Payroll Savings In the Kitchen: Worth the Risk?

August 26, 2010Articles

With businesses facing continued economic uncertainty, the pressure to find cost savings is greater than ever. Undeniably, cutting down on overtime costs is one of the first places employers look. Unfortunately, this is often rife with risk. The easiest way to cut down on overtime costs (and most lawful) is to ensure that non-exempt employees do not work in excess of forty hours in a week (or eight hours in a day in states that require daily overtimes, such as California) in order to avoid having to pay for those overtime hours at time-and-one-half the regular rate of pay. Unfortunately, this is not always the path taken. The Department of Labor and plaintiffs attorneys know to look out for “time shaving,” “off-the-clock” work, and failure to pay for overtime at the correct rate. This column, however, will address what is often an unintentional error committed by many hospitality employers who simply do not understand the wage and hour laws: failure to understand the difference between paying a “salary” and being “exempt” from overtime.

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