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Federal Overtime Rule’s Effect on the Hospitality Industry

The Fair Labor Standard Act’s new overtime rules will go into effect at the December 1st, 2016. Managing and comparing overtime costs and employee time cards can be particularly difficult when many employees work non-traditional hours such as early morning, late night and graveyard shifts, typical in the hospitality industry. This federal law will affect the hospitality industry.

Effects of the New Rule
In order to comply with the new overtime rule, managers must, designate employees as hourly and keep track of their time for California compliance or raise the employees’ salaries to be above the new Federal Salary Threshold of $47,476. This is a significant jump from the previous Federal minimum of $23,660 as well as the State of California minimum salary threshold. This can have a massive effect on a company’s bottom line, particularly for smaller organizations. Employers should consider that raising the salaries of lower-level employees may bring their pay up to the same level as their supervisors, who will then, in turn, expect raises as well.

What Hospitality Managers Can Do About It
Hospitality managers will need to be rigid about the hours that overtime-eligible employees work to keep costs down and adhere to scheduling budgets. This can include reducing scheduled hours for employees, restricting shift trades and hiring additional staff members to fill in the gaps in the schedule.

We are here to help!
California Payroll has a robust time keeping and scheduling solution that empowers you to accurately track your employees’ time and traded shifts. Managers can easily create and modify employee schedules, view and approve time cards, manage time off requests, ACA tracking and more. Employees can check their schedules, request to trade shifts or time off, view their accrual balances and even clock in using the mobile app. We understand the needs of the hospitality industry and have solutions to streamline your processes ultimately saving you time and money.

Contact California Payroll at 800.713.7007 today to learn more about how we can help you weather these new changes to overtime compensation.

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