House Expands Aid for Small Restaurants, Excluding Employers With Wage Violations

A huge opportunity could be coming for small restaurants struggling due to the pandemic, but they will need to make sure they are in compliance with wage and hour laws to be eligible.

On April 7th, 2022, the House of Representatives passed the “Relief for Restaurants and other Hard Hit Small Businesses Act of 2022,” by a vote of 223-203. The act, an amendment to the American Rescue Plan Act of 2021, significantly increases the funding for the Restaurant Revitalization Fund (RRF) by $42 billion and establishes the “Hard Hit Industries Award Program.” 

The Restaurant Revitalization Fund was a grant program meant to provide relief for restaurants struggling as a result of COVID-19. While approximately 300,000 businesses applied for funding under the initial program, only about one third of restaurants were able to receive assistance.  A survey by the Independent Restaurant Coalition demonstrated that over 80% of restaurants that did not receive additional funding are on the verge of permanent closure. If the act successfully overcomes the filibuster in the Senate, it should alleviate some of the stress placed on small businesses.

The program is administered by the United States Small Business Administration, through which restaurants can submit their applications for additional funding. According to the Small Business Administration, “this program will provide restaurants with funding equal to their pandemic-related revenue loss. ” As for the new Hard Hit Industries Award Program, the 2022 act states “the aggregate maximum amount of awards made to an eligible entity and any affiliated businesses of the eligible entity under this subsection may not exceed $1,000,000.”

Small businesses including restaurants, food stands, caterers, bars, bakeries, wineries, distilleries, and inns would be able to apply for funding through the Small Business Administration. The funds could be used to to cover expenses incurred as a direct result of, or during, the COVID-19 pandemic which may include payroll costs, payment to independent contractors, mortgage and rent obligations, utility payments, maintenance, worker protections expenditures, supplies, paid sick leave, and more.

Limits on Eligibility

The Hard Hit Industries Award Program specifically excludes small businesses that “have a wage violation at the time of application.” Representative Rashida Tlaib (D- Mich) explained,  “[T]hese dollars should go to businesses who do right by their workers, not those who exploit and steal from them.” Though the bill does not provide a definition for wage violations, the implication seems to be that employers must be in compliance with minimum wage and overtime requirements.

The Wage and Hour Division (WHD) of the Department of Labor (DOL) enforces the Fair Labor Standards Act (FLSA) with respect to private employment such as restaurants.

To make sure they are eligible, small businesses interested in receiving some of the new funding through the Hard Hit Industries Award Program should make sure that they are in compliance with the FLSA before applying.

What does this mean for employers?

Making sure your organization is in compliance with the Fair Labor Standards Act is a crucial step you can take to avoid costly lawsuits. Lawsuits alleging violations of the Fair Labor Standards Act are one of the fastest growing types of employee lawsuits. The judgments and settlements in these lawsuits have been massive, with several totaling over $10 million.

At the same time, state and local laws have expanded employee rights to overtime and have implemented mandatory rest and meal periods and predictive work scheduling requirements.

Clear Law Institute’s Wage and Hour Fundamentals course teaches employees their specific responsibilities for complying with the federal Fair Labor Standards Act.

Unlike most courses on this topic, the training also addresses how to comply with state and local wage and hour laws, which often are much more expansive than the federal FLSA.

Clear Law Institute CEO, Michael Johnson, published an article on Why Wage and Hour Training for Managers is Essential.  You can read the article here.