Restaurant manager checking food quality in the kitchen

With the holidays around the corner, vacations are being planned and time off work is being considered. When reconciling your personal schedule with the demands of your restaurant that, unlike most other industries, doesn’t close for major holidays, it’s important to understand restaurant employment laws when it comes to holiday, overtime, and vacation pay for your tipped employees.

While these three categories are closely related, there are different rules, regulations, and traditions that govern each one of them. Plus, they may be different for salaried employees than tipped, hourly employees. Legalities aside, you also want to balance the needs and stresses of your workers during the hectic holiday period, and reward their loyalty for their past year of hard work.

Wondering the best way to ramp up your staff without blowing your bottom line? As you start to work out your holiday and vacation plans, here’s what you need to know about holiday, overtime, vacation pay for restaurant employees, as well as how to make your staff’s end-of-year stint merry and bright.

Overtime Pay

The law is clear: Restaurants must pay their employees overtime pay for working more than 40 hours a week. 

Unless classified as an exempt (aka salaried) employee, employees are entitled to receive overtime pay “at a rate not less than time and one-half” your normal rate of pay, according to the Department of Labor. The period of time that defines the 40-hour threshold is a standard week: “seven consecutive 24-hour periods” that don’t have to align with the calendar week, meaning that a work week period can begin on any day and any hour of the week. An important thing to note is that overtime pay cannot be averaged out over the course of two weeks, a pay period, or any other timeline.

Restaurant manager discussing with chef in kitchen. Tipped employee preparing a dish with restaurant owner standing by.

Holiday Pay

There is no federal law that requires employers to provide time off on nationally recognized holidays (think Memorial Day or Labor Day), paid or not. However, you can look to your industry peers to get an idea of how other busy restaurants handle the holiday rush in a way that’s fair to their workers.

Of course, salaried employees are still entitled to their full weekly salary even during weeks that include days when the establishment is closed. That said, holiday pay is one perk that pits employers against each other in the hiring realm. Often the prospective employer offering the best holiday package will win out when it comes to competing for talent, so just because it isn’t required doesn’t mean that you won’t get it or shouldn’t bargain for it.

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Things get a little more complicated when it comes to religious holidays. While employers don’t have to provide pay, they are required to provide “reasonable accommodation for the religious practices of its employees,” unless they can demonstrate that doing so “would result in undue hardship” for the business. 

While less common in the restaurant industry, floating holidays are a practice that many businesses deploy to handle issues like this, so it’s worth it to find out if your restaurant has a policy on this buried in its handbook. 

Vacation Pay For Tipped Employees

Like holiday pay, there is no law that requires employers to offer paid vacation days, especially for the hourly, tipped employees. While each establishment is different, most salaried positions come with a set number of vacation days each year, typically referred to as paid time off, or PTO. Although it’s not required by law, PTO is a traditional offering and averages about 14 days per year for employees in their first year of employment at a given establishment, according to

Beyond Pay, Offer Holiday Incentives

Although restaurant workers don’t always get to take time off during the holidays, a savvy employer will find other ways to support staff during the season of giving. Here are some season of giving strategies to consider:

  • Give a holiday bonus. All of our wallets are lighter during the holiday season, and money worries can cause a lot of stress for people. Think about offering your staff a bonus during the holiday season to show your appreciation. Consider giving the bonus in early December and your employees will feel your generosity during the crunch of the holiday season. Plus it will be a welcome surprise for their own holiday shopping.  
  • Ramp up seasonal staff. The combination of increased foot traffic in your restaurant, employees’ family commitments, and holiday parties will make for a busy holiday season. Seasonal staffing is a chronic problem across the restaurant industry, so it’s vital to stay ahead of the game and start hiring some extra help as soon as possible.
  • Have a plan in place. By communicating with your team far in advance and asking for day-off requests long before the holidays hit, you can solve staffing issues before they start. Do your best to give everyone at least part of one holiday off so they can spend time with their families.
  • Don’t be a Scrooge. It may sound trite, but it’s easy to forget to show gratitude and say thank you once the busy holiday rush comes around. Go the extra mile to make staff feel extra appreciated: Offer a hot chocolate station in the break room complete with candy canes, invite staff members to a special pre-shift brunch that offers more than your usual family-meal fare, or leave notes for your staff telling them how much their contribution helps to make your customers experiences magical this time of year.
  • Keep things fun. Encourage your staff to embody the spirit of the season by keeping things fun and festive. Offer your staff the opportunity to earn prizes throughout your busiest times based on who can sell the most gift certificates, or get guests to order a seasonal holiday cocktail.
  • Offer a post-holiday break. Once you’ve made it through the holidays, offer a little extra flexibility to let your staff recover. After all, it’s a quick sprint between New Year’s and Valentine’s Day and you need your staff back on the top of their game by February. Allow for some shorter shifts, a day or two off, and be open to your staff’s suggestions for how they’d like to recoup after the holidays. A little flexibility up front could result in a much happier staff long-term and lead to lower post-holiday turnover in staff.

Planning ahead for the holidays is just as important for your staffing management as it is for your inventory, your marketing, and your restaurant décor. Discuss your plan with your staff so they understand your expectations, can make plans of their own, and so there are no surprises financially (unless you’re gifting them with a bonus, that is). And, if possible, show a little extra payroll generosity, as well as in other ways that make your restaurant workers feel supported.

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Cinnamon is a Minneapolis-based freelance writer and journalist who paid a large part of her way through college and graduate school by serving. Her work has been published with outlets like National Geographic, the Washington Post, Pacific Standard, and more. You can read more about her at