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DOL set to require overtime for managers earning less than $35K, reports say

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Salaried restaurant employees making less than $35,000 annually would be eligible for overtime pay under a rule change likely to be proposed by the U.S. Department of Labor sometime this month, according to media and other reports.

The new threshold, reported Wednesday by Bloomberg, would be roughly the midway point between the current trigger level of $23,660 and the $47,476 standard proposed by President Obama administration but set aside by a federal court in Texas. 

Any increase in the trigger point is likely to cost the restaurant industry at least tens of millions of dollars in additional pay to salaried restaurant workers. In addition to headquarters employees, the paychecks of unit-level managers, assistant managers and key kitchen personnel would likely be affected.

The Trump administration has acknowledge the need to raise a standard that hasn’t changed for 15 years, but has indicated it would prefer a more moderate increase than the level proposed by Obama. 

Lowering the $47,476 figure proposed by the Democratic administration would almost certainly face a court challenge from labor advocates. Some groups are already protesting that Trump’s team decided to drop the threshold without sufficiently studying the implications.

The report by Bloomberg and the contentions of industry lobbyists don’t address the other controversial changes that some expect in overtime regulations, the so-called duties test.  Restaurants are frequently sued by salaried workers who argue they are entitled to the same overtime pay an hourly earns because they’re often called upon to do the same sort of work. Managers routinely fill in for employees who don’t show for a shift or to help out in the kitchen during crunch periods.  

Using a duties test in place of a strict pay threshold could determine what duties are truly managerial functions, and hence don’t merit overtime pay, and which are the functions of an hourly employee. 

If the proposed figure is adopted, salaried employees earning less than $35,000 annually would be entitled to time-and-a-half pay for hours exceeding 40 per week. 

Under the usual process for regulatory changes, the proposal would be aired for public comment. The Department of Labor would then review the comments and issue a final ruling.

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