Overtime Rule, What Does It Mean for Your Restaurant?

Last year, President Barack Obama signed a new overtime rule that would mean raises for more than four million Americans. The new rule raised the overtime threshold from $23,660 or $455 weekly to $47,476 or $913 per week.

Under the previous rule, salaried employees earning more than $23,660 were not eligible for overtime pay, even when they worked more than 40 hours a week. Under the new overtime regulations, millions of hourly restaurant workers and salaried employees at fine-dining establishments earning less than $47,000 a year would automatically qualify for time-and- a-half for working overtime. This means that a salaried employee earning $22 an hour would earn time-and- a-half or $33 per hour for time worked over 40 hours per week.

The new overtime rule was set to go into effect on December 1, 2016 and the government warned that no extensions would be granted. Restaurants instituted changes by reclassifying employees, raising managers and higher-level employees over the $47,000 threshold and installing new time-saving and labor management technology to keep costs from spiraling out of control.

Injunction Puts the Rule on Hold

Nearly two dozen states and a coalition of business groups filed lawsuits, arguing that the
Department of Labor had overstepped its authority by instituting the new higher overtime
threshold. On November 22, less than two weeks before the new rule was to take effect, a federal judge in Texas agreed and issued an injunction to stop the changes.

What Do Restaurants Do Now?

For now, a decision is on hold — and with the new incoming administration, the fate of the new overtime rule is uncertain. While you wait for a final decision, you may have questions about how to move forward with changes.

1. If you haven’t addressed the proposed changes but have employees who would be affected by the new overtime rule, don’t do anything yet. You may not have to make any changes to their classification or salary level.

2. If raises were already promised to your employees, you should still grant the increase. It could lower morale and pave the way to expensive lawsuits for not implementing a promised raise.

3. No one likes uncertainty, so make sure you are open about any changes at the federal level and reassure staff that your business will be complying if the new rule eventually
takes effect.

Leverage Technology for Compliance

Even the most diligent restaurant owners and managers may find themselves slipping below the compliance threshold unintentionally. It’s important to have the right technology for your
business to help monitor labor costs.

Granbury Restaurant Solutions’ Thr!ve software is designed for the evolving workplace. The software has the option to set manager alerts that will warn you when an employee is close
working overtime. Granbury’s subscription, Point of Sale as a Service includes free upgrades to the software, so when — and if — the overtime rule changes, your POS software will be
upgraded at no additional charge to address the changes.

If new overtime rules do eventually take effect, restaurant owners and managers can be ready for these changes by having the right technology in place to help them stay in compliance.