Running a hotel or restaurant means balancing guest service and satisfaction, staffing shortages, and compliance. Below are five common compliance mistakes we continue to see, along with a practical checklist hospitality employers can use before year-end to reduce legal risk.

1. Meal and Rest Break Compliance

Common Mistake: Employees feel pressured or are required to work through meal periods or rest breaks during busy shifts without receiving required breaks or premium pay.

Example: A server skips their lunch during a Saturday dinner rush, but no premium pay is recorded.

Action: Review scheduling practices and ensure adequate coverage, train managers to actively authorize and permit meal and rest breaks during pre-shift line ups and throughout the shifts, and regularly audit payroll for missed meal and rest break premiums.

2. Misclassifying Managers as Exempt

Common Mistake: Assistant managers or supervisors are typically classified as exempt under California’s executive exemption even though they spend most of their shifts performing the same duties as hourly employees.

Example: A hotel front desk manager regularly covers the front desk due to staffing shortages but is not paid overtime.

Action: Review a manager’s actual day-to-day duties periodically – do not rely on a position’s job titles, job description, or expected job duties. To be classified under the executive exemption, a manager must supervise at least 2 full-time employees during their shift and spend at least 50% of their shift performing managerial duties.

3. Off-the-Clock Work

Common Mistake: Employees perform work before clocking in or after clocking out.

Example: Closing staff finishes cleaning after clocking out, or supervisors contact hourly employees by text or phone call texts after hours without recording the time worked.

Action: Require employees to record all time worked. Train managers to not contact hourly employees who are clocked out for work-related reasons unless they are doing so for scheduling. Limit group messages or chats that involve multiple hourly employees who may not be clocked in while receiving work-related messages. to request or allow off-the-clock work.

4. Outdated Employment Policies

Common Mistake: Employee handbooks and workplace policies no longer reflect current California or local law.

Example: A restaurant continues using a handbook drafted several years ago that omits current leave requirements, workplace violence prevention policies, or other recent legal developments.

Action: Review and update employment policies at least annually to ensure compliance with evolving state and local laws that may affect your business.

5. Waiting Until There’s a Claim to Audit Compliance

Common Mistake: Employers do not review HR or payroll practices until they receive a demand letter, Private Attorneys’ General Act (PAGA) Notice, Labor Commissioner complaint, or lawsuit.

Example: A payroll audit uncovers recurring wage statement errors only after litigation has begun.

Action: Conduct proactive HR, payroll, and wage-and-hour audits to identify issues before they become costly claims.

Year-End Checklist

With 5 months left in the year, consider taking these practical steps:

□ Review the last three (3) months of time records for missed, late, or short meal periods and confirm premium pay was issued where required.

□ Spot-check manager classifications to ensure exempt or salaried managers are primarily performing management duties; not regularly filling hourly positions due to staffing shortages.

□ Run a payroll audit to identify recurring wage statement errors, overtime calculations, or premium pay issues before they become systemic.

□ Ask managers where compliance breaks down. Busy shifts, call-offs, and understaffing often reveal the operational practices most likely to create legal risk.

□ Update policies that no longer match your operations, particularly if scheduling, leave practices, or workplace procedures have changed during the year.

□ Schedule a brief manager refresher on meal and rest breaks, off-the-clock work, and documenting employee issues before the holiday season or next busy period.

□ Document any corrective actions you take now.

Stokes Wagner will continue monitoring regulatory, legislative, and judicial developments affecting hospitality employers across the country. If your hotel, restaurant group, or asset team needs assistance navigating these changes, our attorneys are available to provide tailored compliance reviews, operational guidance, and training.

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THIS DOCUMENT PROVIDES A GENERAL SUMMARY AND IS FOR INFORMATIONAL/EDUCATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE COMPREHENSIVE, NOR DOES IT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT WITH COUNSEL BEFORE TAKING OR REFRAINING FROM TAKING ANY ACTION.