Rest in Peace 40 Hr Work Week

Rest in Peace 40 Hr Work Week

2016 New Overtime Regulations-The Final Rule

You are the owner of a fine dining establishment or a fast food chain. You feel confident all your part and full time employees are correctly classified, right? Maybe NOT. The Department of Labor (DOL) has now raised the overtime salary cap level to $47,476.

Example: When upper management asks your salaried chef or regional manager, earning less than $47,000 annually, to work more than 40 hours per week, they now automatically must be paid time and a half. The new overtime rules may give restaurant workers a perceived, much deserved raise, but in reality, this policy alters restaurant dynamics, minimum wages, and overall operating procedures significantly.

Significance to the Restaurant and Hospitality Industry

Industry Associations believe the new overtime law, referred to as The Final Rule, specifically creates overwhelming challenges for restaurant and hospitality businesses. In fact they call it a “Career Killer.”

Reclassification of Workers

Instead of increasing salaries to raise workers above the overtime threshold, many businesses will simply reclassify professionals as hourly workers. This removes their existing perks, flexibility, and certain benefits. Comp time, where employees work overtime in exchange for future days off, is not allowed for those eligible for overtime under the new rules.

Solution Tradeoffs

Simply put, each business owner will have to take into account the tradeoff of higher payroll and administrative costs versus a potentially dispirited staff that sees better opportunities elsewhere. Kiosk technology replacement is already in full swing. Solutions will affect business owners’ bottom line.

So here’s the question: How Will This Really Impact Your Business?

According to the Department of Labor (DOL)…


  • The Issue: DOL contends the new rule will set employers back $1.5 billion annually—$1.2 billion in increased overtime pay and $300 million in related administrative costs. The projected changes will directly affect 4.2 million workers and another 8.9 million indirectly by reclassifying their status. Businesses are already burdened by having to decide whether to absorb the extra costs of the Affordable Care Act (ACA) or cut health benefits altogether, dumping employees into the Healthcare exchanges. Now, the overtime rule represents another cost that disproportionately affects small businesses and the cumulative effects could be too much for some businesses to tolerate.
  • The Problem: On the macro level, experts claim the rules may cause economic harm. On the operating side, businesses will be faced with raising or cutting base salaries and/or benefits, limiting hours and hiring temporary staff or freelancers. Oxford Economics concludes the new rules will leave most workers without an increase in take-home pay due to limited hours or other pay adjustments to offset the increases in payroll costs. Administrative expenses such as the added costs of tracking hours for more employees and updating of payroll systems were estimated to cost businesses $745 million.

Now, According To AccountFirst…

  • The Good News: we have the Overtime Alternative Solution. If you are stressing over the regulatory parameters of the Final Rule, if you require cost effective compliant employee tracking, if you’re seeking world class affordable healthcare solutions to retain quality employees and fulfill ACA mandates, OR if you simply want to re-take control of your business MENU; reach out to us today!

We’re AccountFirst and “We Make the Complex Simple”