What Does the DOL’s Final Overtime Rule Mean for Restaurant Owners?

At a glance

• The main takeaway: The U.S. Department of Labor (DOL)’s final overtime rule that went into effect July 1, 2024, imposes salary changes to certain employees based on the Fair Labor Standards Act (FLSA).
• Impact on your business: The new rule might have an impact on the labor costs of your restaurant. You will want to ensure employees are correctly classified as exempt or non-exempt.
• Next steps: Review your organization’s payroll records and identify salaried exempt employees with wages below the new threshold. Reach out to Aprio’s Restaurant, Franchise & Hospitality team so we can walk you through the new overtime rules and how they could potentially impact your restaurant operations.

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The full story:

The U.S. Department of Labor (DOL) announced a final rule on overtime regulations that could impact labor costs for restaurant or franchise owners. The rule imposes salary changes to certain employees based on the Fair Labor Standards Act (FLSA). It takes effect in two instances: one on July 1, 2024, and the other on January 1, 2025. The salary threshold, based on wage data, will automatically update every three years starting July 1, 2027. We recommend contacting a professional benefits advisor or employment attorney for a more comprehensive review of the rule’s potential impact on your restaurant operations. In the meantime, here are the key takeaways from the regulations you should know.

What is the DOL’s final overtime rule?

The DOL’s final overtime rule can help determine which employees are exempt or non-exempt based on the rule’s provisions. If an individual is employed in a bona fide executive, administrative, or professional (EAP) capacity, they are exempt from the FLSA’s minimum wage and overtime protections. To qualify for the exemption, an employee must be paid a fixed or predetermined salary on a specified weekly level and mainly perform EAP duties.

Final rule provisions

DATE	STANDARD SALARY LEVEL	HIGHLY COMPENSATED EMPLOYEE TOTAL ANNUAL COMPENSATION THRESHOLD
Before July 1, 2024	$684 per week (equivalent to $35,568 per year)	$107,432 per year, including at least $684 per week paid on a salary or fee basis.
July 1, 2024	$844 per week (equivalent to $43,888 per year)	$132,964 per year, including at least $844 per week paid on a salary or fee basis.
January 1, 2025	$1,128 per week (equivalent to $58,656 per year)	$151,164 per year, including at least $1,128 per week paid on a salary or fee basis.
July 1, 2027, and every 3 years thereafter	To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update.	To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update.

Source: U.S. Department of Labor

According to Julie Su, acting DOL secretary, the rule turns back to its promise to workers that if they work for more than 40 hours per week, they should be well-compensated for the time they worked beyond that. However, this could negatively impact small business owners, like franchise and restaurant owners, trying to maintain affordable, fair menu prices for customers in light of rising operating costs.

What should restaurant owners do now?

Restaurant employers should review each employee’s job responsibilities and payroll records to determine if they are properly classified as exempt or non-exempt, and identify those salaried employees with wages below the new threshold Restaurant owners may want to adjust wages to comply with the final rule These decisions should be made with the guidance of a professional benefits advisor who can consider the current economic landscape and labor challenges.

The bottom line

The DOL’s final rule means more restaurant employees can now qualify for overtime pay, which could prompt an increase in labor costs and staffing practices for restaurant owners. They will need to review job duties to ensure employees are correctly classified as exempt or non-exempt based on their duties. Restaurant owners will also want to identify salaried exempt employees with wages below the new salary thresholds.

Schedule a consultation with us if you have any questions about the DOL’s final rule and how it could impact the labor costs of your restaurant operations. Aprio’s Restaurant, Franchise & Hospitality team can walk you through the steps to comply with the final rule.

Related Resources/Assets/Aprio.com articles/pages

About Aprio’s Restaurant, Franchise & Hospitality Services

Final Rule: Restoring and Extending Overtime Protections

National Restaurant Association Statement on DOL Changes to the Overtime Threshold

U.S. Department of Labor: FAQs – Final Rule