New Federal Overtime Rule Starts Monday: What Restaurants Should Know
The long discussed federal rule requiring overtime for some salaried employees starts Monday and many restaurants will be affected.
The federal Department of Labor (DOL) rule released in April raises the minimum salary exempt executive, administrative, and professional employees must be paid. In the restaurant industry, this includes salaried employees such as general and assistant managers and chefs.
The new minimum salary requirements for exempt employees
There are three lawsuits attempting to block the rule, but since they are still pending, the new rule starts Monday. It requires employers pay exempt employees at least $844 per week ($43,888 annually), or if their salary is below the minimum threshold, then they become non-exempt and must be paid overtime for hours worked above the DOL legal overtime hours worked definitions.
The DOL rule includes a minimum salary escalation to $1,128 per week ($58,656 annually) on January 1, 2025. It also includes an automatic increase in the salary threshold every three years.
In recent discussions with various restaurant owners, the full impact of this new DOL ruling will be felt in many U.S. cities when the January increase takes effect.
You can get more information on the new rule in our previous article: New Overtime Rules To Affect Millions of Employees. The DOL also offers additional information in this fact sheet.
Where the lawsuits on the new federal overtime rules stand
There are currently three lawsuits underway, all filed in federal district courts in Texas. The lawsuits allege the DOL doesn’t have the authority to regulate the salary level test.
We’ll keep you updated on any developments with the lawsuits. In the meantime, companies will need to comply by paying overtime for salaried employees below the threshold.
How we can help
Navigating the new rule and its exceptions and exemptions can be complex. CLA’s talent solutions team can help you comply with labor laws. Contact us for assistance.
Karen is a Principal in the CLA Bizops practice specializing in serving restaurant clients as a CFO. She has 25 years of experience in the retail and restaurant industry with senior management positions at Wilsons Leather, Famous Dave's, and a division of Hallmark Cards. She is based out of Minneapolis, MN