Proactively Manage New Overtime Laws with the Projected Hours Report
The conversation around the new overtime laws continues to simmer in the minds of restaurant, retail and hospitality operators. (okay, okay … admittedly, some operators are still boiling) In the aftermath of the vote – which increased the salary threshold for eligible overtime pay to $47,476 or $913 a week – operators and managers are […]
The conversation around the new overtime laws continues to simmer in the minds of restaurant, retail and hospitality operators. (okay, okay … admittedly, some operators are still boiling)
In the aftermath of the vote – which increased the salary threshold for eligible overtime pay to $47,476 or $913 a week – operators and managers are trying to figure out the best course of action.
We’ve had our fair share of conversations with current customers and what we can tell you is that there is a very genuine effort to do the right thing by employees while keeping the business top of mind too.
In fact, the solutions we’ve been hearing about are nearly identical to what the Department of Labor recommends.
Here’s how the DOL recommends employers handle the new overtime laws:
- Increase the salary of an employee who meets the duties test to at least the new salary level to retain his or her exempt status;
- Pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked;
- Reduce or eliminate overtime hours;
- Reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime for hours worked over 40 in the workweek, to hold total weekly pay constant; or
- Use some combination of these responses.
We’ve addressed a few of these solutions and some ways online restaurant scheduling and overtime reports can help restaurants manage the changes.
- Overtime Law 2016: Tracking Your Employees’ Time and Attendance
- How Restaurants Can Cope with Rising Labor Costs with Overtime Controls
But when we looked back at what the DOL recommends, we realized we still need to tackle strategy No. 4.
Today, we’re looking at how restaurants could implement solution No. 4 with the help of a brand new report just released in HotSchedules online restaurant scheduling solution. It’s called the Projected Hours Report and the goal is to help restaurants proactively and intelligently manage those additional overtime hours.
Calculate Regular Weekly Overtime
Before we dig in, let’s remind ourselves of what No. 4 says:
Reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime for hours worked over 40 in the workweek, to hold total weekly pay constant.
If you were to use strategy No. 4 and change some of your salaried employees to hourly – while maintaining their current salary – you’d first need to do a little math to calculate how much overtime they need each week.
This isn’t the easiest equation, but essentially you calculate your manager’s hourly weekly pay for 40 hours and then subtract their current salary from that rate to figure out (1) how much you will still need to pay them and (2) how many overtime hours you need to add to the week at the time-and-a-half rate to keep their pay constant.
Woah. That’s some serious thinking right there. I need an example. We thought you might!
Chris is currently a full-time salaried manager making $38,000 / year.
Moving him up to the $47,476 salary per year would be a significant increase based on his seniority level and responsibilities. So you decide to keep his salary at $38,000 but transition him to an hourly employee and supplement his income with weekly overtime.
But how much weekly overtime? Let’s do some math.
- Current Salary: $38,000 / year
- Minimum Wage: $15.00 / hour
- Base Work Week Hours: 40 hours
- Overtime Rate = $22.5 / hour
- Weeks worked: 45
- Bonuses: for sake of simplicity, we’ll remove bonuses in this example
$15.00 × 40 hours x 45 weeks = $27,000 annually
$38,000 – $27,000 = $11,000
So you need to build in $11,000 worth of overtime hours over the course of 45 weeks.
$11,000 / 45 weeks = $244.44 / week
or $49.50 / day = ~ 2.2 overtime hours / day
(we divided $49.50 by the time-and-half rate, $22.50)
Chris will need approximately 2.2 overtime hours per day over 45 weeks to hold his annual salary at $38,000.
How to Use HotSchedules Projected Hours Report
Step 1: Choose and Set Overtime Rules
HotSchedules automatically pulls in each state’s overtime rules. (We also keep them updated too). In the scheduler, it’s just a matter of turning those overtime rules on for the state where your store is located.
Next, you’ll want to set your weekly overtime threshold. This will be for all employees across your operations. Later, we’ll look at how you can filter for different hourly thresholds based on schedule and job type.
Setting that overtime threshold up in the backend basically tells the schedule to flag the employee “red” when someone is scheduled over that weekly overtime threshold.
Because it updates in real-time as the schedule is created, managers are able to make adjustments to shifts before an employee goes into overtime. But in this case, you want to make sure your new hourly managers are hitting a specific amount of overtime.
Step 2: Run the Projected Hours Report
The Projected Hours Report is accessible in the HotSchedules Reports tab. It’s an interactive and real-time way to look at the current weekly schedule and proactively manage overtime hours using your actual and scheduled data.
What you see: Scheduled hours, number of hours remaining before they’ll hit the overtime threshold and actual hours (what they punched for) and then what you projected. Projected is where your employees are expected to come in based the actual hours worked plus the remaining hours scheduled.
The Projected Hours Report makes it easy to filter for the exact job title or schedule so you can access the information quickly.
- You can filter by schedules or jobs.
- You can also filter the hourly threshold.
When you go into the Projected Hours Report, you can see that some of your employees are sitting under the 40 hours a week overtime threshold. This is great for your part-timers. You can also go in and see how many hours your new hourly managers worked and decide if they have enough hours to satisfy their salary requirements.
This is where things get really fun! Using the hourly threshold filter, you can see how many hours your new hourly managers have worked.
Let’s look at how this would play out using the numbers we crunched earlier.
Remember Chris? Well, Chris is a Bar Manager. He’s making $38,0000 / year but you need to make sure he gets those extra 11 hours of overtime each week to keep his pay constant. You put all your Bar Managers on the same schedule by location (Bar Schedule), which makes it easy to filter by either Job Code or by Schedule.
The other thing you know is that each Bar Manager needs to work 40 hours + 11 overtime hours, which is 51 hours per week.
You could take that handy filter and pull it right down to 51 hours to see if your Bar Managers are getting the hours they need each week to satisfy your new calculation.
And just like that, you’re proactively using the Projected Hours Report to manage those fun overtime laws.