When a restaurant operator seeks to expand their team, there are many requirements and regulations they must abide by. Hiring compliance can be complex, but nevertheless, it is the restaurant operators’ responsibility to understand and meet these requirements.
To help in that effort, we’ve assembled this list of the most common requirements. There are more beyond this list, especially as they affect specific industries or classes of employees. Furthermore, state regulations may vary from state to state, so we encourage further research to get a comprehensive understanding. Where relevant, we have included some of the laws that cover these topics and links to further information.
Let’s jump in.
Hiring Compliance Requirements and Regulations
Job Postings
Job postings and job applications may require specific language (such as pay rates) or omission of certain language that could be considered discriminatory. In addition to the description of the job, hours, locations, and how to respond, best practices and statutory requirements indicate the inclusion or avoidance of several items:
- ADA statement: Indication that the employer abides by the requirements of the Americans with Disabilities Act (ADA). This federal regulation ensures accessibility for individuals with disabilities by setting standards that businesses must adhere to, including workplace accommodation for employees with disabilities.
- EEOC statement: Indication that the employer abides by the EEOC (Equal Employment Opportunity Commission). The EEOC is a federal agency responsible for enforcing laws that prevent workplace discrimination.
- Employment Eligibility: Requires that employees be eligible to work in the U.S.
- Pay Transparency: Requires employers to disclose pay ranges for open positions. Most pay transparency laws require a pay range to appear in both public and internal job postings, sometimes alongside other information, such as details about benefit offerings. A few jurisdictions require the employer to share a pay range with a job applicant upon request or at a certain point in the interviewing and hiring process but do not mandate that the information appears in job postings.Other pay transparency laws also give employees the right to learn the pay range for their current position. Locations currently requiring or will being to require pay transparency in 2025 include:
- California
- Colorado
- Connecticut
- Washington D.C.
- Hawaii
- Illinois
- Maryland
- Minnesota
- Nevada
- New Jersey (and Jersey City)
- New York (and Albany, Ithaca, NYC, Worchester County)
- Rhode Island
- Vermont
- Washington
- Age: Required age to qualify for the position, if relevant. In many instances, minor workers are not allowed to perform certain jobs (serving alcohol, limitations due to minor work rules, etc.).
- Educational Requirements or Certifications: Required educational achievements to qualify, if relevant.
- Non-Discrimination: Avoid requirements or language that could be construed to indicate a preference for applicants based on:
- Age: The federal Age Discrimination in Employment Act (ADEA) prevents hiring practices that discriminate against applicants for their age.
- Gender
- Criminal background
- Credit history
- National origin
- Physical appearance
- Race
- Religion
- Union affiliation
- Marital status
- Disabilities
Job Applications and Hiring Compliance
During the recruiting process, most employers require potential hires to complete a job application and/or provide a resume with additional information about their personal and work history. Since these are typically provided to prospective employers before a job offer, there are certain items that may not be asked of employees.
Below is a list of items with restrictions in some states and/or warnings to protect the employer and prospective employee. Occasionally, a job may be offered if certain post-offer conditions are met, such as drug testing, credit or background checks, verification of information, etc. Furthermore, states may have additional requirements.
Important requirements and recommendations include:
- Ban the Box and the Fair Chance Act: Over 40 cities and states have statutes in place to protect prospective employees convicted of a crime from automatic disqualification during the selection process. These ban-the-box laws prevent an employer from requesting a prospective employee’s criminal history information on an employment application.Some jurisdictions prohibit an employer from asking whether an applicant has been convicted of a crime until a specified point in the hiring cycle (e.g., the interview stage or after a conditional job offer has been made). Several states also have laws imposing restrictions on an employer’s ability to use credit history in making employment decisions.
- Credit Checks: The Federal Bankruptcy Reform Act of 1978 bans employers from discriminating against employees solely because they have filed for bankruptcy or have bad debts. The Fair Credit Reporting Act requires written authorization and specific notices when an employer obtains a credit report through a consumer reporting agency and uses the report to take an adverse action.
- Salary History Inquiry: To promote pay equity, several states and cities have enacted laws that prohibit prospective employers from inquiring about salary history or retaliating against an applicant that refuses to provide salary history.
- What NOT to Ask: Employers are required to refrain from asking any questions on an application that might violate the rights of the EEOC.
- Employment Eligibility: To determine if an employee is eligible to work, employers may ask the following questions:
- Do you have the legal right to work permanently in the US?
- What is your visa status? (if answered no to the previous question)
- Are you able to provide proof of employment eligibility upon hire?
- Work Schedule: Rather than ask about religious schedule accommodations, you may ask employees if they are able to work certain schedules. Many employment applications have a section for employees to indicate the days/times they are available and unavailable – which might include both religious observance, school, other personal commitments, and preferences.
- Are you available to work on Saturdays?
- Are you available to work on Sundays?
Onboarding
In addition to any on-the-job training for the position, the paperwork to get an employee set up can seem endless. Worse, getting it wrong or missing just a few items can be very time-consuming and expensive to rectify. A thorough checklist of all items your organization requires, including federal, state, local, and internal company policies or documents, is crucial for success in the onboarding process.
The items below include the primary statutory requirements (federal/local) and steps required to get your employees set up for success. Your industry or local organization may have many more, so be sure to check local authorities or industry-specific regulations for a full understanding of the requirements.
Determining Employee Status and Rate of Pay:
Each employee must be assigned a single status for all work performed for the employer. Note that an hourly employee (with few exceptions) may never be considered “Exempt”. If an employee’s role changes, the status may be changed. If so, it is always recommended to change the status at the beginning of a workweek to avoid confusion. Status determines if employees are eligible for overtime, pay premiums, Fair Workweek requirements, and more.
- Non-Exempt Hourly Employee: Typically paid an hourly wage and scheduled for shift work.
- Non-Exempt Salary Employee: Paid a salary but still eligible for overtime and other protections and premiums – often used for supervisors or administrative staff.
- Exempt Salaried Employee: Typically executive, certain administrative, and professional staff. Salaried employees are paid a fixed salary for a defined role which may not have a set schedule or required number of hours. They are not eligible for overtime or other premiums, so long as their salary is above a specified threshold.
- Independent Contractors: These are not considered employees, are paid for their services based on submission of invoices and/or contracts, and are not eligible for employee benefits, unemployment compensation, minimum wage, or overtime.
Onboarding Documents Required at Hire
- I -9 Employment Verification: All employers must complete and retain Form I-9, Employment Eligibility Verification, for every person they hire for employment in the U.S.
- Employees must complete and sign Section 1 of Form I-9 no later than their first day of employment (the actual commencement of employment of an employee for wages or other remuneration, referred to as date of hire in the Department of Homeland Security (DHS) regulations. However, employees may complete Section 1 any time after they accept the job offer. Preparers and translators can help employees complete Section 1.
- Employers must review the employee section for completeness and complete the employer section no later than three days from the first day of employment.
- Options for completion of the I-9 form:
- Federal and State/City Employment Tax Forms for Employees
- Federal: All employees must submit an IRS form W-4 Employee’s Withholding Certificate to indicate the amount of federal income tax to be withheld from pay. If an employee fails to provide the form, the taxes withheld will be at the highest rate. Recovery of any over-withheld income tax will be the responsibility of the employee when they file their personal income tax returns.
- State: Each state with income tax as well as a few cities have their own forms that employees must complete:
- Nine States have NO individual income tax and do not require a different form:
- Arkansas
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
- Several states allow for reciprocity forms if an employee works in one state but lives (and is taxed) in another. These are often used when an employee lives near a state border or is on a short assignment in another state. Most payroll processors can accommodate these reciprocity forms, so an employee does not have to file an income tax return for the nonresident state to receive a refund and then make individual tax estimates in their resident state.
- New Hire Reporting: Federal law requires employers to report basic information on new and rehired employees. The information is maintained in the National Directory of New Hires, which child support agencies use to locate a parent who owes child support and will issue an income withholding order. This information is typically reported as part of the payroll processing system.If there is a mandated child support garnishment, the employer will be notified from the garnishing agency and then can begin withholding accordingly. There is nothing needed from the employee for this process, and the employee may not “opt out” of the garnishment process.
- Other Employer Forms that may be required for employee signature might include:
- Signing an offer letter or employment agreement
- Wage Theft Notices: Several cities and states require that upon hire and when there are changes to pay, the employer provides a Wage Theft Notice to the employee with specified information regarding wages and pay. The notice must be signed by both the employee and the employer.
- Handbook or company policy acknowledgments which may include:
- Drug-free workplace notifications
- Conflict of interest policy
- Sexual harassment policy
- Confidentiality and non-disclosure policy
- Ethics policy
- Tip credit and tip pooling policy
- Family Medical Leave Act (FMLA) rights statement
- Paid family and medical leave benefits
- Paid time off (PTO), vacation, and sick leave policy
- Pregnancy accommodation policy
- Workers’ compensation notification
- Phone, email, internet monitoring policy
- Meal and rest break policy
- Access to personnel file policy
- Direct deposit agreement or pay card agreement
- Earned Wage Access Enrollment Options: Benefits offered and methods for enrollment
Compliance Violation Story: Age Discrimination at Olive Garden
In 2024, GMRI, Inc., (doing business as Olive Garden) paid $30,000 along with “significant non-monetary remedies” following an age discrimination lawsuit filed by the EEOC. The general manager during an interview with an applicant with a disability asked several illegal questions related to the disability. Questions included what was “wrong with” the applicant, how “bad” was the disability, and about the applicant’s use of a cane. After hearing the answers to these questions, the manager concluded the interview and declined to hire the applicant on account of their disability.
These interview questions and the actions that followed were considered to be discriminatory by the EEOC. In addition to the $30,000 paid to the applicant, Olive Garden was also required to provide mandatory ADA training to the general manager and other select employees.
“Workers with disabilities provide invaluable contributions to their employers and to the American economy when given a fair opportunity to show their job-related knowledge, skills, and abilities. The EEOC is strongly committed to protecting disabled workers from job discrimination, including illegal disability-related inquiries, which often produce employment decisions rooted in prejudice, implicit bias, unfounded fears or assumptions, or a desire to evade the legal duty to provide reasonable accommodations.”
— EEOC Regional Attorney Debra Lawrence.
Automate Hiring and Onboarding Compliance with an Applicant Tracking System
Restaurant should seek an Applicant Tracking System (ATS) that automates the recruiting process to help meet compliance requirements, including background checks, document management, and I-9 verification. Meanwhile, these tools offer customizable onboarding packages and easy access to compliance tracking.
A strong ATS helps businesses stay compliant, save time, and reduce risk, allowing HR teams to focus on higher-value tasks like candidate engagement and employee development. PeopleMatter, Fourth’s ATS, automates these critical processes, ensuring compliance while streamlining workflows, reducing recruitment costs, and allowing businesses to focus on what matters.
Download the “Definitive Guide to Compliance for Restaurants”
Hiring compliance is just one of the many areas of regulation that a restaurant owner must understand. From there, payroll compliance, tips, employee benefits, and termination all come with their own federal and state regulations to follow. Learning it all is a big task, but Fourth is here to help.
Download our essential ebook, “The Definitive Guide to Compliance for Restaurants“, to better align with relevant regulations and avoid costly penalties.
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