This article is the third and last piece in the Brewery Compensation series (part 1 and part 2), which is intended to provide guidance on the variety of compensation structures for common positions in the brewing industry. The series has been focused only on highlighting common issues with employee compensation and is not designed to serve as a comprehensive summary of specific federal and state laws that govern payment of employees and independent contractors. As always, we encourage you to consult a legal professional regarding your specific compensation questions or issues.
The first article in the series dealt with compensation for employees working on the brewing side of operations – head brewers or brewmasters, assistant brewers, and other related positions. Our second article focused on compensation for the sales team. In this final piece, we will look at issues specific to the front-of-house staff – beertenders, servers, and front-of-house managers.
The front-of-house team plays a critical role in the branding and identity of your company to the public. These individuals create the atmosphere and experience that brings back repeat customers and results in positive reviews of your location and your beer. At the same time, front-of-house staff also have higher turnover rates than other positions, and are often in the best position to cause long-term financial damage in the form of free drinks, trading drinks for favors at other restaurants or bars, or outright theft from the cash register. As you hire your front-of-house team, you want to focus on bringing in individuals who are able to work well with others, willing to perform duties that may fall outside of the norm, and committed to being on time, in uniform and ready for anything.
Independent Contractor or Employee?
As we have emphasized in our prior articles, the first step in bringing on a new worker is to determine whether the individual will be an employee or an independent contractor. The factors for this test are covered heavily in the first article in the Brewery Compensation series. As with most individuals at your brewery or tasting room, front-of-house staff are probably going to be employees. While these individuals may also work in front-of-house positions for other restaurants or bars, the level of control the company has over the method and means of work renders these individuals as employees and not independent contractors.
Exempt or Non-Exempt?
Assuming the new front-of-house worker is an employee, the next question is whether the position is non-exempt or 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.
The default classification under federal and state law is non-exempt status. Beertenders and servers will almost always be non-exempt staff, as they are not engaged in the kinds of job duties that are associated with exempt status.
Front-of-house managers, however, may qualify for the “executive” exemption category. Under the federal Fair Labor Standards Act (FLSA), this is an individual who:
- (a) has the primary duty of managing the business or a customarily recognized department or subdivision of the business;
- (b) customarily and regularly directs the work of two or more full-time employees; and
- (c) has the authority to hire, fire or make other personnel recommendations.
If this person is classified as an executive, they are not subject to overtime or designated meal and rest breaks. Job duties that are typically performed by exempt executives include:
- interviewing, hiring and training new front-of-house employees; conducting performance evaluations;
- disciplining and/or terminating employees (or making recommendations for discipline or termination);
- making budget and purchase decisions;
- creating techniques and processes for customer complaints, customer accidents, or customer service issues;
- handling employee grievances and complaints; and
- planning, directing and scheduling work assignments.
In addition to performing the required job duties, the front-of-house manager must also be paid a minimum salary level in order to be considered exempt employees. As of the date of this article, the federal FLSA minimum salary required for an exempt executive is $455 per week – it is widely expected that this minimum salary rate will be revised sometime in 2016 to a salary rate that could be as high as $900 per week. Depending on your location, the state minimum salary required for an exempt executive may be higher than the FLSA minimum. As always, you must abide by the highest salary rate required.
Before classifying a front-of-house role as non-exempt or exempt, review your state laws and state wage orders to determine the job duties and minimum salary requirements for various exempt roles. Misclassification of employees as exempt can have significant wage and hour consequences, so good planning and good decision making is important.