The National Restaurant Association (NRA) issued support for legislation put forward by Congressman Kurt Schrader (D-Oregon) that would allow for a three-year phase-in period and eliminate indexing in the Department of Labor’s newly implemented overtime rule.
“We thank Congressman Schrader for his proposal providing relief to the small business owners that operate our nation’s restaurants and their employees. Restaurants operate on thin margins with low profits per employee and little room to absorb added costs. The Department of Labor’s overtime overhaul will force many Main Street businesses to change many entry-level managers to nonexempt status. For the employees, this could mean a loss of above-average fringe benefits, less job security and fewer opportunities for career advancement. Allowing for a more gradual phase-in time and eliminating automatic indexing provides employers and employees a respite in navigating yet another regulation.”
The new rule, proposed on May 8, raises the threshold for employees who are exempt from overtime pay from $23,660 to $47,476, and goes into effect Dec. 1, 2016.
The proposed changes would incrementally phase in the new threshold of $47,476 over the next three years, beginning with a 50 percent increase to $35,984 this December. Each year following, the salary threshold would be raised by $74 per week until Dec. 1, 2019, when the DOL’s proposed $47,476 threshold is reached.
According to the National Association of Convenience Stores (NACS), many convenience stores rely on overtime exemptions for managers and certain assistant managers, allowing them to avoid paying overtime rates to those employees. A dramatic increase in the salary threshold may make this difficult if not impossible to maintain, possibly resulting in much higher labor costs for stores.
NACS supports a plan that would scrap the DOL’s overtime rule and require the department to go back to the drawing board and draft a new rule that addresses the overall economic impact the changes will have.