Retailers, hotels will feel overtime rule more than others
Employees could shift to hourly wage
“This regulation could force many hoteliers to reduce hours and flexibility or cut jobs altogether.” Brian Crawford, American Hotel and Lodging Association
The Obama administration’s new overtime rule is likely to touch employers across the country, but sectors with many low- to moderately paid managers, such as retail, hotels and health care, will be disproportionately affected.
The National Retail Federation and National Restaurant Association argue that companies won’t suddenly have more money to pay overtime and instead will change job titles, descriptions and schedules.
A study last year by Oxford Economics, commissioned by the NRF, found that increasing the pay at which an employee is exempt from overtime would mean a raise for less than 5% of salaried retail and restaurant workers. Roughly a third of salaried employees are likely to be converted to hourly employees, and 21% of that group will work enough hours to be eligible for overtime, the restaurant group says.
“Whenever that happens to an employee, they feel immediately demoted and devalued in the workplace,” says David French, senior vice president for government relations at the NRF.
At Toppers Pizza, which has 74 restaurants in 12 states, about 100 managers and other executives will be affected, company President Scott Gittrich says. At its 24 corporateowned outlets, the base pay of most general managers, who routinely log 50 hours a week, will probably be boosted to the new threshold to avoid big overtime bills, Gittrich says.
To offset that, the managers’ incentive compensation will probably be reduced or eliminated, increasing net salaries for some while reducing them for others.
Gittrich says reducing such pay will tarnish the company’s freewheeling culture. Managers “were attracted to large incentive packages that gave them a sense of autonomy and an ability to control their own pay,” Gittrich says.
Hotel representatives say the measure will force owners to pare back employees’ hours.
“With roughly half the hotels in the U.S. owned and operated by small or independent property owners, this regulation could force many hoteliers to reduce hours and flexibility or cut jobs altogether,” says Brian Crawford, vice president of government affairs for the American Hotel and Lodging Association.