Meal credits For Restaurant Owners
Many restaurant owners who offer free meals to
their workers are unaware that they are entitled to a minimum wage
meal credit for each employee. An employer who regularly furnishes meals to
employees may reduce the cash wages paid to those employees in an amount
equal to the reasonable cost of the meals as determined by the U.S.
Department of Labor.
The meal credit is in addition to any tip credit the employer is permitted to take and can include any employee.
Here’s how the meal credit works: the Federal Department Of Labor allows a restaurant establishment to take the food cost (approximately 50% of the menu price) of an employee meal, and divide it by the average hours worked in a shift. This calculation can be averaged out over the entire workforce and made a standard hourly credit amount for all employees. The meal credit amount must be “fair and reasonable – and – without profit.” Here’s an example: $4.00 menu item x 50% food cost = $2.00 divided by a 5 hour shift = 40 cents per hour meal credit.
So, an average weekly savings using 40 cents per hour, would be $896 per year per employee (40 cents x 40 hours x 56 weeks). If you have 20 fulltime servers and bussers combined that would be over $17,920 per year. If you had 50 servers and bussers combined it would be over $44,800 per year.
And since meal credits are not taxable for FICA/Medicare, federal and state withholding or unemployment, there is an additional savings to both you and the employee.
To take advantage of the meal credit you need to process it through your payroll and properly reflect the calculated amounts in your payroll records. If you’d like a no-obligation restaurant compliance evaluation, we’ll be happy to supply it.
The meal credit is in addition to any tip credit the employer is permitted to take and can include any employee.
Here’s how the meal credit works: the Federal Department Of Labor allows a restaurant establishment to take the food cost (approximately 50% of the menu price) of an employee meal, and divide it by the average hours worked in a shift. This calculation can be averaged out over the entire workforce and made a standard hourly credit amount for all employees. The meal credit amount must be “fair and reasonable – and – without profit.” Here’s an example: $4.00 menu item x 50% food cost = $2.00 divided by a 5 hour shift = 40 cents per hour meal credit.
So, an average weekly savings using 40 cents per hour, would be $896 per year per employee (40 cents x 40 hours x 56 weeks). If you have 20 fulltime servers and bussers combined that would be over $17,920 per year. If you had 50 servers and bussers combined it would be over $44,800 per year.
And since meal credits are not taxable for FICA/Medicare, federal and state withholding or unemployment, there is an additional savings to both you and the employee.
To take advantage of the meal credit you need to process it through your payroll and properly reflect the calculated amounts in your payroll records. If you’d like a no-obligation restaurant compliance evaluation, we’ll be happy to supply it.
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