A real labor-cost worry

Enough with the wailing over minimum wage increases. If you’re really worried about labor costs, pour a stiff drink and brace for the wallop of new pay scales for your assistant and shift managers.

A fundamental change in the way they’re compensated was set in motion last week with surprisingly little recoil from rank-and-file restaurant operators. In a formal memo, President Obama directed Secretary of Labor Tom Perez to overall federal regulations for overtime pay with the express purpose of covering managers at the low end of the salary scale, a group prevalent in the business. The President said as much before he signed the directive.

Right now you can pay managers as little as $23,660 and avoid overtime, as long as their duties are truly managerial. It’s called the white-collar exemption. The White House believes the standards are as outdated as sideburns. It contends the pay threshold is too low, and the work done today by many people with a management title is actually the sort of physical labor that should qualify for time-and-a-half if it’s undertaken for more than 40 hours per week.  Yet, it says, 88 percent of salaried employees are exempt from overtime mandates.

“It doesn't matter if what you do is mostly physical work like stocking shelves, it doesn't matter if you’re working 50 or 60 or 70 hours a week—your employer doesn't have to pay you a single extra dime,” President Obama said at the signing event on Thursday. “And I think that’s wrong … If you’re working hard, you’re barely making ends meet, you should be paid overtime.  Period.”

Updating the regulations to reflect the times “is going to make a real difference in the lives of millions of Americans, from managers in fast food and retail to office workers, cargo inspectors,” he said.

Obama indicated that Perez would consult with businesses as well as exempt white collar employees before drafting new regulations.

He also stressed that he’d like the changes to come quickly, but the National Restaurant Association noted in a statement on its website that regulatory changes usually take a long time, and that the Department of Labor is required to solicit comments before any changes are implemented.

“The issue has huge implications for all employers,” the association commented. “The National Restaurant Association is tracking this issue closely.”


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