Restaurant industry strives to shape overtime update

Representatives of the restaurant industry this week urged members of a Congressional panel to consider the realities of the business before they recommend changes in the rules governing overtime pay for unit-level managers.

At the direction of President Obama, the U.S. Department of Labor is considering an update of the criteria that determine whether or not a manager in any business qualifies for overtime pay. Restaurants usually do not pay overtime to unit-level managers, who are typically paid a salary rather than hourly wages. But that convention has been challenged in lawsuits filed by managers, who argue that they are often required by circumstances to do the same work as hourly employees who quality for time-and-a-half pay when their workweek extends beyond 40 hours. Restaurant managers routinely work more than 40 hours per week.

The U.S. House of Representatives’ Subcommittee on Workforce Protections held hearings this week to explore ways of updating overtime-pay rules. Even moderately broadening the scope of who is entitled to extra compensation could cost restaurateurs and retails an additional $5 billion annually in labor costs, according to the National Council of Chain Restaurants.

Of particular concern to the restaurant industry is one of the criteria that determines who is exempt from overtime-pay requirements.  The so-called “primary duties” test says the fundamental responsibilities of an exempt employee must qualify them as an executive, professional or administrative employee. 

“The duties test has become impractical and, as expected, confusing – leading to excess litigation and undermining an employer’s ability to utilize this statutory exemption without fear,” Angelo Amador, SVP of labor and workforce policy for the National Restaurant Association, said in written testimony submitted to the House Subcommittee.

He and others fear the Department of Labor will adopt a set measure to replace the duties test. If a certain percentage of time on the job is spent by a manager in non-managerial functions, he or she would then quality for overtime.  Adopting a standard of that sort “would require employers to track an employee’s work tasks on an hour-by-hour, or even a minute-by minute, basis and figure out whether each task is exempt or non-exempt in nature,” Amador wrote.

“Such a modification would curb a manager’s critical ability to multitask in a busy restaurant setting, undermine customer service, limit training opportunities for team members, diminish morale and force complicated assessments of time spent ‘managing’ in a restaurant setting,” Jamie Richardson, a vice president of White Castle, testified before the Subcommittee. He appeared on behalf of the NCCR.

Richardson said the industry sees the need to update overtime rules, which he characterized “a 1930s Depression-era law.” But he stressed that any update should fit the workplace of today.

He noted how changes in the workplace and the infiltration of technology in particular have made flexibility in duties and responsibilities a hallmark of employment today.


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