEES and MUST have FIT/SIT/FICA/Medicare withheld on their income (and imputed tips).

Second, they are supposed to. Of course, employers are also supposed to complete I-9 forms to ensure that all working in their operations are eligible to work in the US. Of course, how many employers are doing that.

Actually, if you really wanted to make the operator's life miserable, you could call several state and federal agencies to ensure that all permits and the like have been applied for.

Tough one. I hear so many stories about shifty owners who don't honor agreements, "forget" to tell the staff they'd have to wait 30 days for their first paycheck, etc.

Good gigs are hard to come by, and there's no shortage of crappy ones. Of course, if you'd tried getting something in writing with the owner, I can't imagine they would have complied with that.

To be blunt, this is all illegal. You friend needs to contact the state wage and hour board, which deals with anonymous complaints all of the time. And then he needs to get out of this job as fast as possible-not easy, I know, but necessary. You can always find find crappy bosses, alas.

bakerb wrote:You can always find find crappy bosses, alas.

Even crappy bosses are hard to find nowadays.