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3 Ways Restaurants Should React to the Overtime Rule Delay

publication date: Mar 6, 2017
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author/source: Steven Kramer

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In late November, the Department of Labor (DOL)'s updated overtime regulations were stalled just ten days before the expected start date. Under the new rules, workers who earn less than $913 a week or $47,476 a year would have been required overtime pay at one and a half of their hourly rate for every hour worked beyond 40 hours. Considering the restaurant industry's unpredictable demand and reliance on overtime hours, many owners had prepared for this change. But with the new rules in limbo, many restaurant employers are asking the same question: should we expect the new rule to go into effect later down the line, or go back to the way things were?

If the new regulation is eventually implemented, it will have a monumental impact on restaurants and fast food chains alike. According to the Bureau of Labor Statistics, there are currently 696,730 managers, supervisors and workers employed by restaurant and eateries. Among these individuals, the average annual earning is $32,410 - while this was above the previous threshold of $23,660, it is now certainly within the raised limit. Employees aren't opposed to additional pay but, employers on the other hand, will likely suffer significant labor costs if they continue traditional scheduling methods.

Though employers aren't required to comply with the regulations until a decision is reached, restaurant owners can address this uncertainty and protect their bottom line by reevaluating their scheduling management and overtime spending, regardless of the government's decision. Here are three steps restaurant leaders can take to ensure that their workers are motivated while keeping overtime hours in check:

1. Implement a scheduling platform to manage hours. Inefficient scheduling through outdated methods like paper charts or spreadsheets can lead to unnecessary overtime spending. Updated scheduling tools like employee engagement platforms allow workers to input their own schedules and requests so managers can keep better track of hours. With these systems, managers can also require employees to request overtime work authorization instead of taking on extra hours without approval.

Additionally, these platforms help monitor staffing levels to avoid understaffing. According to a recent study by WorkJam, 88 percent of managers claim they are understaffed on a weekly basis. But with a clear scheduling system in place, managers can adjust their staffing needs to account for increased demand.

2. Conserve managers' valuable time. Restaurant workers on the floor wouldn't be the only ones affected by overtime regulations. Most managers typically log additional hours to handle administrative tasks. While the Executive-Administrative-Professional (EAP) Duties Test exempts some managerial workers from additional overtime pay, there is a blurred line between administrative duties that do and don't qualify.

When managers do qualify for overtime, restaurant owners will need to outsource as many administrative responsibilities as possible to conserve hours. Utilizing employee self-service tools can help cut the extra hours spent rearranging schedules and training workers-freeing up managers' schedules to focus on more high-level tasks.

3. Provide alternative options to go above and beyond. In the past, restaurant workers frequently picked up additional shifts to accommodate high demand, bring in extra income, or simply to go above and beyond the hours listed in their job description. However, if the new rules are implemented, workers will no longer be able to take on extra shifts and may lose motivation to excel. Because of this, many restaurant owners are worried the overtime rules will impact the quality of customer service.

Management must re-evaluate how their employees can meet career goals within a 40-hour work week and stay engaged at work. Rewards and recognition can provide positive reinforcement for achievements like company loyalty, customer service, learning, and reliability. Employee engagement platforms that open up channels of communication and gamify tasks allow managers to connect, motivate, and reward like never before.

As an industry that has traditionally relied on overtime work, restaurants and fast food chains will need to make some major adjustments if the DOL's new regulation goes into effect down the line. By tracking hours, outsourcing administrative tasks, and rewarding workers for a job well-done, restaurant owners and managers can keep their business profitable without sacrificing employee morale.



Steven KramerSteven Kramer is the CEO and Co-Founder of WorkJam, an employee engagement platform for the service industry. With more than 20 years of executive leadership experience driving business results and developing disruptive technologies for the retail industry, Steven identified a gap between traditional workforce management systems and how retailers actually hire, schedule and manage their hourly employees. With this in mind, he co-founded WorkJam and is responsible for the strategic direction of the company.