Restaurant Payroll Checklist

Restaurant payroll is more complex than most industries. Between tipped wages, overtime rules, and high staff turnover, it’s easy to miss critical compliance steps. This Restaurant Payroll Checklist will help you streamline payroll while keeping your business compliant. You can also download the printable PDF version to share with your team.

Step 1 – Track Employee Classification

• Classify workers correctly as employees or contractors.
• Differentiate between tipped vs. non-tipped employees.
• Ensure managers and supervisors are not incorrectly classified as tipped staff.

Step 2 – Manage Tipped Wages

• Pay at least the federal tipped minimum wage ($2.13/hr) plus tips, or higher if state/local laws require.
• Track tips accurately — both cash tips and credit card tips.
• Make up the difference if tips + wages don’t reach the standard minimum wage.

Step 3 – Overtime Compliance

• Pay time-and-a-half for hours worked over 40 per week (federal rule).
• Watch for states like California with daily overtime rules.
• Include tips in overtime wage calculations where required.

Step 4 – Handle Shift Differentials & Deductions

• Apply correct pay rates for late-night or weekend shifts.
• Deduct for employee meals only if allowed by state law.
• Track uniform costs if deducted from pay.

Step 5 – Recordkeeping & Reporting

• Maintain employee schedules and timecards for at least 3 years.
• Keep payroll records (wages, tips, taxes) for 4 years.
• File federal (941, 940) and state payroll tax returns on time.

Download the Restaurant Payroll Checklist PDF

Get the printable version here: Download Restaurant Payroll Checklist PDF

FAQs

Do I have to pay credit card processing fees on employee tips?
Some states allow you to deduct a proportional share of credit card fees, but many prohibit it. Always check local law.

What happens if tips plus wages don’t meet minimum wage?
The employer must make up the difference so the employee earns at least the full minimum wage.

Can salaried restaurant managers earn tips?
Generally no — managers and supervisors are excluded from tip pools under federal law.

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Related Checklists

If you’re handling payroll for multiple states, you may also need our Payroll Tax Compliance Checklist and Payroll Recordkeeping Checklist