Expanding to the US: Employment Law Considerations for International Hospitality Brands

So, you’ve decided to expand your restaurant or hospitality brand to the United States! While this comes with a host of opportunities, it also involves navigating countless employment-related laws that differ significantly from those in Australia, Canada, and Europe.

Unlike many other developed nations, the U.S. has a highly fragmented regulatory landscape, with labor laws enforced at the federal, state, and often local levels. This can create overwhelming compliance challenges, especially for international restaurants and hospitality operators unfamiliar with the system. Below, we break down the key employment considerations and the risks of non-compliance.

Key U.S. Employment Law Considerations

1. At-Will Employment One of the most defining characteristics of U.S. employment law is “at-will employment.” This means that, in 49 out of 50 states, employers can terminate an employee at any time, for any reason, if it is not discriminatory or retaliatory. This is unlike many other countries, which require just cause for termination and mandate severance pay. But – and this is a BIG but – just as employers can fire employees at will, employees can also sue employers at will. While frivolous lawsuits are discouraged by strict anti-frivolity laws overseas, the U.S. legal system allows almost anyone to file a lawsuit, creating an additional layer of risk for businesses.
2. Wage and Hour Laws The Fair Labor Standards Act (FLSA) establishes the federal minimum wage ($7.25 per hour as of 2024), but many states and cities set their own, higher, minimum wages. Additionally, tipped employees in the hospitality industry often receive a lower base wage (as low as $2.13 per hour) if tips bring their earnings up to the minimum wage. This differs dramatically from countries with centralized wage regulations.
3. Anti-Discrimination and Harassment Protections The U.S. has stringent anti-discrimination laws enforced by the Equal Employment Opportunity Commission (EEOC). Federal law prohibits discrimination based on race, sex, religion, age, disability, and other protected classes. Many states offer additional protections, such as prohibiting discrimination based on sexual orientation and gender identity.
4. Unionization and Labor Relations Unlike in many European countries, where hospitality unions are common, union representation in the U.S. hospitality sector is very low. Businesses must still comply with the National Labor Relations Act (NLRA), which protects employees’ rights to organize and collectively bargain.
5. Paid Leave and Benefits The U.S. does not have federally mandated paid vacation or sick leave, unlike Australia and Europe. However, some states and cities require paid leave, and employers are subject to the Family and Medical Leave Act (FMLA), which provides up to 12 weeks of unpaid leave for qualifying employees.

Special Considerations for New York City: The Hospitality Wage Order

New York City has some of the most complex wage laws in the country, particularly for hospitality businesses. The New York Hospitality Industry Wage Order sets specific requirements for restaurants and hotels, including:

• Higher Minimum Wages: As of 2024, the minimum wage for hospitality workers in NYC is $16 per hour, higher than the federal (and state) minimum.
• Tip Credit Regulations: Employers can take a tip credit, meaning tipped employees can be paid a lower base wage ($10.65 per hour in NYC) as long as tips bring their total earnings up to the full minimum wage.
• Spread of Hours Pay: Employees working over a 10-hour shift must receive an extra hour of pay at the minimum wage. Because this is jurisdiction specific, not all timekeeping and payroll software is capable of automatically capturing this specific payment premium.
• Overtime Rules: Hospitality workers must be paid 1.5 times their regular hourly rate for hours worked over 40 in a week.

The Risks of Non-Compliance

Failure to comply with U.S. employment laws can result in severe consequences, including lawsuits, fines, and reputational damage. According to the EEOC, nearly 74,000 workplace discrimination charges were filed in 2022, with retaliation being the most common claim. Additionally, wage and hour disputes are a significant risk, with the Department of Labor frequently investigating restaurant operators for unpaid overtime and tip violations.

Why the U.S. is So Litigious

Compared to many other countries, the U.S. has a highly litigious business environment. Employees have strong legal protections and access to contingency-based attorneys, meaning lawsuits can be filed with little to no upfront cost to plaintiffs. Class-action lawsuits are also common, particularly regarding wage theft and discrimination claims. Since there are no anti-frivolity laws, weak or baseless lawsuits often proceed, adding significant legal costs for employers.

How Hospitality Businesses Can Stay Compliant

• Work with HR and legal professionals familiar with federal, state, and local employment laws.
• Develop clear policies on hiring, termination, discrimination, and wage compliance.
• Train management and staff on employment laws, workplace conduct, and compliance procedures.
• Regularly audit payroll and HR policies to ensure ongoing compliance.

Potential Changes Under the New Presidential Administration

The recent change in the U.S. presidential administration has introduced considerable changes to employment law that will likely impact all employers. Notably, President Donald Trump issued Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” prohibiting private organizations from implementing Diversity, Equity, Inclusion, and Accessibility (DEIA) programs in positions funded by federal contracts. This order also revokes certain provisions of the 1965 Equal Employment Opportunity order, potentially affecting affirmative action policies among federal contractors.

Additionally, the administration has made significant changes to the National Labor Relations Board (NLRB), including the removal of member Gwynne Wilcox and General Counsel Jennifer Abruzzo, signaling a potential shift toward more employer-friendly labor policies.

These developments suggest a move toward reducing DEIA initiatives and altering labor relations dynamics. Hospitality businesses, especially those engaged in federal contracting, should closely monitor these changes to ensure compliance and adjust their employment practices accordingly.

By proactively understanding and addressing U.S. employment laws, international hospitality businesses can successfully navigate expansion while minimizing legal risks. Need expert guidance? Empowered Hospitality specializes in helping hospitality businesses comply with complex HR regulations.