Laws and Regulations for Restaurants: What Owners and Managers Need to Know in 2026

Violations of the laws and regulations that apply to restaurants can be costly and dangerous. In 2025 alone, the Department of Labor (DOL) recovered $259 million in back wages, illustrating the many violations and issues facing the industry at large.¹ This makes restaurant compliance a daily operational responsibility.

Restaurants operate under several sets of rules at once: federal wage law under the FLSA, OSHA workplace safety standards, state and local minimum wage, leave and scheduling laws, FDA and local health department food safety codes, and ADA accessibility requirements. This guide covers what each requires, where states and cities require beyond federal law, and how to build a compliance program that catches problems before an inspector or investigator does.

The Fair Labor Standards Act (FLSA): The Foundation of Restaurant Wage Compliance

The FLSA applies to practically every restaurant, regardless of size or state, and sets the federal floor for wages and overtime. State and local laws often set a higher standard, and when they do, employers must follow whichever law gives employees the greater protection.

Federal minimum wage is $7.25 per hour, but state and local rates are frequently much higher. Check your current state rates before running payroll.

Overtime is one and one-half times the regular rate for any hours worked over 40 in a workweek for nonexempt employees.

Assistant manager classification face the highest-stakes wage and hour risk in food service. The FLSA's executive exemption requires that management be the employee's primary duty, not a secondary one. An assistant manager who spends most of their time on the line or serving tables does not meet that standard. The Department of Labor has also made clear that culinary roles do not qualify for the "learned professional" exemption, so chefs cannot be classified as exempt professionals. Misclassifying a non-exempt manager as salaried exempt is one of the most common and expensive FLSA violations in the industry.

"Misclassification rarely happens on purpose. It happens because an assistant manager's job description says 'management,' but their actual job duties looks like serving tables and working on the line," says Paul Zdanowicz, a Senior Compliance Analyst at Paychex. "The DOL doesn't look at the title — it looks at how the person actually spends their time, and restaurants need to look the same way before an investigator does."

Recordkeeping requirements also apply to every employee and require accurate records of hours worked, wages paid, and tip amounts. These are typically the first documents a DOL investigator requests. Be sure to follow FLSA guidelines regularly to avoid penalties and recourse from employee misclassification.

Minimum Wage and Tipped Employee Rules

Tipped employees fall under their own set of FLSA rules, and this is often where restaurants run into the most trouble.

The federal tipped minimum wage is $2.13 per hour, as long as the employee's cash wage plus tips meets or exceeds the applicable minimum wage. If tips fall short in any week, the employer must make up the difference. That requirement is not optional.

For example, if a waiter were to work 28 hours in one week of shifts and make only $100 in tips, they would fall short of these requirements.

Federal Minimum Wage: $7.25 x 28 = $203

Tipped Minimum Wage: $2.13 x 28 = $59.64 + $100 (Tips) = $159.64

In order to meet FLSA requirements, the employer would need to pay the difference of $43.36 to the employee’s wages. If any state requires a higher cash wage than the federal $2.13, or prohibits the tip credit entirely, the employer must follow whichever standard is more protective of the employee.

Before taking a tip credit, employers must give each tipped employee written notice of four things: the cash wage being paid, the amount of the tip credit claimed, that the tip credit cannot exceed the tips actually received, and that all tips belong to the employee. Missing or incomplete notice can invalidate the tip credit retroactively, turning a paperwork gap into a wage claim.

Tip pools carry their own restrictions. Restaurants can require tip pooling among employees who customarily receive tips, such as servers and bartenders. Employers and managers may never participate in a mandatory tip pool. Employees who don't customarily receive tips, such as kitchen staff, can participate only if the employer isn't taking a tip credit. Several states, including California and Minnesota, do not permit tip credits at all. Where state or local law is stricter, apply the more generous standard.

Accurate tip reporting also makes a tax benefit available: the FICA Tip Credit. Restaurants that follow tip reporting requirements correctly can claim the credit by filing IRS Form 8846, and any restaurant with more than 10 tipped employees must also file IRS Form 8027 to report tip income. Additional federal tip reporting requirements may apply depending on sales volume, the percentage of tipped sales, and how tips are distributed.

Overtime Rules for Restaurant Employees

Non-exempt employees earn one and one-half times their regular rate for hours worked over 40 in a workweek. Some states go further: California, for example, requires daily overtime after 8 hours in a single workday regardless of the weekly total.

Tipped employee overtime is where many restaurants make an expensive mistake. Overtime for tipped employees must be calculated at 1.5 times the full applicable minimum wage, not 1.5 times the reduced tipped cash wage. Get this wrong across a large workforce and the back pay adds up fast.

The “regular rate” used to calculate overtime includes most forms of compensation, including non-discretionary bonuses. Leaving those out of the calculation is a common and costly error that can result in penalties against your organization.

Child Labor Laws in Restaurants

Restaurants that employ workers under 18 face a distinct set of federal restrictions on top of standard wage and hour law.

• Workers age 14 and 15: May work as cashiers, servers, and dishwashers, and may cook on gas or electric grills. They may not operate meat slicers, grinders, or commercial mixers.
• Workers age 16 and 17: Have fewer restrictions but are still barred from operating power-driven meat processing equipment.

During the school year, 14- and 15-year-olds cannot work more than 3 hours on a school day or 18 hours in a school week and cannot work before 7 a.m. or after 7 p.m. (extended to 9 p.m. between June 1 and Labor Day). State laws frequently add further restrictions and may require work permits for minors. Apply whichever standard, federal or state, offers more protection.

Predictive Scheduling Laws

A growing number of cities and states require restaurants to give employees advance notice of their schedules, typically 7 to 14 days out, along with the right to rest between shifts and predictability pay when the employer changes a posted schedule on short notice.

As of 2026, predictive scheduling laws apply in Chicago, New York City, Philadelphia, San Francisco, Seattle, and statewide in Oregon, among other jurisdictions. Most of these laws apply only above a certain employee count. Oregon's law, for example, applies to food service employers with 500 or more employees globally.

Confirm the threshold in each jurisdiction where the business operates and note that a locally owned franchise location may be evaluated against the franchisor's total employee count rather than the location's own headcount.

This is an actively expanding area of law. This means it’s better to treat it as an ongoing monitoring responsibility rather than a one-time check.

Workplace Safety: OSHA Requirements for Restaurants

OSHA sets the baseline for workplace safety, and any OSHA-Approved state safety plans must meet or exceed federal standards. Coverage may include requirements relating to fire extinguisher access, personal protective equipment, injury reporting, and accident prevention signage and other workplace safety measures.

Restaurants carry a distinct set of high-risk hazards:

• Slips and falls on wet floors
• Burns from fryers and hot surfaces
• Cuts from knives and slicers
• Chemical exposure from cleaning products

OSHA expects employers to identify and address hazards in each of these categories, not just general safety awareness. Employers with more than 10 employees generally must maintain a Form 300 injury and illness log. The “Job Safety and Health” poster, also known as “It's the Law,” must be displayed somewhere accessible to all employees.

Restaurants remain subject to OSHA safety inspections, which can be triggered by employee complaints, referrals from other agencies, or programmed enforcement initiatives, so being inspection-ready is a constant requirement.

Health Codes, Food Safety, and Licensing Requirements

Food safety rules come from the FDA Food Code, adopted with variations by each state's health department.

Health inspections look for a specific set of things:

• Temperature control
• Cross-contamination prevention
• Proper handwashing facilities
• Pest control

These are the violations cited most often, and inspections are typically unannounced, so ongoing compliance matters more than pre-inspection cleanup.

Many states require food handler certification for managers, and some extend that requirement to all employees. Even where a course isn't legally required, it can be a worthwhile investment for the team.

Beyond a general business license, restaurants typically need a food service establishment permit, health department clearance, and, where applicable, a liquor license. Each carries its own renewal timeline and fee, so track them separately.

ADA Compliance for Restaurants

The Americans with Disabilities Act covers two distinct areas for restaurants:

• Customer-Facing Accessibility: Entrances, restrooms, seating, signage, and digital menus
• Employment Practices: Reasonable accommodation for employees with disabilities

If a restaurant leases its space, responsibility for physical accessibility modifications may be shared between the operator and the property owner. Document that split in the lease so there is no ambiguity when a modification is needed.

Building a Restaurant Compliance Program: What You Need to Do

Reading the laws is one step. Building a program that keeps a restaurant compliant day to day is the harder, more valuable one. Consider these steps:

• Conduct a wage and hour audit, prioritizing tipped wage calculations, the 80/20 rule, and overtime on tipped wages. These are the areas DOL auditors focus on first.
• Audit manager and supervisor classifications. Confirm that anyone classified as exempt genuinely spends the majority of their working time on management or other exempt duties, and document the basis for each exemption.
• Verify that required workplace postings are current and accessible. The FLSA poster, the OSHA safety poster, the state or local minimum wage notice, and any additional state or local notices.
• Document tip credit notice delivery. If a tip credit is taken, confirm that each affected employee has received and acknowledged the required written notice.
• Audit job postings for pay transparency compliance. Several states now require pay rate or range disclosure in job postings, including restaurant listings. See pay transparency laws by state.
• Build a minor labor scheduling review process. For any employee under 18, check weekly hours against applicable restrictions before publishing the schedule.
• Set a regulatory monitoring cadence. Assign ownership of compliance monitoring, whether internally or through outside HR advisory support, and set a recurring calendar for review.

"When a DOL auditor or health inspector shows up, they're not asking just what you know — they're asking for documentation. So, there's a big difference between knowing the rules and proving you follow them," says Paychex's Zdanowicz. "A compliance program that only exists in someone's head doesn't hold up. To be effective, it should be written down, current, and owned by someone."