3 Ways Restaurants Can Prepare for New Overtime Regulations

The start of 2016 welcomed new minimum wage regulations, causing restaurant owners in several states to start increasing wage pay for employees. Nearly a year later, the next wave of paycheck changes is here: overtime pay.

On Dec. 1, new overtime regulations from the Department of Labor take effect, meaning it’s time for you to once again start implementing pay changes for certain restaurant staff. But before you break into a sweat over how these new overtime rules impact your business, take a deep breath. Much like anything else in your restaurant, preparation is key. Here are three ways to get ready for new overtime laws.

Identify which employees are eligible for overtime pay

The new laws will require overtime pay for employees below a specific salary threshold. Restaurants are not required to pay overtime to employees who make at least $47,476 annually, meaning any workers below that threshold  are eligible to earn overtime. Take a close look at your employees’ earnings to determine which staff members are already above the threshold and which will start earning overtime when new regulations kick in. Once you know exactly how many workers make at least $47,476 and how many will be overtime eligible, you can start crunching numbers.

Compare the salary threshold versus overtime pay

Once you’ve determined which employees are exempt from receiving overtime pay, look at the earnings of employees who will be eligible for overtime wages. How close are they to the minimum salary threshold? While many restaurant staff members are hourly, if salaried workers  – including managers and chefs – are lingering just below the $47,476 mark, it might be worth it to bump their salary to meet the minimum requirements.

Conduct a thorough cost analysis, weighing the pros and cons of giving employees a raise versus paying overtime each week they work more than 40 hours. You might discover that a salary increase now makes more financial sense than frequently paying overtime. For hourly workers, consider making their maximum weekly schedule 40 hours. Capping at 40 hours can be beneficial to your restaurant for more reasons than simply abiding by overtime laws – it can lead to a better work/life balance and happier employees in the long run.

Communicate pay changes with your employees

Change can be scary for everyone, especially your restaurant staff. But as the manager, they rely on you for open and honest communication on the subject. Talk with overtime-eligible employees about how new overtime rules will impact your restaurant as a whole, and on an individual level. You might also want to consider training staff on how to clock their hours more accurately and consistently. Taking the time to prepare your restaurant workers for the changes ahead will make the transition that much smoother.

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