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National Restaurant Association - NRA on overtime: Don’t redefine management

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NRA on overtime: Don’t redefine management

The waiting for the Department of Labor’s final revisions to federal overtime rules has begun. The Department of Labor stopped accepting comments from the public on its dramatic proposed revisions on Sept. 4, and there’s no timetable for release.

What has been proposed: The Department of Labor, acting on an order from President Obama, proposed increasing the minimum salary for employees to be considered exempt from overtime to $50,440 a year, or $970 a week—a substantial increase over the current levels $23,660, or $455 a week. But that’s not all. The proposal also left open the possibility that the DOL could institute a “duties test,” rigid guidelines that define the types of employees who must be paid overtime.

More than 1,500 restaurant operators and the National Restaurant Association submitted comments outlining their concerns about the proposed revisions. The NRA focused on three main areas that restaurants are concerned about:

Duties test: While most of their time is typically spent on management-related duties, it’s also common for restaurant managers to fill other roles—serving, cleaning, cashiering—as needed. Any changes to the current duties test that determines which employees may be defined as “management,” and therefore exempt from overtime pay, could eliminate that important flexibility.

“The concurrent duties test rule recognizes that front-line managers in restaurants play a multi-faceted role in which they often perform nonexempt tasks at the same time as they carry out their exempt, managerial function,” the NRA wrote in its comments. “It recognizes that exempt and nonexempt work are not mutually exclusive.”

Total compensation: The Department of Labor suggested that the new regulations could include nondiscretionary bonuses and incentive payments, such as bonuses related to productivity or profitability. The NRA supports that aspect, but disagrees with another suggestion that would limit the bonuses that could be included to 10 percent of an employee’s weekly salary level. 

“It should make no difference to an exemption analysis whether someone earns $40,000 per year in base salary with $10,000 in bonus versus $45,000 per year in base salary with $5,000 in bonus,” the NRA wrote.

The proposed minimum salary level is unrealistic for restaurants. While the NRA supports increasing the minimum salary level used to determine which employees are exempt from overtime, the proposed increase from $23,660 ($455 a week), to $50,440 ($970 a week) is not realistic for restaurants. The NRA suggested an alternative of $657 a week to more accurately reflect the balance between salaried managers and hourly restaurant employees. 

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