In 1988, I called up my accountant Stuart and asked his advice about a burning question I had. A lot of our Columbian kitchen staff who were already working 35 to 40 hours a week at our Boston restaurant wanted to work additional hours at our restaurant in neighboring Brookline, Massachusetts. When they came to me requesting more hours, I agreed but I didn't want to pay them overtime. Was I allowed to do that? Were the two restaurants separate in the eyes of the law? I was really young at the time, in my late twenties, and I didn't know any of this stuff.
Stuart said the restaurants were separate. "You've set them up as different corporations. No problem."
My mind now at ease, I let our staff work as much as they wanted in both of our restaurants, paying them the normal hourly rate. Years went by.
One day in early 1992, a woman came to see me in our Brookline restaurant. "I'm from the Federal Labor Board, and I'm here to talk to you about your policies and how you pay people."
I invited her to sit down. "What can I do for you?"
"Do you have people who work here for 35 hours a week, and then go to work in your other locations?"
"Yes," I said, "but they're set up as separate corporations. So I'm all set."
She shook her head. "No, you're not."
My heart started pounding. "What do you mean, no I'm not."
"Well, you own them all, right? And they're doing the same job in each location?"
"Yep."
"Then you have to pay them time and a half."
"My accountant said it's fine."
She shot me a hard look. "You need to find a new accountant."
I didn't know how to respond. I was freaking out. I never imagined I'd have a problem like this. I called Stuart. "Hey, Stu, you know how we have all the guys working two jobs at two different restaurants? Are you sure that's legal?"
"Steve, no problem whatsoever."
"Well, Stu, guess what? I'm looking right now at a Federal agent, and she's telling me we're breaking the law. She's telling me I have to pay time and a half. Do you know how much money I'd have to come up with if they went back two or three years and made me pay the difference in wages?"
It turned out Stuart was dead wrong. I had been responsible for paying time and a half all along. In no way was I trying to get around the law; I was so young that I just had no idea about any of this. I didn't know, for example, that kitchen managers had to spend 50 percent of their time hiring, firing and doing other managerial tasks in order to receive a salary and not hourly wages. And here's the point: I didn't have the proper accounting experts around me telling me what to do.
I hope you see the value of good professional help. But once you have good professionals on your team, people you've vetted and whose work you know you can rely on, you still can't sit back and just let them do their job. You have to watch them and make sure they keep their services up-to-date and high quality. Besides helping you stay out of trouble, having true experts on your side can let you make the most of your business opportunities. That's why I make sure that the professionals I hire know about restaurants... and labor laws.
Having qualified experts by your side protects your business interests. But nobody is perfect, and always remember the interests at stake are yours. Keep your eyes open. Ask tough questions. Explore your options. Make changes when you have to.
The responsibility for covering your ass-ets ultimately lies with you.