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Founded in 1933, the Indiana Restaurant represents over 1,600 member restaurant properties and industry-related services companies. It is these members that help make the foodservice industry the nation's largest private sector employer and one of the state’s most politically active and public service oriented industries. Our members are the cornerstone of the Indiana community and economy.

November 2012

Tips Vs. Service ChargesEnd of the Auto-Grat?

The DOL regulation is codified at 29 C.F.R. § 531.55, and in Wage-Hour Opinion Letter 2005-31, the DOL reaffirmed that a com-pulsory service charge is not a tip and cannot be counted as a tip even if the employer distributes the service charge to employ-ees.

It is important for restaurants to inform guests of service charges and the amount of the charge before the guest orders, either by a conspicuous notice on the menu or some other means.

U.S. Department of Labor regulations and IRS interpretations distinguish between a tip voluntarily paid by a customer and a mandatory charge imposed upon the customer. A service charge is an amount automatically added to a customer's bill by man-agement. IRS Rev. Rul. 2012-18 lists four factors, all of which must be present in order for the customer’s extra payment to be deemed a tip:

• The customer’s payment must be made free from compulsion; • The customer must have the unrestricted right to determine the amount; • The payment should not be the subject of negotiation or dictated by the employer policy; and • Generally, the customer has the right to determine who receives the payment.

IRS Revenue Ruling 2012-18, issued June 7, 2012, gives the following examples to distinguish when a gratuity left by the cus-tomer will be considered a “tip” or “service charge”:

Example 1: A restaurant’s menu specifies that an 18 percent gratuity will be added to all customer bills. A customer’s bill for food and beverages includes an amount on the “tip line” equal to 18 percent of the price for food and beverages and the total includes this amount. The restaurant distributes this amount to the server sand buspersons. Under these circumstances, the customer did not have the unrestricted right to determine the amount of the payment because it was dictated by employer policy. The customer did not make the payment free from compulsion. The 18 percent gratuity is not a tip within the meaning of section 3121 of the federal tax code. The amount included on the tip line is a service charge dictated by the restaurant.

Example 2: A restaurant includes sample calculations of tip amounts beneath the signature line on its charge receipts for food and beverages provided to customers. The actual tip line is left blank. A customer’s charge receipt shows sample tip calculations of 15 percent, 18 percent and 20 percent of the price of food and beverages. The customer inserts the amount calculated at 15 percent on the tip line and adds this amount to the price of food and beverages to compute the total. Under these circum-stances, the customer was free to enter any amount on the tip line or leave it blank; thus, the customer entered the 15 percent amount free from compulsion. The customer and the restaurant did not negotiate the amount nor did the restaurant dictate the amount. The customer generally determined who would get the amount. The amount the customer entered on the tip line is a tip within the meaning of section 3121 of the federal tax code.

If the gratuity is deemed to be a service charge rather than a tip, under federal law, service charges:

• Belong to the establishment • Become a part of the establishment's gross receipts • Must be considered as income to the employer, and • May be retained entirely by management or distributed to employees in any amount management chooses.

Service charges that get distributed to employees are treated as wages under federal law. Distributed service charges may be used to help employers meet their obligation to pay employees the minimum wage. However, a compulsory service charge cannot be counted as a tip credit. Under the DOL regulations, 29 C.F.R.§ 531.55, as amended effective May 5, 2011, restaurants that automatically add a gratuity, for example, for large parties or catered events (deemed by DOL to be a service charge and not a tip), cannot take a tip credit for the mandatory gratuity the establishment receives, even if management passes the gratuity on as a tip to employees. Instead, the mandatory-gratuity receipts would be considered part of the employer's receipts. Money paid from those receipts to employees would be considered wages rather than tips.

For more information contact IRA 317.673.4211 | 800.678.1957

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IRA and IHLA Coming Together as One OrganizationOn Tuesday the Indiana Restaurant Association and Indiana Hotel & Lodging Association held membership meetings at the Omni Hotel Indianapolis to vote on the proposed merger of the two organizations. The goal of the merger is to create a better, stronger organization with size and importance of the hospital-ity sector.

Both organizations voted unanimously to merge into one asso-ciation – the Indiana Restaurant and Lodging Association. The new association will become effective January 1, 2013. Phil Ray, General Manager of the Marriott Indianapolis Downtown will become the first Chairman of the Board. The Board of Di-rectors of both associations have also merged together to form one Board. Work will begin immediately to solidify financial budges and brand identification.

John Livengood, President and CEO of both associations says, “Over 20 states have already taken this step and more are con-sidering mergers. Sometimes mergers of this kind are born out of financial necessity but in this case it is the desire to have a stronger organization that can better reflect the industry. We want a voice that reflects the size and importance of the hospitality sector."

The two industries are collectively the state’s largest employer. Restaurants employ over 287,000 Hoosiers and hotels add another 31,000 jobs. In 2012, restaurant sales are projected to be $8.8 billion and the lodging industry in Indiana has $1.4 billion in direct sales.

This driving force ultimately provides jobs and builds careers for thousands of people. Most hospitality businesses are small enterprises that are in good standing within the community and keep dollars spent here in Indiana.

In fact, a study done by the Center for Business and Economic Research at Ball State University found that the average county in Indiana enjoys over $11.7 million in wages from hotel accommodations and $66 million in food service.

The overall quality of life in our state is enhanced by hospitality related businesses and in return, helps economic development. In today’s world you can locate a business anywhere. We are more likely to attract the high-tech jobs of the future if we provide the amenities that people want in their community. That means great restaurants, recreational facilities and entertainment options. When we add these opportunities for visitors, we are also adding them for those who live and work in Indiana.

The proposed new Indiana Restaurant and Lodging Association is the best way to continue that partnership and represent an industry that will play a vital role in the lives of all Hoosiers for years to come.

Blu MartiniRuss AllenIndianapoliswww.blumar-tini.net

Kilroy's Bar and GrilleChris BurtonIndianapolis

Jersey Mike's Franchise SystemsJeff BernsLibertyvillewww.jerseymikes.com

Three D's Cafe and PubErin HellerCarmel

Haub Steak HouseLarry HaleyHaubstadt

Sangiovese RistoranteChris EvansIndianapolis

Please help welcome the newest Members of the IRA family!We are proud to announce our newest members. Please extend a warm welcome to them!

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Endorsed Providers

Chairman of the Board:Phil RayMarriott Indianapolis DowntownIndianapolis

Vice Chair – Restaurant Division:John BenjaminScotty’s BrewhouseCarmel

Vice Chair – Lodging Division:Rob EvansHoliday Inn IPFWFort Wayne

Treasurer:Mark McDonnellLaSalle GrillSouth Bend

Immediate Past Chairs:Craig Huse St. Elmo Steak House | Harry & Izzy’sIndianapolis

Michael ConnerHilton Garden Inn Indianapolis

National Restaurant Association DirectorWes StouderPenguin PointWarsaw

American Hotel & Lodg-ing Association DirectorJeffrey BrownSchahet HotelsCarmel

Partner Division Representative

Michael Crafton360 ServicesIndianapolisDirectors

Vickie FarmwaldHaciendaSouth Bend

Rich GhiselliPurdue Hospitality & Tourism MgmtWest Lafayette

Karen Hirsh-CooperHomewood Suites Lafayette

Michael JonesCulver's of NoblesvilleNoblesville

Kevin LatoneOmni Severin Hotel Indianapolis

Charles LaMotteWhite Lodging Merrillville

Randy ShieldsMcDonald'sGreenwood

Erik StukenbergTreat America Food ServicesIndianapolis

Craig TruelockHuse Inc.Bloomington

Dan WallerSchahet HotelsCarmel

Tim WorthingtonSpring Mill InnMitchell

Jim Zink, Jr.Zink DistributingIndianapolis

Russ AdamsStrongbow InnValparaiso

Bruce ByrdResidence Inn Colum-busColumbus

Rob ChinskyPenn Station East Coast SubsFishers

Bruce DodgeApple Sauce, IncFort Wayne

Greg Ehresman Triple XXXWest Lafayette

Neil HottleSysco FoodserviceIndianapolis

Richard LetkoHilton Garden InnIndianapolis

Mark LuttikHilton Fort WayneFort Wayne

Regina MehallickR BistroIndianapolis

Peter Meyer120 Fresh Market @HiltonIndianapolis

Gary MillerIndiana State Park InnsIndianapolis

Thom SimmonsIndiana Memorial UnionBloomington

Jeff SweetHilton Indianapolis DowntownIndianapolis

Scott WiseScotty's BrewhouseMuncie

John XenosMonarch BeverageLawrence

George BrinkmoellerSherman House Res-taurant & InnBatesville

Lennie BuschOne World EnterprisesBloomington

Carolyn CochranWhite LodgingMerrillville

Brad CohenArni's Inc.Lafayette

John FrenzMontana Mike’sVincennes

Bob GattoTexas RoadhouseIndianapolis

Carl HillKonover Hotel CorpWarsaw

Pat HurrleRNDCIndianapolis

Tim JonesBob Evans RestaurantsFishers

Rick LuxLux RestaurantsIndianapolis

Dave MontroseWhite LodgingMerrillville

Jeffrey MurrayIndiana Grand CasinoShelbyville

Andy RogersBrown County Hotels & RestaurantsNashville

Ryan RogersBonefish GrillCarmel

Todd StearnsStanz FoodserviceSouth Bend

Joe VezzosoFrench Lick Springs | West BadenFrench Lick

Robert VioxBelterra Casino Resort-Belterra

Julia WatsonIndianapolis Downtown Indianapolis

Board of Directors of the Indiana Restaurant & Lodging Association:

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Complaints about illegal payroll deduc-tions are one of the most common wage complaints received by the IDOL, Wage & Hour Division and can result in a costly learn-ing experience for an employer if a complaint results in litigation.

Employers make a variety of payroll deductions, most of which are authorized by federal law or state and federal revenue regulations. However, beyond the payroll deductions autho-rized by federal or state law, Indiana wage and hour law limits the circumstances under which an employer may make deduc-tions from an employee’s wages.

Indiana Code 22-2-6-2 sets out the requirements for legal pay-roll deductions and involves a two-step test. First, deduction authorizations must be:

1. In writing,2. Signed by the employee,3. Revocable upon written notice, and4. Agreed to in writing by the employer.

Once the requirements of the first step are satisfied, the employer may deduct for any of 13 categories of reasons identified in the statute. The statute authorizes deductions for

health and life insurance premiums, charitable contributions, savings bonds, union dues, stock option plans, etc. Indiana law does not authorize payroll deductions for loss or damage to an employer’s property, cash drawer shortages, employee billing errors or employee uniforms. These are some of the more common illegal deductions investigated by the IDOL.

When an employee or former employee files a wage complaint with the IDOL, it is usually advantageous for the parties to take advantage of the IDOL’s wage dispute resolution process. The process is efficient and effective, but more importantly involves almost no transaction costs for the parties. In con-trast, litigation can be very expensive. Indiana law provides that a wage claimant who files a civil lawsuit to recover wages may be entitled to recover actual damages (wages), plus up to two times the actual damages as liquidated damages, plus reasonable attorney fees.

For example, a former employee filed a $504 wage claim with the IDOL. The former employer refused to cooperate with the IDOL Wage Investigator who was trying to resolve the dispute. The former employee hired a law firm and filed a civil law-suit to recover the wages. By the time the case was over, the Indiana Court of Appeals remanded the case back to the trial court, ordering the former employer to pay the original $504 in wages, plus an additional $7,832.17 in liquidated damages, costs and attorney fees, for a total of $8,336.17.

For questions about illegal deductions, review IDOL’s Frequent-ly Asked Questions at www.in.gov/dol/2345.htm.

Are Those Payroll Deductions Legal?

Fall 2012 Executive Study Group MeetingsNRA just concluded an outstanding round of Fall 2012 meetings for NRA's Executive Study Group series. Our study groups bring together restaurant executives once or twice a year in disciplines ranging from quality assurance to marketing. This fall's meet-ings gave chain restaurant execs an opportunity to share best practices, talk about emerging issues, and get to know others in their field. Next up: February 2013, human resources & risk management professionals. To get on the mailing list for future meetings, contact Robin Nichols, rnichols@restaurant.org

Be Alert to Restaurant Crimes There has been a rash of recent burglaries targeting restaurants in the Indianapolis downtown area. Now is a good time to remind everyone to consider conducting a security audit.To see a sample audit, go to: http://www.indianarestaurants.org/CrimePrevention.asp

Recent burglaries include someone throwing a rock through a window to get inside. Another scam involves an individual who comes in to fill out a job application and leaves with expensive liquor. He did not complete the job application, waiting until he was not being observed.

Please be aware and inform your managers. Use caution when someone comes in to complete a job application especially dur-ing slower hours.

Please report activity to your association to help alert your fellow restaurants.

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National Restaurant Association Seeks Examples of Outstanding Community Service for 2013 Restaurant Neighbor AwardNational Restaurant Association encourages restaurants and their patrons to nominate outstanding philanthropic contributors online and on social media

Restaurants’ charitable contributions are estimated to up to $3 billion annually, and more than nine out of 10 restaurants are actively involved in community service. To recognize these efforts, the National Restaurant Association (NRA) encourages the na-tion’s nearly one million restaurants to apply for its 2013 Restaurant Neighbor Award. The NRA is also accepting nominations from individuals who have seen first-hand how restaurants support their communities, including patrons and employees.

The NRA and Restaurant Neighbor Award founding partner American Express devel-oped the award to raise awareness about the restaurant industry’s contributions in local communities. Application/nomination forms are accepted online at Restaurant.org/Community until January 7, 2013. The NRA will also accept nominations through its social media channels, including Facebook and Twitter.

“Restaurateurs and their employees are heroes in local communities from coast to coast, but often don’t get the recognition they deserve – we are trying to change that,” said Dawn Sweeney, National Restaurant Association President and CEO. “For the 15th year, we are recognizing their tremendous efforts and celebrating the ways in which they support their communities with our Restaurant Neighbor Award. We look forward to continue learning about all the great things our industry is doing, both from restaurants themselves and from the people they support.”

The annual Restaurant Neighbor Award is presented to restaurants that exemplify the industry’s community support and philanthropic spirit. Four national winners will each receive a $5,000 contribution to their charitable projects. The national winners will be presented the awards in Washington, D.C., in April 2013, and be recognized on the NRA’s website.

The Restaurant Neighbor Award honors charitable contributions in four categories (small business, mid-size business, large business/national chain, and Cornerstone Humanitarian). Each participating state restaurant association will select winners in their respective states that will be in the running for the national award. The state winners will also be recognized on the NRA’s website.

For more information on the Restaurant Neighbor Award and to see the stories of last year’s winners, visit Restaurant.org/Community.

National Restaurant Association Seeks Individuals Who Have Achieved the American Dream for 2013 Faces of Diversity Award

The National Restaurant Association (NRA) encourages restaurant operators nationwide to apply or nominate a fellow industry professional for its 2013 Faces of Diversity Award. The Faces of Diversity Award is sponsored by PepsiCo Foodservice and celebrates the diversity of the restaurant industry by honoring individuals who have achieved the American Dream. Application/nomination forms are accepted online at Restaurant.org/Diversity until January 7, 2013. “As one of the most diverse industries in America, the restaurant industry is full of success stories of people of all cultures and backgrounds who have achieved the American Dream,” said Dawn Swee-ney, National Restaurant Association President and CEO. “Our Faces of Diversity Award celebrates the unique stories that make up our industry, and highlights that diversity strengthens the fabric of the restaurant community.” The Faces of Diversity Award recognizes the diversity of the restaurant industry and the role it plays in helping individuals achieve professional and personal success. Three individuals, who through hard work and determination have realized their dreams, are selected each year as the national winners. Winners will be recognized on the NRA’s website, and a $2,500 ProStart student scholarship will be presented in their name.

For more information on the Faces of Diversity Award and to see the stories of last year’s winners, visit Restaurant.org/Diversity.

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Customers want to make environmentally responsible dining choices, not just enjoy a meal. Learn how this trend can drive in new customers and create loyal ones, and how your business and the environ-ment will both reap some amazing benefits.

Minimize your waste and carbon footprintMore restaurants are becoming “Near-Zero Waste Restaurants.” In other words, they are composting and recycling nearly 95 percent of their waste. Here are some steps your private dining business can take to minimize its waste and reduce its carbon footprint.

• Restaurants are the number one consumer of electricity of the retail sector. Consider making the switch to LED lighting, which is 80 to 90 percent more efficient and contain no mercury.

• Instead of having just one trash bin in the public area, add a bin for recyclables and another for compostable items.• Recycle cooking grease or leftover vegetable oil. The oil can be recycled for other consumer uses, such as biodiesel.• Donate leftover food to organizations that serve homeless and underprivileged families in your local community. Contact

Second Helpings locally for guidance.

Consider your sourceAccording to the National Restaurant Association, locally sourced food is was the hottest restaurant trend in 2012. Restaurants are returning to sourcing their food from small, local farms rather than from large, industrial farms. Not only do small farms help keep local foods accessible and cheap for operators, they also offer more jobs to local communities and ultimately support local economies.

Go green in menu choicesStudies show that 80 percent of Americans consider themselves environmentally concerned, including the growing trend among brides and grooms who are incorporating eco-friendly decisions into their big day. Your private dining business can serve a menu that reflects the couple’s values without harming the environment.

• In addition to locally grown fruits and vegetables, consider adding smart-sourced seafood, responsibly farmed meats and artisan cheeses to the menu. Meals labeled vegan, vegetarian and dairy-free offer more personalized dining options to customers with special dietary needs.

• Wedding cakes, truffles and other sweets crafted by eco-conscious bakers who meet the couple’s requests for organic des-serts are becoming increasingly popular in the private dining sector.

• Offer your customers a variety of organic wines, antioxidant rich berry-infused cocktails, and locally sourced beers to select for their bar list and rehearsal dinner.

The power of technologyIn response to the growing desire for communities around food, both virtual and non-virtual, dining communities are quickly gaining traction. More consumers are visiting food websites and making use of food-related phone apps.

• Make use of your Facebook, Twitter and Snappening profiles to check in with existing customers and reach out to potential ones. Menu updates, events, promotions and business news can be posted and distributed to your contacts in seconds.

• Invite customers to write a review about their private dining experience at Yelp, Urban Spoon or other amateur restaurant review sites.

Online orderingAccording to a study sponsored by the Nation’s Restaurant News, more than 40 percent of adults order food online. Electronic ordering offers many advantages—improved order accuracy, higher productivity and enhanced customer relationship manage-ment abilities. It also reduces the cost and waste associated with the involved paperwork.

• Consider if an online ordering capability is right for your offsite catering business. Perhaps it would be a good test for smaller luncheons, pre-fab menus then consider the program larger receptions.

• Smart phone apps with ordering tools are expanding. Consider your customer base and whether this tool may benefit your business.

Snappening.com is an online event planning database that contains central Indiana's most comprehensive list of meeting and event venues - including restaurants. Since its 2011 launch, the site has provided over 65,000 consumers, venues and professional planners with an online service that makes event venue and event planner searches quick and easy, as well as provides highly localized event planning inspiration, tips and tools. Feel free to poke around on the site to see for yourself how helpful we are and perform your own searches. We estimate we'll save you anywhere from 4-8 hours of your own time by bringing all your options together in one well-appointed location.

Think Green: Inside the Restaurant and Onlineby Crystal Grave; founder, president and CEO of Snappening.com

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R bistro’s Regina Mehallick Recognized at ACF State ConferenceAt the recent American Culinary Federation Indiana conference, women chef and culinarians were recognized for their contribu-tion to the profession.

IRA Member Regina Mehallick was one of the featured honorees. Her sous chef, Erin Kem was also nominated for her role in raising the awareness of women chefs. Mehallick spoke of her beginnings as a “salad girl” and mentors who taught her the skills that were generally attributed to the men in the kitchen. Mehallick told students present that new kitchen employees in her restaurant –both male and female, always begin as a “salad girl”.

Other women chefs nominated for their contributions were:

Amanda Boucher-Fegley, PalominoKatherin Clifford, Ivy TechMegan Cook, Warner Transitional ServicesLiz Gimenez, Second HelpingsCindy Hawkins, Circle City SweetsMary Jan Houin, Mitchell’s Fish MarketPam Hodson, Hilton Garden InnErin Kem, R bistroSara Beth Moody, Hyatt RegencyKimberly Olson, Westin

Child Labor Law Training OpportunitiesThere are many opportunities for you to participate in training provided by the Indiana Department of Labor, which is offered via teleconference so you don’t lose productive time in travel and can keep your employees onsite. These training opportunities are provided free of charge, though registration is required.

To register for an upcoming teleconference, email childlabor@dol.in.gov. Please include your name, your email address and the date and time of the desired training. If enrolling a group of people, please list the name of each attendee.

Date Sponsor Class Location Time

December 6, 2012 IDOL Bureau of Child Labor

Child Labor Laws

Teleconference

10:00 AM

December 11, 2012 IDOL Bureau of Child Labor

Child Labor Laws

Teleconference

10:00 AM

Wes Stouder honored by Kosciusko County Kosciusko County recently inducted IRA member Wes Stouder, Penguin Point into the Entrepreneur and Innovation Hall of Fame. Stouder currently serves as the Idniana delegate to the National Res-taurant Association Board of Directors.

ENTERPRISE describes the essential elements of creating a successful, healthy, growing economy. It includes ENTRPRENEURS having the critical and unique talents to build a strong, growing com-pany.

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ALCOHOL SERVER TRAININGThe leading food safety training for the industry

Indiana law requires all alcohol servers to be trained within 120 days of employment

Certification Classes in Your AreaYour Business. Your Industry. Your Solution.

FOOD SAFETY TRAININGThe leading food safety training for the industry

Indiana Law Requires Certificationof one food handler per establishment

ServSafe Food Testing CostsClass: $125 Member | $150 Non-MemberRecertification: $60Proctored Exam: $35 Member | $50 Non-Member

To register call us at 800.678.1957 or 317-673-4211 or visit us online at www.indianarestaurants.org

ServSafe Alcohol Testing CostsClass: $25 Member | $30 Non-MemberTrain the Trainer: $250 Member | $300 Non-Member

Training at Your LocationThe IRA offers onsite classes for groups of ten or more students. To schedule training contact us at 800.678.1957 or dscott@LMVconsulting.com

800.678.1957 toll-free • www.indianarestaurants.org

Training Dates

Dec. 4 & 11Chrisney, Ind.2 DAY

Dec. 5Columbia City, Ind.RECERT

Dec. 5Indianapolis1 DAY

Dec. 6Franklin, Ind.RECERT

Dec. 10Princeton, Ind.RECERT

Dec. 11Fort WayneEXAM ONLY

Dec. 11Salem, Ind.1 DAY

Dec. 17IndianapolisEXAM ONLY

Dec. 18Paoli, Ind.1 DAY

2013

Jan. 28 & Feb. 4Princeton Ind.2 DAY

Training Dates

Nov. 26 12 p.m.Indianapolis

Dec. 1712 p.m.Indianapolis

More to come in 2013!