Restaurant Owner to Congress: “A One-Size-Fits-All Overtime Policy won’t Work for Small Businesses”

Restaurant Owner to Congress: “A One-Size-Fits-All Overtime Policy won’t Work for Small Businesses”
National Restaurant Association Board Member Testifies before House Subcommittee on DOL’s Proposed Overtime Regulation

(Washington, D.C.) Today, Kevin Settles, National Restaurant Association board member and President and CEO of Bardenay Restaurants based in Idaho, testified before the House Small Business Subcommittee on Investigations, Oversight and Regulations regarding the Department of Labor’s proposed changes to the current overtime regulations.

In his testimony, Settles addressed the lack of time given to employers during the initial comment period and DOL’s denial of an extension period.

“It would have been helpful to have had more time to review and comment on the proposed rules,” said Settles. “In denying requests from the U.S. Small Business Administration Office of Advocacy as well as thousands of employers for an extension, the Department referred to the ’listening sessions’ it held. The proposed changes are lengthy and complicated and an insufficient time was allowed for the data to be gathered…in addition, more time would have enabled our industry to better assist the Department in gathering substantive and more accurate information on the impact the proposed revisions would have on the nation’s employers.”

Settles’ testimony focused on the impact a proposed salary threshold would have on small businesses across the country and addressed the DOL’s proposal to automatically increase salary levels each year without notice and comment.

“The Department is charged with regular review and update of the minimum salary level
and they acknowledge that they have not done this,” Settles told the committee. “The reason they give is the ‘overall agency workload and the time-intensive nature of the notice and comment process have hindered the Department’s ability to achieve this goal.’ I take this to mean that they are willing to put a key task for the Department on auto-pilot at the expense of employers and employees.”

Settles argued that as the new salary level becomes effective, the number of workers paid on a non-hourly basis will decrease and more workers would be moved to hourly positions due to the loss of exemption status. He also stated that if the proposed “40th percentile test” is adopted and updated annually without review, in the years following the proposal, the salary level required for exempt status would effectively eradicate the availability of the exemptions in the restaurant industry.

In addition, Settles addressed the adjustments to the duties test which is of particular concern to the restaurant and hospitality industries.

“Our managers need to have a ‘hands-on’ approach to ensure that operations run smoothly,” he added. “Any attempt to artificially cap the amount of time exempt employees can spend on nonexempt work would place significant administrative burdens on restaurant owners, increase labor costs, cause customer service to suffer and result in an increase in wage-and-hour litigation.”