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New Changes to Overtime Pay in the Food Industry: How are Employees and Employers Affected?

Stephen Brockman

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Stephen Brockman | August 11, 2016 | 0

Overtime Pay Changes in the Food Industry

The Department of Labor has drastically amended the overtime pay laws which is set to affect roughly 5 million workers with the largest impact being felt in the retail and service sectors. Here’s what these big changes have in store for both business owners and food service workers:

What this Means for Service Employees

The rate for overtime is 1.5 times your hourly wage (time and a half) and if you’re salaried it will be 1.5 times your aggregate weekly salary if you work more than 40 hours in the week.

The Department of Labor estimates that 35% of full-time salaried employees in all industries will now be able to get overtime pay, up from just 7% before. Traditionally, “white collar” jobs, including the convenience store and restaurant managers, were exempted if the worker earned at least $23,660 per year. However, the amended law has expanded overtime coverage to salaried employees earning $47,476 per year ($913 per week) and depending on what you do at your job, you may be eligible for overtime pay now.

If you’re a manager who doesn’t do service work or other heavy lifting tasks, you might receive a pay hike if your employer wants to keep you exempt. Bonuses and other incentive pay for managers will also be factored into that base salary. If you are a part-time employee, you could expect to receive more hours as management may want to allot hours to more people than have fewer employees work more hours.

Time off in Lieu of Overtime Pay

This might be offered to you by an employer where you’ll receive paid time off from work instead of overtime. This is really not allowed by the Federal Labor Standards Act (FLSA.)

What this Means for Businesses in the Restaurant and Service Industries

A job is exempt from the overtime rules if it passes a duties test that proves the job is executive, administrative, or professional. You can’t simply attempt to give an employee management status but still have them tend bar, manage inventory, take customers’ orders, and so on. The manager needs to direct at least two full-time employees to be exempted from the new overtime rules under the FLSA. This may give you more incentive to offer more hours to part-time employees who are currently exempted, but work directly with a manager.

While the new overtime rules account for performance-based compensation like manager bonuses, you’ll likely need to offer a sweeter deal for your management employees to keep happy customers flocking to your establishment. Increasing managers’ pay well above the $47,476 per year threshold and still offering performance-based bonuses can be one way to do this.

There can be variations in the overtime pay rules by state, so you’ll want to check with your state’s labor department if you want to do more research on what these new rules could mean for you.

If you’re looking to take your food service career to the next level and take advantage of these new protections now that many restaurant managers are covered, you’ll definitely want to look into Food Manager Certification. State law and/or your employer may require this certificate. Click here to choose your state if this applies to you.

 

Sources:

https://www.dol.gov/whd/regs/compliance/whdfs27.htm

https://www.dol.gov/whd/overtime/fs17a_overview.pdf

http://www.marketplace.org/2016/05/12/world/millions-more-white-collar-workers-could-get-overtime

http://www.chicagotribune.com/business/ct-overtime-final-rule-0519-biz-20160518-story.html

http://www.restaurant.org/News-Research/News/White-House-unveils-overtime-rule

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