By Christopher Yeh
Update (7/6/2015): Duane Morris has a detailed analysis of the proposed new rules, as well as information about an upcoming July 15th webinar, here.
On Tuesday June 30th, the Department of Labor released its long-awaited proposed overhaul to overtime regulations, further to President Obama’s goal of raising wages for more low and middle-income workers. Soon after the announcement, the National Restaurant Association (“NRA”) announced its opposition.
Under the current federal minimum wage rules, employers generally do not have to pay overtime to certain employees earning more than $455 per week, or $23,660 per year. Under the proposed new rules, the overtime exemption threshold would increase to $970 per week, or $50,440 per year. The proposed changes are open for public comment, and will not be finalized for a while.
The NRA’s statement says, in part:
While we are still reviewing the Department of Labor’s proposed overtime regulations, at first sign, it seems as if these proposed rules have the potential to radically change industry standards and negatively impact our workforce. As with previous policies put forth by this Administration, we are deeply concerned with the outcome this process will have on the employer community and our employees.
Supporters of these regulations say they want to increase Americans’ take-home pay, but these sweeping changes to the rules could mean anything but. More than 80% of restaurant owners and 97% of restaurant managers start their careers in non-managerial positions and move up with new, performance-based incentives. If these regulations stand, that mobility and adaptability of employee schedules, which makes our industry appealing, will be severely diminished.
The Obama Administration’s overhaul of overtime pay rules aims to boost workers’ paychecks, but that also means increased operating expenses for restaurant owners. These competing interests will have to be hammered out in the upcoming public comment period until all sides come to a middle ground.