FLSA Change Essay

FLSA Changes and its Influence on Hospitality On March 13, 2014 President Obama signed a memorandum to update and adapt the overtime rule (Final Rule) in the Fair Labor Standards Act of 1938 (FLSA), which regulates minimum wages, work hours, overtime and child labor. These changes include a raise of the salary threshold for exempt workers and therefore broaden the number of people eligible for overtime pay. The Department of Labor’s (DOL) new regulations will take effect on December 1, 2016, impacting the Hospitality Industry’s current pay and overtime policies. As for now an employee (the position) is considered exempt by an FLSA covered employer if it passes all three sections of the 3-prong test. Most employers are covered by the FLSA, including the federal, state and local government, companies with annual gross sales of $500,000 and higher, businesses the engage in interstate commerce, which includes hospitals and schools. The 3 – Prong Test is a tool to classify an employee as exempt or non-exempt (eligible) under Fair Labor Standards Act (FLSA). If an employee is considered exempt, then the worker is not eligible to collect overtime pay at an hourly rate but is paid at a set salary regardless of the hours worked. A non-exempt worker is eligible to collect overtime and get paid for every hour worked per week over 40. It is important to …show more content…
While at the moment managers in operations (Restaurants and Hotels) make around $23,000 to $47,467 and are classified as exempt employees the new rule will reclassify them as non-exempt, which will lead to these employees being eligible to receive overtime pay. Hotel and Restaurant operations are OPEN around the clock or at least longer than the “standard” company office – many of the employees work more than 40 hours on a salary basis. These managers might now fall into the non-exempt category and need to be reclassified and receive overtime