Salaried foodservice employees who work more than 40 hours in a week will be entitled to overtime pay as of Dec. 1 unless they earn more than $47,476 annually, the result of a rules change announced last night by the U.S. Department of Labor.
The threshold that will make management employees exempt from overtime requirements is roughly double the current level—the equivalent of $913 per week, versus $455, or $23,660 annually.
The level will automatically reset every three years to match “wage growth rates,” Labor said.
The rules will for the first time allow employers to count bonuses and commissions for up to 10 percent of a salaried employees’ income, according to the International Franchise Association.
The steep hike is intended to instantly raise the income of about 4.2 million members of the middle class. It is not clear how many of the beneficiaries work in the foodservice business.
After the new rule takes effect Dec. 1, noncommercial facilities and other employers will have four options in dealing with salaried employees—in the foodservice business, a group consisting almost exclusively of management-level people.
If a manager or assistant manager works more than 40 hours, as many routinely do, an employer will either have to:
- Pay time and a half for every hour exceeding 40 hours, as they almost never do today;
- Raise the salary of anyone paid less than $47,476 above that level;
- Reduce the number of hours the manager works; or
- Use a combination of those strategies.
In a recent interview, Cicely Simpson, the chief lobbyist for the National Restaurant Association, cited changes in the overtime threshold as the foodservice industry’s top governmental concern.
However, the NRA noted that Labor heeded its requests to base overtime eligibility on income rather than a so-called long-duties test, whereby managers who shouldered duties usually handled by hourly workers could be entitled to overtime. The industry had pointed out that managers routinely fill in for hourlies who don’t show for their shifts, or help out the crew during crunch periods by assuming such tasks as clearing tables or running food out to the dining room.
The NRA and individual restaurateurs had argued that deciding what constituted managerial duties in a foodservice operation would lead to costly litigation and strain employer-employee relations.
The business community also noted that Labor backed away from its original proposal of using $57,000 per year as the salary threshold for exemption from overtime rules.
In addition, many employers had fretted that they’d be given only 60 or 120 days to comply with the new requirement. Labor provided more than six months.
Despite the concessions, the NRA blasted the new rules as a measure that will ultimately hurt foodservice employees as much as their operations.