The IRA’s Information Resource Center receives a wide-variety of questions ranging from labor regulations to liquor codes. The following are some of the most frequently asked questions and answers.
Please Note: This information is provided as a membership service, and is not intended as legal or professional advice or council. Any local, state or federal rules, regulations or laws summarized are subject to change. The Illinois Restaurant Association strongly encourages readers to consult with their attorney or competent professional, prior to taking action based on the following information.
Q: Do I have to pay my employees for training sessions and staff meetings?
A: Employees must be paid for all hours on duty, including training sessions and staff meetings, if the employer requires attendance.
Q: Can I charge my servers or cashiers for cash shortages or walkouts?
A: Employers are prohibited from charging an employee for shortages or walkouts. However, in some cases an employee is permitted to voluntarily reimburse you for these losses. Make sure that you get a signed written statement that the reimbursement is in fact voluntary.
Q: Can I charge my employees for damaged property or breakage?
A: Employees cannot be charged for damaged property or breakage. As with shortages, voluntary reimbursements may be permitted.
Q: Do I need to pay for time taken off for breaks?
A: If breaks are less than 30 minutes in duration, employees must be paid for this time. If however, the employee is given a break of 30 minutes or more and the employee is relieved of all work duties, no payment of wage is required for that time.
Q: When do I need to give a break?
A: An employer must permit at least a 20-minute meal break for employees scheduled to work 7.5 continuous hours. This meal period must begin no later than 5 hours after the start of work. Employees who are 14 and 15 years old who are scheduled to work 5 or more consecutive hours must be given at least a 30-minute meal period.
Q: Can I deduct the cost of employee meals from the wages that I pay?
A: The reasonable cost of meals furnished by the employer and actually used by the employee may be considered as part of the wage paid an employee. To qualify, the employee must receive the meal for which he/she is being charged. Additionally, the acceptance of meals must be voluntary and not coerced. The reasonable cost of meals furnished by the employer excludes profit and includes only the actual cost of the food, its preparation and related supplies.
Tips & Wages
Q: Is it true that my tipped employees only need to report 8% of their sales as tip income?
A: Contrary to a commonly held belief, employees are not required to report just 8% of their sales as tipped income. The law has always required that all tip earnings be reported as income. The 8% figure is only relevant to the employer as a threshold that must be reached in order to avoid the I.R.S.’s "tip allocation" requirement.
Q: What are the rules governing service charges on fixed gratuities?
A: A service charge is an amount added to the customer’s bill by management. In Illinois, service charges are not subject to sales tax, provided that of all the proceeds of the service charge are in fact turned over to the employees who would normally have received tips had the service charge policy not been introduced. These percentage-based service charges therefore are traditionally based on pretax totals. Service charges, which are used by management to pay wages, employee benefits or employer costs of doing business, are taxable receipts.
Q: Can employee tips be retained to pay for uniforms, breakage or shortages?
A: Tips may not be used by management to pay for uniforms, breakage, walkouts, shortages or any other types of loss.
Q: What are the rules for taking a "tip credit" on tipped employees’ earnings?
A: If an employee regularly receives tips, the employer can account for this income when calculating the minimum wage rate. Taking credit for tipped earnings can reduce the employer’s payroll contributions while ensuring that their employees earn the adult minimum wage of $6.50 per hour. In Illinois, the amount of the tip credit taken cannot exceed 40% or $2.60 per hour; therefore, the tipped wage rate would equal $3.90 per hour, in addition to any tips he or she receives.
Q: How do I calculate the "tip credit"?
A: Tips plus wages paid must equal or exceed the minimum wage. The tip credit amount cannot exceed 40% of the Illinois minimum wage. Therefore, the tip credit amount cannot exceed $2.60. Thus an employer must pay tipped employees at least $3.90 per hour. Tip credit $2.60 + tipped wage rate of $3.90 = minimum wage of $6.50.
Q: Can the "tip credit" be taken on overtime pay?
A: Assuming a maximum tip credit of $2.60 per hour, the overtime pay rate would be calculated as follows. Time and one half (1.5) x minimum wage $6.50 - tip credit $2.60 = overtime pay $7.15.
Q: Can I deduct the credit card processing fee from my tip payouts?
A: If the employer pays the credit card company a processing service fee, the employer may deduct this amount from the tip payout. For example, if the credit card company charges 2% on charged sales as a service fee, the employer need only pay the server 98% of the charged tip.
Q: What are the rules regarding when to distribute credit card tips?
A: If tips are charged on a credit card, the employer must distribute these tips to the employee no later than the next regular payday. The employer may not delay distributing tips until reimbursement by the credit card company, even if receipt of the funds by the employer are delayed by the credit card company.
Teenage Workers in the Industry
Q: How old must teens be to be employed in a restaurant?
A: Children under the age of 14 may not be employed in restaurants. If the establishment serves liquor, individuals under the age of 16 may not be employed. No one under the age of 18 may be allowed to operate or clean power-driven food slicers or meat processing machines. No one under the age of 16 may do hot cooking, baking, repairs or maintenance on machines or equipment.
Q: What are the work hour restrictions on teen workers?
A: Illinois Child Labor laws do not cover persons 16 and older. Persons 14 and 15 years old have restricted hours of work under the child labor laws which states that minors:
May work only between and (Except between June 1 and Labor Day when working hours may be extended to )
May not be employed more than 8 hours per day, or 3 hours per day on days when school is in session.
May not be employed more than 48 hours per week during non-school weeks or more than 24 hours per week when school is in session.
Q: Can I serve alcohol to a minor if their parent is present? What if it is in conjunction with a religious ceremony?
A: It is illegal to sell, give, or deliver alcoholic beverages to anyone who is under the age of 21. It is also illegal for anyone under the age of 21 to buy, consume, or possess alcoholic beverages. Retail licenses cannot serve alcohol to minors in the presence of their parents. In the case of a religious ceremony or service, it is acceptable for minors to consume alcohol during the service or ceremony.
Q: Can I give or buy a customer a drink "on the house"?
A: Yes, as long as such practice is not advertised and is not intended to improve public relations or promote consumption of alcoholic liquor.
Q: How old do my employees have to be to sell and serve alcoholic beverages?
A: All persons serving, selling or delivering alcoholic drinks must be 18 years or older, unless increased to age 19, 20, or 21 by local ordinance. Check with the local liquor commissioner (generally the Mayor), or local ordinances.
Q: Can I purchase liquor at a retail store to sell at my business?
A: Retail liquor licensees must purchase all alcoholic liquor from a licensed distributor authorized to sell that product within the retail licensee’s geographic area. Retail liquor licensees are not allowed to purchase alcoholic liquor for resale from another licensed retailer.
Q: Can I offer "happy hour” or drink promotions to my customers?
A: The Happy Hour Law PROHIBITS serving two or more drinks to one person for consumption by that person, as well as serving an unlimited number of drinks during a set period of time for a fixed price, i.e.: "$5.00 all you can drink” promotions are illegal.
Q: Is Dram Shop insurance necessary?
A: Yes. In fact, it became mandatory as of January 1, 2004. The law provides that persons that apply for both local and state retailer "on-premise” liquor licenses must provide proof of Dram Shop insurance for the maximum liability limits as a requirement for both licenses to be issued.
Q: Is there a restaurant trade show in Illinois?
A: The Illinois Restaurant Association partners with the National Restaurant Association to promote the National Restaurant Association Restaurant Hotel-Motel Show held at Chicago’s McCormick Place usually the third weekend of May. Foodservice members of the IRA/NRA receive one complimentary badge—a $60 value.
IRA Sanitation and Alcohol Awareness Classes
Q: How long does it take the Illinois Restaurant Association to process a sanitation or alcohol awareness certificate from when the test is taken to approval?
A: Approximately 4 weeks. Depending on the volume of requests, the Illinois Restaurant Association processes these as quickly as they can to expedite your foodservice needs.
Q: What does a sanitation course consist of?
A: The state of Illinois requires that all foodservice establishments must be under the operational supervision of a certified person at all times. In this 3-day Foodservice Sanitation Certification class, the content will cover:
Prevention of Foodborne Illnesses
Codes and Regulations
Cleaning and Sanitizing
Facilities and Equipment
Q: How long is the sanitation certificate valid for?
A: The certificate is good for 5 years and must be renewed by taking the 5-hour recertification class prior to the certificate’s expiration date.
Q: How long is the Beverage Alcohol Sellers & Servers Education Training (B.A.S.S.E.T) certification for responsible alcohol service valid for?
A: Liquor laws are very specific to municipalities. It’s best to check with local liquor commissions however, in the city of Chicago, the certification is valid for 3 years.
Restaurant Tax Center
Q: Where can I access restaurant tax information, forms, and resources?