Learn what 2025 pay transparency and predictive scheduling laws mean for restaurant operators, and how to prepare for new rules in 2026.
As 2025 winds down, restaurant operators are adapting to a wave of local and state legislation focused on pay transparency, predictive scheduling, and employee fairness.
These policies, designed to increase visibility into pay practices and give employees more control over their schedules, are changing how operators manage labor compliance across markets.
In Fourth’s End-of-Year Restaurant Compliance Update webinar, Christopher Bentley, labor and employment attorney at Johnson Jackson PLLC, joined Fourth to unpack how these laws are evolving and what restaurants should expect next year.
Pay transparency laws require employers to disclose salary ranges to employees and applicants, sometimes in job postings, other times upon request. The intent is to close pay gaps and ensure fair compensation across similar roles.
Bentley explained that these laws are spreading quickly at the city and state level, especially in jurisdictions with large hospitality industries. Cities such as New York, Philadelphia, and Chicago have already enacted pay transparency ordinances, with additional states like California, Colorado, and Washington expanding their requirements in 2025.
While specifics vary, most laws now require employers to:
For restaurant operators, Bentley emphasized that these rules don’t just apply to corporate roles, they increasingly include hourly staff and tipped positions, especially where multiple locations fall under the same business entity.
Predictive scheduling, or “fair workweek” legislation, is another major area of focus. These laws are designed to give hourly employees greater advance notice of their shifts and compensation protections when schedules change unexpectedly.
Bentley described predictive scheduling laws as “a balance between fairness and flexibility.” They aim to reduce last-minute schedule changes that make it difficult for employees to plan child care, transportation, or second jobs, while still allowing restaurants to adapt to fluctuating customer demand.
Oregon remains the only state with a statewide predictive scheduling law, applying to hospitality and retail employers with 500+ employees worldwide.
Several cities, including Chicago, Seattle, New York, and Philadelphia, have their own local ordinances with varying notice and pay requirements.
Some states, such as Florida, Georgia, Tennessee, and Ohio, have laws that prohibit local governments from enacting predictive scheduling rules
Bentley walked through several common components that operators should be familiar with:
Employers must post or distribute schedules 10-14 days in advance, depending on local rules.
For example, Oregon’s statewide law requires at least 18 days’ notice.
If a manager changes or cancels a shift after it’s posted, employees are often entitled to additional compensation, sometimes half the scheduled hours or a predictability pay premium.
Example: If a server’s five-hour shift is canceled with short notice, the employer may still owe pay for 2.5 hours.
Employees must have at least 10 hours of rest between shifts to prevent “clopening” (closing late and returning to open early).
If this rest period isn’t met, the employer must pay overtime or an additional premium.
Most laws require that employees have the right to decline unscheduled shifts or provide availability preferences, which employers must make good-faith efforts to accommodate.
For multi-unit restaurant brands, predictive scheduling and pay transparency add layers of complexity.
Different jurisdictions impose different notice periods, penalties, and definitions of “covered employer.”
Even within one state, operators may need to track separate compliance requirements across cities or counties.
Bentley recommended that restaurant leaders centralize their scheduling and recordkeeping systems to ensure consistency.
Manual tracking or paper-based scheduling, he noted, can make it nearly impossible to demonstrate compliance if regulators request records or if employees raise concerns.
HotSchedules by Fourth enables restaurant operators to stay ahead of these new laws through proactive compliance automation.
With HotSchedules, managers can:
By integrating scheduling, timekeeping, and wage data, HotSchedules helps operators maintain compliance across all locations, without sacrificing efficiency or flexibility.
Bentley noted that more jurisdictions are expected to explore pay transparency expansions and predictive scheduling pilots in 2026.
He anticipates stronger enforcement mechanisms in states like Oregon and Illinois, and growing interest from lawmakers in neighboring regions.
For restaurant operators, staying informed and investing in compliance-ready systems is the best way to prepare for what’s next.
Hear Christopher Bentley break down these compliance trends in more detail, including predictive scheduling penalties and pay transparency enforcement in our on-demand webinar.
With HotSchedules by Fourth, restaurant operators can meet evolving labor law requirements while maintaining efficient operations.
HotSchedules helps you automate scheduling compliance, track labor laws by location, and alert managers to rest or pay violations, all in one connected platform.
Talk to us to learn more about how HotSchedules supports smarter, compliant labor management across all your restaurant locations.
Introduction
Christina Lau (Host, Fourth):
Hey everyone, and welcome to today’s webinar. I’m Christina with the Fourth team and your host. Thanks for joining our end-of-year compliance update.
Before we get started, a few quick housekeeping items: this session is being recorded, and we’ll share the replay and slides after the webinar. If you’re joining us live, you can drop questions into the Q&A box on your screen — it should be toward the bottom. We’ll take as many as we can toward the end.
To kick things off, I’m thrilled to be joined by Christopher Bentley, a board-certified labor and employment attorney with Johnson Jackson PLLC.
For anyone who hasn’t joined one of these sessions before, Chris specializes in labor and employment law and works closely with hospitality businesses navigating wage-and-hour compliance and the ever-changing patchwork of state and local labor laws.
Chris, thank you for being here again. You’ve joined us before, and our audience always gets a ton out of these sessions. Could you start by sharing a bit about your background?
Speaker Introduction
Christopher Bentley:
Absolutely, and thank you, Christina. I’ve been practicing for about eighteen years. I’m currently with Johnson Jackson, where we exclusively represent employers in all types of labor and employment matters. Our clients range from hospitality and restaurant operators to public-sector employers.
Over the years we’ve become very familiar with the constant changes in employment laws — and that’s exactly what we’ll be talking about today.
Why Compliance Is Getting Harder
Christina Lau (Host, Fourth):
Perfect — thank you. Today we’ll cover several new and evolving labor laws that restaurant and hospitality operators should know about, from overtime rules and pay transparency to tipped wage enforcement and new local laws taking effect.
Let’s start with why compliance is getting harder in the first place.
We talk with restaurant operators every day, and the theme is clear: labor laws are changing fast — not only federally, but at the state and even city level. For multi-location brands, that means more complexity, more record-keeping, and definitely more risk.
Even if your specific city or state isn’t yet affected, it’s often a preview of what’s coming next. Cities like Chicago, Seattle, and Philadelphia tend to set the tone for the rest of the country. Staying aware gives you more time to adapt before those changes hit your market.
And what’s fueling all this change? A combination of rising wages, inflation, workforce burnout, and a growing focus on pay equity and transparency. We’re also seeing increased enforcement and higher penalties for violations.
With that backdrop, Chris, let’s jump into the specific regulations operators should be watching. Can you start with overtime?
Part 2 → Overtime Rules
Christopher Bentley:
Sure. Thanks again, Christina. We’re living in a highly political environment, and labor policy often swings depending on which administration is in charge. That’s why staying current on these changes is so critical.
Let’s start with overtime.
The Department of Labor publishes annual data on back-wage recoveries. Last year alone, it recovered about $34.7 million in back wages for the food-service industry — much of it tied to misclassification and overtime errors.
The main law here is the Fair Labor Standards Act (FLSA). Section 213 gives the Secretary of Labor authority to define and limit exemptions from overtime. Two primary exemptions apply most often in restaurants:
Historically, the Department focused on the “duties test,” but recently we’ve seen more emphasis on the “salary test.”
A common misconception is that paying someone a salary automatically makes them exempt from overtime — that’s not true. Employers must also evaluate what duties the employee actually performs.
Executive Exemption
Christopher Bentley:
To qualify under the Executive Exemption, an employee’s primary duty must be management of the enterprise or a recognized department or subdivision.
They must regularly direct the work of at least two or more employees, and they must have authority to hire or fire — or their recommendations must carry significant weight.
Typical qualifying duties include interviewing and training employees, setting pay and schedules, handling grievances or discipline, and managing budgets.
In restaurants, managers can still jump on the line or run food occasionally, but their primary duty must remain management-related to meet the exemption.
Administrative Exemption
Christopher Bentley:
The Administrative Exemption applies when the employee’s primary duty is office or non-manual work directly related to management or general business operations — and they must exercise discretion and independent judgment on significant matters.
If someone simply follows preset policies or routines without independent decision-making, they likely do not meet this test.
Common administrative roles include HR, accounting, budgeting, and marketing. Again, purely clerical or routine work doesn’t qualify.
Why does this matter? Because if the Department of Labor audits you for misclassification, the burden of proof falls entirely on the employer to show why an employee meets an exemption.
The Salary Threshold and Legal Challenges
Christopher Bentley:
Over the past decade, administrations have repeatedly changed the salary-basis threshold. Under the prior rule, the minimum salary was $35,568 per year.
In 2024, the Biden administration proposed a new rule that would raise that threshold to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025**.** It also included an automatic escalator to increase the threshold every three years.
However, this rule faced immediate legal challenges, most notably from the Plano Chamber of Commerce, arguing that the Department of Labor exceeded its authority. The court agreed, ruling that the increase displaced the duties test and was inconsistent with the FLSA. As a result, the nationwide implementation was struck down.
What Employers Should Do Now
Christopher Bentley:
Employers have asked, “What now? Should we roll back salaries we already increased?” You technically can, but do it carefully. Reducing pay after employees have adjusted can hurt morale and retention — many see it as a demotion.
Most employers are keeping current rates and waiting for further clarification.
With the current administration, most legal experts expect no further action to raise thresholds soon, but the salary test hasn’t been updated in years, so keep monitoring developments.
In the meantime, focus on your duties tests. Conduct audits to ensure job descriptions match actual work performed. I often see job descriptions written for exempt roles where, in practice, the employees don’t meet the criteria.
Periodic reviews are your best protection against misclassification claims.
Recent Court Case: EMD Sales v. Carrera (2025)
Christopher Bentley:
A recent case, EMD Sales Inc. v. Carrera (January 2025), involved three sales representatives challenging their exempt classification.
The district court initially required employers to prove exemptions by “clear and convincing” evidence, which is a high bar. The Supreme Court later clarified that the correct standard is “preponderance of the evidence” — meaning more likely than not (about 51%).
This ruling was a win for employers and brings consistency across jurisdictions.
Part 3 → Pay Transparency and Predictive Scheduling
Christopher Bentley:
Another major trend is pay transparency and predictive scheduling. More states and cities are adopting these laws, so it’s important to understand what applies where your restaurants operate.
These laws aim to give employees more predictability and protection from unfair scheduling practices — but they add complexity for operators.
Oregon is currently the only state with a fully implemented statewide predictive-scheduling law. It applies to hospitality and retail employers with 500 or more employees worldwide.
Under Oregon’s law, employers must:
Failure to comply can result in premium pay for affected employees.
Other states — like Alabama, Florida, and Georgia — have explicitly banned local governments from enacting predictive-scheduling laws, while large cities such as Chicago, Seattle, and New York City have their own versions.
Christopher Bentley:
These rules also require detailed record-keeping, so make sure your scheduling software tracks and stores changes accurately.
Now, let’s turn to another critical area — minimum wage and tipped-wage enforcement.
Part 4 → Minimum Wage and Tipped Wage Regulations
Christopher Bentley:
Minimum wages vary widely and change frequently. For instance:
Always check your state’s current rates, especially for tipped employees.
Under the FLSA, the federal minimum wage is $7.25/hour, and employers may take a tip credit of up to $5.12, meaning they can pay tipped employees $2.13/hour if tips make up the difference.
States can impose stricter standards — for example, in Florida the tip credit is capped at $3.02/hour.
A “tipped employee” is defined as someone who customarily and regularly receives more than $30 per month in tips.
The 80/20 Rule and Recent Challenges
Christopher Bentley:
You’ve probably heard of the 80/20 Rule — it limits how much time a tipped employee can spend on non-tipped duties while still receiving the tip credit.
If more than 20% of their time is spent on non-tipped work (like side duties), or if they perform non-tipped tasks for more than 30 continuous minutes, you must pay them full minimum wage.
The rule classifies duties into three “buckets”:
When President Biden reinstated the 80/20 Rule in 2021, it faced immediate legal challenges. The Fifth Circuit Court (covering Texas, Louisiana, Mississippi) struck it down as unconstitutional, and the Department of Labor later withdrew its enforcement guidance.
However, some courts — like those in Nebraska — continue to uphold the rule, citing existing judicial precedents.
So while the 80/20 Rule is effectively dead in Texas, Louisiana, and Mississippi, it still applies in many other jurisdictions.
Best practice: check your circuit’s stance and document all tipped and non-tipped duties clearly.
Part 5 → State and Local Labor Laws
Christopher Bentley:
Now let’s shift to state and local labor laws that operators should pay attention to. Each market has its own rules — and they’re changing fast.
For example, in Philadelphia, there’s the Power Enforcement Act, which gives the city’s labor department more resources to investigate pay-practice violations. They’ve even created a “Bad Actors List” of employers who’ve violated the law. Those on the list are publicly identified, and the city prohibits retaliation against any employees who report issues.
In Chicago, the Fair Workweek Ordinance requires at least 14 days’ notice for schedule changes. It applies to hotels and restaurants with more than 100 employees. Employers must pay premiums for last-minute adjustments.
And in Minnesota, starting January 2026, the state will roll out a Paid Family and Medical Leave program. Operators there will need to update policies to ensure qualifying employees receive paid time off when taking leave under FMLA or related circumstances.
Meal and Rest Breaks
Christopher Bentley:
Let’s also touch on meal and rest breaks.
Federal law under the Department of Labor doesn’t require meal or coffee breaks — but many state laws do. If an employee works through a meal break, the time must be counted as compensable.
We’ve seen recent cases where employers had written policies stating employees couldn’t work during lunch, but in practice, employees did — and the employer knew it. Courts held those employers liable for the unpaid time.
So make sure managers are enforcing break policies consistently and documenting compliance.
The “One Big Beautiful Bill” and No Tax on Tips
Christopher Bentley:
Before we wrap, I want to mention one notable provision from the federal “One Big Beautiful Bill.”
It includes a No Tax on Tips measure — not something employers need to manage directly, but it matters to employees.
Under this rule, workers in tipped occupations earning $150,000 or less annually can exclude up to $25,000 in cash tips from federal income tax. This exemption runs through 2028.
It’s a meaningful change for your tipped staff, so it’s worth helping them understand it when reviewing payroll or communication materials.
Part 6 → Summary and Key Takeaways
Christopher Bentley:
Let me summarize the main points we covered today.
Overtime Rules:
Pay Transparency & Predictive Scheduling:
Tipped Wages (80/20 Rule):
Final Thought:
Stay proactive with compliance audits and periodic policy reviews. The best defense is documentation and consistent training.
Christina Lau (Host, Fourth):
Thank you, Chris — that was a ton of valuable information and a great breakdown of what’s changing.
Before we move into audience questions, I want to leave everyone with a few practical steps for staying compliant across all your restaurant locations.
Key Takeaways
Christina Lau (Host, Fourth):
To wrap everything up, here are the three main takeaways from today’s session:
If you’d like help reviewing your restaurant’s compliance readiness, our team offers a free consultation to assess your locations, identify risks, and share recommendations before 2026.
If you’re joining us live, you can select “Yes” on the survey on your screen.
If you’re watching the recording later, feel free to email me at christina.lau@fourth.com, and I’ll help get that set up.
Part 7 → Q&A Session
Christina Lau (Host, Fourth):
All right — now let’s move into the Q&A. Feel free to keep submitting questions; we’ll answer as many as we can.
Question 1: Regarding the salary-basis test — since part of it was overruled, what’s still in effect?
Christopher Bentley:
Good question. The salary-basis test is still a component of the exemption. What’s no longer in effect are the substantial increases proposed by the Biden rule. The threshold remains $35,568 per year, and the duties test remains critical for determining exemption.
Question 2: How can we get notifications about minimum wage changes?
Christopher Bentley:
The Department of Labor’s website is the best resource. They publish a comprehensive chart that’s updated regularly. Checking it periodically will show when your state’s rates change and what your obligations are.
Question 3: How does the 80/20 rule work for overtime if an employee has two positions — one tipped and one not?
Christopher Bentley:
In that case, use a blended rate to calculate overtime across both roles. The Department of Labor provides Q&A examples on this — they walk through sample calculations. Just make sure you’re applying the blended average, not the lower of the two rates. If you need help, reach out to your legal counsel or my office.
Question 4: Is the 80/20 rule still active in North Carolina?
Christopher Bentley:
Yes — at least for now. The Fifth Circuit ruling only applied to Texas, Louisiana, and Mississippi. Other circuits, including those covering North Carolina and Florida, still recognize the rule through prior judicial opinions. I do expect future challenges, but for now, assume it’s still active.
Question 5: Is the minimum salary threshold now $58,656 or the 2020 level?
Christopher Bentley:
It’s still the 2020 level — $35,568. The planned jump to $58,656 was struck down with the rule. That higher number never took effect.
Question 6: Do we expect the Trump administration to raise the salary threshold again?
Christopher Bentley:
There’s no official indication yet. Some discussion, yes, but no confirmed plan or publication. If it does happen, it’ll likely be a smaller increase than what the Biden rule proposed.
Question 7: Can carryout tips placed in a jar be shared with the whole staff working that day?
Christopher Bentley:
That’s about tip pooling, and it’s allowed under certain conditions. Tips can be shared among employees who regularly receive them — like servers, bartenders, and bussers — but not with managers or supervisors. If a manager participates, you lose the tip-credit eligibility. Make sure any tip pool is clearly documented and communicated.
Question 8: In Florida, the tipped minimum wage has been tough. Could the state increase the $3.02 tip credit to help operators?
Christopher Bentley:
I certainly hope legislators consider it. The jump to a $15 minimum wage has been hard on restaurants. The Florida Restaurant Association is actively advocating to adjust the tip credit upward. For now, though, it remains $3.02.
Question 9: If a salaried manager earns above minimum wage, can they also earn tips — for example, when delivering catering orders?
Christopher Bentley:
They can perform dual roles, but be cautious. If their management duties qualify them as exempt, receiving tips could create confusion about their classification. That’s a situation I’d review carefully to avoid any compliance issues — feel free to reach out for case-specific guidance.
Christina Lau (Host, Fourth):
Great — thank you, Chris. Those were excellent answers. We are just about out of time, so we’ll wrap up here.
For any unanswered questions, we’ll follow up directly via email after the session.
Chris, thank you so much again for sharing your expertise and time today, and thanks to everyone in the audience for joining. We’ll send out the recording and slide deck shortly.
We host webinars every month here at Fourth, so we hope to see you at the next one.
Christopher Bentley:
Thank you, Christina. Always a pleasure.
Christina Lau (Host, Fourth):
Thanks, everyone — have a great rest of your day, afternoon, or evening!
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