Dive Brief:
- Hospitality expects to be one of the most affected industry sectors when the new federal overtime rule kicks in on Dec. 1, and it has hoteliers very worried.
- Apart from a large contingent of part-time hourly workers, by its nature the hospitality sector also has a large group of relatively low-paid paid middle managers, who today are classified as "exempt" from overtime.
- Under the new rule, they will either have to have their pay move to the $47,476 threshold or move to hourly pay (and overtime for anything over 40 hours), which will create a serious challenge for hotel operations, according to the Indianapolis Business Journal.
Dive Insight:
The Business Journal points to how hotel employers in central Indiana are working on calculating the new threshold's financial impact and trying to keep costs to a minimum. Estimates in the article range from $100,000 to $300,000 annually in labor costs.
Six hotel general managers in the article say they are still formulating plans, and some said they are hoping federal lawmakers would provide a delay. Some Democratic lawmakers recently submitted legislation to try and make the overtime rule a three-year phase-in, but the DOL is not a fan of the idea.
The rule will no doubt place pressures on such employers. But since it had not been updated since 2004, many experts said such an update was "long overdue."