5 strategies for dealing with the overtime rule change

Joshua Ostrega

Earlier this month the Department of Labor released final federal overtime rule changes, which more than doubled the salary threshold for eligibility from $23,600 to $47,476 a year. Between this rule and rising minimum wages across the country, restaurants are expected to face heavy labor costs.

Predictably, the National Restaurant Association opposes the changes and is mounting a challenge.

[CHARTBEAT:3]

“The DOL moved ahead with this final regulation despite widespread opposition,” NRA states on its website. “Hundreds of lawmakers have joined with employer and nonprofit groups in criticizing DOL for failing to accurately estimate the rule’s impact. We expect immediate legislative efforts to defund, block or nullify the rule, as well as possible litigation against the DOL over its process for issuing the final rule and some of its mandates.”

Assuming the rule stands, here are five strategies for softening the blow:

1. Understaffing is going to be more expensive than ever. It’s no secret that when a store is understaffed due to a sick employee, a no-show or irreconcilable schedules, a manager or a more experienced employee will sometimes step in to cover the empty shift. With the overtime ceiling raising, these occurrences will become costlier than ever as more of the senior staff becomes eligible for overtime. To reduce instances of understaffing, employers might want to to adopt technology that can help keep availability data up to date and encourage collaboration among employees to fill last-minute shift gaps.

2. Managers will need to schedule more efficiently. According to a recent WorkJam survey of more than 500 service industry managers, 67 percent of employers still use manual methods such as pen and paper or spreadsheets to put together employee schedules. Employers who do use traditional workforce management systems to create optimized schedules also lack capabilities to complete the “last mile” of labor allocation. With these outdated processes, managers spend immense amounts of time trying to reconcile the needs of the business and the needs of their employees. Sixty-eight percent of employers say the most difficult part of scheduling is assigning shifts that accommodate both their staff’s availability and business needs. With manager time becoming more valuable due to the recent overtime rules change, employers should consider automating scheduling techniques to reduce the administrative burden of managers. 

3. Enabling employee self-service will free up managers’ time. Employees inevitably need to change their schedules and get in contact with each other frequently, but without the proper tools to facilitate communication, many managers, at all hours of the day and night, are left trying to juggle the inflow of requests via phone calls, text messages, Facebook posts, sticky notes…the list goes on. Now more than ever it makes sense to streamline communications and adopt employee self-service tools to reduce the time managers spend juggling shift cancellations and trades.

4. Reducing turnover should be a high priority. Turnover is extremely costly for service industry businesses. Not only can it take new employees a long time to get up to speed, but it can also be incredibly time-consuming (and now, more costly) for the manager to recruit, hire and train each new employee. According to the U.S. Bureau of Labor Statistics, 47.5 percent of employees in the hospitality industry last year voluntarily quit their jobs. Employers can help reduce this figure and ease up managers’ schedules by providing an engaging work environment that motivates, rewards and encourages loyalty in ways beyond the tip jar.

5. Happy employees are good for business. While the overtime rule change will be a jarring adjustment for many employers, deploying an employee engagement program can help to reduce managers’ administrative workloads by enabling enhanced employee self-service capabilities and promoting a happier workplace. Investing in employee engagement will not only help keep costs low under the new overtime rules, but also return value to the employer in the form of better customer service and increased sales.

Joshua Ostrega is c.o.o. and and cofounder of WorkJam.