Modern Restaurant Management
5.29.19

In a recent article for Modern Restaurant Management, Jim Coleman discusses the newly proposed changes to the federal overtime rule under the Trump Administration.

In the final years of the Obama Administration, the United States Department of Labor (DOL) began proceedings to modify the minimum salary required for employees to qualify for most of the white-collar exemptions under the Fair Labor Standards Act (FLSA). The executive exemption in particular applied to restaurant managers and assistant managers in the industry. The final regulations issued in 2016 would have more than doubled from $455 to $913 a week, had a federal court in Texas not invalidated the changes and enjoined the DOL from implementing them.

The Trump administration sought input from the public on a new overtime rule in 2018 through publishing a series of questions and holding six public listening sessions. After considering more than 200,000 comments, the DOL published proposed overtime regulations in March of this year that will make the following changes if finalized:

  • Increase the standard minimum weekly salary from $455 to $679 ($23,660 to $35,308, annualized);
  • Increase the minimum annual compensation for “highly compensated employees” from $100,000 to $147,414 (a proposed increase that is actually higher than what the Obama DOL had proposed);
  • Allow up to 10 percent of the standard minimum salary to consist of nondiscretionary bonuses and other forms of incentive compensation that may be paid annually or more frequently (this is currently not permissible); and
  • Provide for periodic adjustments over time, but only after notice-and-comment rulemaking, and only every four years (under the Obama rule, the adjustments would have been automatic and would have occurred every three years without the need for notice-and-comment rulemaking).

While these proposed changes are similar to the Obama regulations, the one exception is the larger increase in the “highly compensated employee” threshold. The deadline for public comment is May 21, 2019. While nothing may happen in the immediate term, the DOL knows that 2020 is an election year, and politics in election years have a way of derailing much of the legislative and regulatory work of the government. As such, time is of the essence. Though, there is a very good chance that opponents of the proposal will mount a legal challenge in an effort to derail it, much like the opponents of the Obama DOL proposal did in 2016.

All in all, the restaurant industry should have a less difficult time complying with the new proposal than it would have had the Obama regulations ever taken effect. To assess your own situation, now would be a good time to compare your current salary levels with what is contained in the proposal to determine if adjustments would be needed if the proposal becomes final. Until finalization, the minimum salary level set in 2004 remains in effect.

The full article is available here.

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