What the AH&LA, NRA think about the new federal overtime rule

(A waiter setting a table)

The Department of Labor unveiled final federal overtime regulations May 18.

The new federal overtime rule will go into effect Dec. 1, 2016, according to a White House fact sheet and DOL compliance information. The rule:

  • Guarantees time-and-half pay to any salaried employee earning under $47,476 a year ($913 a week) and who works more than 40 hours in a week. That’s double the current salary threshold of $23,660 ($455 a week).
  • Automatically updates the salary threshold every three years, tying it to the 40thpercentile of full-time salaried workers in the lowest-income Census region (currently the South). The first update would be Jan. 1, 2020. Based on current wage trends, the DOL projects a salary threshold of $51,000 by Jan. 1, 2020.
  • Makes no changes in the duties tests used to determine whether a salaried employee above the threshold is considered an executive, administrative or professional employee and thus exempt from overtime pay.
  • For the first time, allows certain bonuses and incentive payments to count toward up to 10 percent of the new salary level.

The National Restaurant Association issued the following statement regarding the Department of Labor’s overhaul of current overtime regulations:

 “We are appreciative that it appears the Department of Labor listened to restaurants’ concerns and did not include the burdensome ‘long’ duties test, which would have led to increased contentious disputes and litigation—something the Department itself stated it wanted to avoid with these current regulations,” said Angelo Amador, SVP of labor and workforce policy and regulatory counsel. “However, the threshold for exempt employees in the final regulations is still too high.

 “Restaurants operate on thin margins with low profits per employee and little room to absorb added costs. More than doubling the current minimum salary threshold for exempt employees, while automatically increasing salary levels, will harm restaurants and the employer community at large.

 “More than 80 percent of restaurant owners and 97 percent of restaurant managers start their careers in non-managerial positions and move up with performance-based incentives. These regulations may mean that salaried employees, who have worked hard to get where they are, could be subject to becoming hourly employees once again.”

The American Hotel & Lodging Association issued the following statement on the Department of Labor’s final overtime rule.

“Our industry is ripe with opportunity and has a tremendous track record of providing the training and resources our employees need to move up through the ranks to more senior positions. However, we are concerned that the significant increase in the rumored salary threshold will have a profound negative impact on small and independent business owners who will face real challenges trying to implement this rule.

“With roughly half the hotels in the U.S. owned and operated by small or independent property owners, this regulation could force many hoteliers to reduce hours and flexibility or cut jobs altogether in order to stay in business. Regrettably, it will ultimately harm the very employees that it purports to help, preventing employee advancement and reducing opportunities in the workplace while impeding industry growth and job creation.” -- Brian Crawford, AH&LA VP of government affairs.