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Retail and food service workers and the new overtime rules: a Q & A

Opinions on the new rules on overtime pay issued by the Obama administration are not hard to come by.

Proponents say the new rules will extend overtime protection to several million more workers. Skeptics anticipate that many employers may reclassify affected positions as hourly and cut pay rather than pay overtime.

In this post, we will discuss how the new rule is likely to affect workers in the retail and food and beverage industries. We will use a Q & A format to do this

When does the new rule take affect and what does it call for?

The new rule takes effect December 1. It makes salaried workers who make less than $47,476 eligible for overtime (time-and-a-half) pay under federal law after working 40 hours per week. The previous amount was $23,660.

How is this likely to affect the retail and food service industries?

The new rule is likely to affect the retail and food service industries significantly. For example, a manager or assistant manager at a convenience store or fast-food franchise may be making only $30,000, yet be classified as a salaried employee while working over 40 hours per week.

With the change in the law, employers will have to decide among several options. One option would be to reclassify the job as hourly. Another would be to pay overtime. And a third option would be reclassify as hourly while cutting hours and perhaps hire an additional employee.

What about workers who make close to the threshold of the new rule?

For workers whose salaries are slightly under the threshold of the new rule, another option would be to raise the salary to make the employee exempt from overtime. For example, if a manager was making $45,000, the employer could avoid the new rule by raising the salary to $47,500.

Could there be some unintended consequences from the new rule?

Absolutely. If an employee is reclassified as hourly, that could feel like a demotion to the employee. It could also limit the ability of such a worker to put in extra time at no additional compensation to try to earn a promotion.

Why did the Obama administration make this new rule?

Unpaid or underpaid overtime is a huge problem in this country. It is deeply problematic to allow an employer evade overtime laws by classifying so many employees who work so many long hours for such modest money as salaried.

What can you do if you think you have been treated unfairly?

If you believe your employer has violated existing wage-and-hour law, it makes sense to discuss your situation with a knowledgeable attorney.

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