Chapter 20 — Self-Check Quiz

Employment Law and Compliance: Wage and Hour, the Tip Credit, Overtime, and Harassment

24 questions. Answers in the collapsed block at the bottom — work them all before you open it.

Every dollar figure in this quiz is an illustrative teaching number. Wage floors, tipped wages, exempt salary thresholds, tip rules, and scheduling ordinances vary by jurisdiction and change. Nothing here is legal advice. Verify locally, with an employment attorney.

Multiple choice

1. Under the FLSA, overtime is computed within:

  • A) a pay period
  • B) a calendar month
  • C) a fixed, recurring workweek of 168 consecutive hours
  • D) whatever period the employer's payroll software uses

2. A cook works 32 hours in week one and 48 hours in week two of the same biweekly pay period. Overtime owed:

  • A) none — the two weeks average forty
  • B) 8 hours
  • C) 4 hours
  • D) 16 hours

3. The tip credit is best described as:

  • A) a discount on the minimum wage for restaurants
  • B) a mechanism permitting an employer to count a portion of an employee's tips toward its minimum-wage obligation, subject to conditions
  • C) a tax credit for tips reported to the IRS
  • D) an employer's right to a share of the tip pool

4. Which of the following is not a condition of claiming the tip credit?

  • A) advance notice to the employee
  • B) the employee retaining their tips except for a valid pool
  • C) paying the shortfall when tips do not reach the full minimum in a workweek
  • D) the employee agreeing in writing to a reduced wage in exchange for scheduling preference

5. Overtime for a tipped employee is computed on:

  • A) the tipped cash wage
  • B) the full applicable minimum wage (or higher regular rate), with the tip credit then applied
  • C) the employee's average hourly earnings including tips
  • D) whichever produces the lower figure

6. Under the 2018 federal tip provisions, managers and supervisors may keep employees' tips:

  • A) when no tip credit is taken
  • B) when they perform tipped work themselves
  • C) when the tip pool is voluntary
  • D) never

7. An employer who does not take a tip credit and pays the full minimum wage in cash may:

  • A) keep a portion of the tip pool
  • B) include traditionally non-tipped back-of-house employees in a mandatory tip pool
  • C) require servers to cover walkouts from tips
  • D) exclude bussers from the pool at will and keep their share

8. A distributed mandatory service charge is, for wage purposes:

  • A) a tip
  • B) wages, included in the regular rate for overtime
  • C) neither wages nor tips
  • D) wages, but excluded from the regular rate

9. Which of the three exempt-status tests is the one no book can answer for you, because it moves?

  • A) salary basis
  • B) salary level
  • C) duties
  • D) the tip-pool test

10. For the executive exemption, "primary duty" means:

  • A) the duty listed first in the job description
  • B) any duty performed for more than 20% of the shift
  • C) the principal, main, major, or most important duty, judged by the character of the job as a whole
  • D) whatever the employee and employer agree it is

11. Docking a salaried manager \$50 for a register shortage risks:

  • A) nothing — it is a private agreement
  • B) an unfair-labor-practice charge only
  • C) defeating the salary basis test, and with it the exemption, potentially for others in the same class subject to the same practice
  • D) only a state-law deduction violation

12. An employer told employees not to work off the clock. A cook did anyway, in view of a manager. The time is:

  • A) not compensable, because policy prohibited it
  • B) compensable, because the employer knew or should have known the work was performed
  • C) compensable only if the employee complains within thirty days
  • D) compensable at half the regular rate

13. Which payroll configuration is the most dangerous single setting in a restaurant?

  • A) rounding punches to the nearest minute
  • B) an automatic 30-minute break deduction
  • C) a biweekly pay period
  • D) direct deposit

14. Title VII applies to employers with:

  • A) 50 or more employees
  • B) 25 or more employees
  • C) 15 or more employees
  • D) any number of employees, federally

15. An employer's exposure for harassment of an employee by a guest generally arises when:

  • A) the employer directed the conduct
  • B) the employer knew or should have known and failed to take prompt corrective action
  • C) never — third parties are not employees
  • D) only if the guest is a repeat customer

16. Which of the following is most likely a legitimate independent contractor at a restaurant?

  • A) the person who comes in Sundays to help with prep, paid cash
  • B) a "consulting chef" running your line four nights a week since March
  • C) the hood-cleaning company
  • D) a dishwasher hired informally by a manager

17. The exposure operators most often fail to price when misclassifying a worker as a contractor is:

  • A) the 1099 filing penalty
  • B) the loss of workers' compensation exclusivity, leaving an injured worker free to sue in tort
  • C) the cost of reissuing pay stubs
  • D) the additional bookkeeping

18. Predictive-scheduling ordinances most commonly require all of the following except:

  • A) advance posting of schedules
  • B) predictability pay for employer-initiated changes inside the notice window
  • C) a premium for shifts worked on less than a stated rest period
  • D) a guaranteed minimum of 30 hours per week for every employee

19. In a wage dispute where the employer's time records are missing or unreliable:

  • A) the claim is dismissed for lack of evidence
  • B) the employee may carry their burden with a reasonable estimate, and the burden shifts to the employer to negate it
  • C) the employer's recollection controls
  • D) damages are automatically capped

20. Bellwether's labor line, with the sous chef classified correctly, is 38.5% of sales. Added to 27.8% COGS, prime cost is 66.3%. On Figure 1.4's scale that band is:

  • A) strong
  • B) healthy full service
  • C) workable but tight
  • D) distressed

Short answer

21. A server works 24 hours at a \$7.50 cash wage in a jurisdiction with a \$12.00 minimum and receives \$95 in tips. Does the employer owe anything? Show the test.

22. Explain, in two sentences, why "early punches cost you money and unrecorded work costs you a lawsuit" are opposite problems with opposite remedies.

23. A sous chef earns \$48,000 and works 55 hours a week. Using the rule of thumb from §20.5, compute the annual overtime exposure if the position is non-exempt — and state the rule.

24. Name the first four things a manager should do in the ten minutes after an employee reports harassment, and one thing they must not do.

Answer key **1. C.** A workweek is a fixed, recurring period of 168 consecutive hours, declared by the employer. Overtime is computed within it, not across pay periods. **2. B — 8 hours.** Week two's hours over forty. Averaging across workweeks is not permitted. **3. B.** It shifts *who funds* the minimum wage; it does not lower the wage the employee must ultimately receive. **4. D.** No such condition exists, and an "agreement" to a sub-minimum wage is not a thing an employee can validly give. A, B, and C are all genuine conditions, along with the limits on non-tip-producing work. **5. B.** Compute overtime on the full applicable minimum (or the higher regular rate), then apply the credit to the overtime rate. Taking 1.5 × the cash wage is the classic and systematic error. **6. D — never.** The 2018 provisions prohibit employers, managers, and supervisors from keeping employees' tips for any purpose, regardless of whether a tip credit is taken. **7. B.** Forgoing the credit is the price of admission for a back-of-house-inclusive mandatory pool. A, C, and D remain prohibited in any case. **8. B.** It is the employer's revenue; distributed portions are wages, included in the regular rate, ineligible for the tip credit and for the FICA tip credit. **9. B — salary level.** The federal threshold has changed repeatedly and several states set higher figures. Any dollar amount printed in a book is stale on arrival. **10. C.** Time spent is a strong indicator but not the sole factor; the analysis looks at the character of the job as a whole. **11. C.** The salary basis test requires a predetermined amount not subject to reduction for the quality or quantity of work; a docking *practice* can defeat the exemption beyond the single employee. **12. B.** A prohibition is necessary but is not a defense on its own. Policy plus enforcement plus a reporting channel plus records of acting on reports is the real program. **13. B.** It is the only shortcut in the chapter large enough to close a real labor gap on its own, it applies uniformly to every employee on every shift, and that uniformity is exactly what makes it a class-wide claim. **14. C — 15 or more.** Bellwether has 31 and is covered. Other federal statutes have their own thresholds, and many state and local laws reach far smaller employers — some at a single employee. **15. B.** Third-party harassment is a real and, in restaurants, common source of exposure. The operational answer is a table-transfer policy backed by a manager who takes the table. **16. C.** The hood-cleaning company runs its own business, serves other clients, brings its own tools and insurance, and does work outside the usual course of running a restaurant. A, B, and D are employees whatever anyone calls them. **17. B.** Workers' compensation is generally the exclusive remedy for a covered employee's injury. A worker you never put on the policy is not covered — and not bound by the exclusivity bar — and your general liability policy very likely excludes injuries to employees. **18. D.** No predictive-scheduling ordinance guarantees a weekly hours minimum. A, B, and C are the recurring structural elements, along with a good-faith estimate of hours at hire and a right of first refusal on additional hours. **19. B.** This is why recordkeeping is the FLSA command that decides cases. Without records, the employee's reasonable recollection becomes the record. **20. D — distressed.** 27.8% + 38.5% = 66.3%. Chapter 1 put that band at "profit is mostly gone, cash is probably strained." **21.** Required: 24 × \$12.00 = **\$288.00**. Actual: (24 × \$7.50) + \$95.00 = \$180.00 + \$95.00 = **\$275.00**. **The employer owes a \$13.00 makeup payment** for that workweek — not averaged against a good week, not deferred. The test runs every tipped employee, every workweek. **22.** Early punches are *recorded, paid* time — a labor-cost problem you fix on the floor by controlling when people clock in, and eliminating it is entirely legitimate. Unrecorded work is *unpaid* time — a liability you fix by making sure everything gets recorded, and "fixing" it in the payroll system converts a manageable cost into a falsified record. **23.** The rule: **one standing hour of weekly overtime costs 3.75% of the salary per year.** At \$48,000 that is \$1,800 per recurring overtime hour. Fifteen standing overtime hours × \$1,800 = **\$27,000 a year**, taking the position from \$48,000 to roughly \$75,000 all-in. Check it the long way: \$48,000 ÷ 52 ÷ 40 = \$23.08 regular rate; × 1.5 = \$34.62; × 15 = \$519.23 a week; × 52 = \$27,000. **24.** Do: stop and take the person somewhere private; thank them and say you take it seriously; listen and ask open questions; write down what they said in their words, that day, with the date; ask what they need to feel safe tonight and make it happen without penalizing them; tell them what happens next and that retaliation is prohibited. Must not: promise confidentiality you cannot deliver — and never ask the complainant to handle it themselves, never investigate a claim about yourself, and never ask why they did not report it sooner. Call the employment attorney the same day.