In May, the White House finalized the Fair Labor Standards Act (FLSA). These new regulations govern overtime pay for a broad class of workers. With this change, millions of salaried employees making under $47,476 will now be eligible to receive overtime pay if they work more than 40 hours a week. Nationwide, 35% of full-time salaried workers will now be impacted by this updated law.
In Florida, this will impact over 300,000 workers in the retail, restaurant and hospitality industries. Over the past twenty years, salaries have not kept pace with inflation, and this new law places salaries more in line with the cost of living. Florida is currently enjoying record high levels of tourism. Over 57 million visitors have enjoyed the Sunshine State in the first six months of 2016.
Business groups opposing the new rule claim that customers, owners, and employees will be harmed by the increased expense of paying employees according to the new ruling. Businesses are looking into various methods of mitigating the impact of this law, including moving some salaried workers back to hourly status, restricting overtime for those who remain at lower salary rates, and possibly raising salaries over the threshold of $47,476 to avoid paying overtime. Companies are scrambling to assess the impact of these new rules on their current and future employees before the December 1st deadline
What Does This Change Mean For Workers?
In the months leading up to the implementation deadline, many employers will be tracking salaried workers’ hours closely in an effort to account for hours worked. Depending on business decisions, some personnel will enjoy a raise to compensate them for their over-40-hour work weeks. Other salaried employees may not see a raise, but will have their hours restricted to stay at 40 hours or less per week. If companies demand over 40 hours of work from these employees, they will have to pay time-and-a-half in compensation.
Impact on Restaurants
Restaurants will be required to ensure that pay for front and back of house managers is in compliance with the new laws. These employees regularly work more than 40 hours per week, and it is likely that they will receive the pay increase and keep working the longer hours demanded by the job. Salaried workers in roles like chefs, sous-chefs and bakers may find their roles converted to hourly and kept at 40 or below per week. In the months ahead, companies will be scrambling to assess the most cost-effective ways to reclassify their workers.
Impact on Retailers
The National Retail Federation (NRF) is forecasting increased consumer spending and a positive outlook for retail overall. Nevertheless, they claim that the fair pay rules are “career killers” for workers in the retail industry. In reality, the regulations will likely prompt employers to reclassify most low-level salaried managers as hourly workers in order to control costs. The NRF is framing this as “demotion” for many workers. Managers and assistant managers stand to gain the most from this new rule if their employers decide to meet the minimum pay requirement for salaried workers, while hourly nonexempt workers like cashiers and stockers will be least likely to experience much of an impact from the change.
Impact on Hospitality
The biggest challenge to the hotel and hospitality industry lies in the 24-hour nature of the business. Salaried employees who already work longer hours at relatively high salaries will benefit from salary increases, and those who are lower on the pay scale will likely be converted to hourly employees. The industry is currently analyzing how best to manage more complicated positions, possibly creating hybrid salaried positions, with one salaried employee performing the tasks formerly done by two.
Despite the threats by lobbying groups, the intent of the new overtime laws is to ensure that workers are fairly compensated and that their pay rate keeps pace with inflation.