For valuing restaurant employee meals, should flat shift pay be divided by eight hours or reduced for the employee's half-hour lunch period?

Plain-English summary

Restaurant employees had to remain on the premises for an eight-hour shift but could take a half-hour lunch during that shift. They received one flat amount for the eight-hour shift, and overtime also was computed from an allocated portion of an eight-hour workday.

The tax-counsel memorandum concluded that the employees were paid for eight hours. The restaurant therefore should use the full eight-hour payment basis when determining both the hourly wage and the value attributable to employee meals.

The source does not provide the actual shift amount, calculate a dollar meal value, identify a statute or regulation, or explain the rest of the tax treatment.

Common questions

Did the half-hour lunch reduce the paid shift to seven and one-half hours?

No. The memorandum treated the flat payment as compensation for an eight-hour shift.

Did the source calculate the taxable meal value?

No. It only established the hourly-wage basis to use in determining that value.

Citations and references

• The complete supporting memorandum cites no statute, regulation, or case.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/550-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/550-1234.pdf

Original ruling text

State of California

Board of Equalization

550.1234

Memorandum
To:

West Los Angeles – Auditing (AB)Date:

From:

Tax Counsel (WEB) - Headquarters

Subject:

REDACTED TEXT

August 8, 1977

This is with reference to your telephone inquiry relating to the hourly labor charge paid restaurant employees of the above-named taxpayer. We understand that the restaurant employees are required to remain on the business premises for an 8-hour shift period, but are authorized to have one-half hour for lunch during each shift. The employees are paid a flat sum of money for each 8-hour shift. Overtime pay is computed at an allocatable portion of an eight-hour work day. It is our conclusion that the employees are being paid for an 8-hour shift and that this payment basis should be used in determining the hourly wage and the value attributable to employees' meals. WEB/vs