Restaurants Get Ready for New Overtime Regulations

Days before the December 1 deadline for the new overtime regulations were due to go into effect, a federal district court in Texas granted a temporary nationwide halt on the new law. While the judge in the case rules on two legal challenges to the overtime regulation, things are in a holding pattern. However, it’s likely that whatever the details of the outcome, there will be some changes coming in the new year.

As a refresher, December 1, 2016 was the deadline the Department of Labor had set for employers to comply with a new overtime rule. This rule was going to make the following important changes:

  1. Salaried employees would receive time-and-half pay if they were earning less than $47,476 a year, and they work more than 40 hours a week. That salary is double the current salary threshold of $23,660.
  2. The salary threshold would automatically go up every three years, starting on January 1, 2020.
  3. Nondiscretionary bonuses, incentives and commissions may satisfy up to 10% of the salary requirement, but must be paid out at least quarterly.

From the beginning, the National Restaurant Association has been against this new rule. They issued a press statement in May stating its opposition, and the negative impacts it saw it having on the nation’s restaurant industry. The NRA has been working with legislators to try and block this rule becoming law, and has been supporting Congressman Kurt Schrader’s (D – Oregon) bill which calls for a three-year phase-in period of the new salary threshold and the elimination of automatic indexing.

For now, things are in a holding pattern, but it’s clear that 2017 will bring some changes to the way hourly employees get paid. Restaurants should be prepared for when some form of the new requirements go into effect.

Review employee classification.

Look back through your payroll records and evaluate the time your staff works and how much they earn. Decide if some of your salaried employees should becoming hourly, and if so, what their new hourly wage would be.

Explain new procedures to employees.

Even if you are waiting for the final ruling to implement changes, keep your employees up to date on what is going on. If there will be a major change to their title or paychecks, they need an explanation and instructions on any changes that will be implemented.

Assess your systems.

More than ever, you’re going to need to keep accurate records. Use this as an opportunity to assess the current systems you have in place and make sure they are up to today’s standards. Maybe this is a good time to upgrade some of your record keeping or payroll technology.

Whatever the final rule ends up being, one thing is for sure, changes are coming. Plan ahead, and make sure that the transition goes smoothly from the start for your restaurant and your staff.

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