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Industry leaders weigh in on labor regulations

FastCasual interviewed a variety of industry leaders hoping to find a consensus regarding the labor ruling. Instead, we learned that the issues sparked a variety of passionate opinions.

May 19, 2016 by Cherryh Cansler — Editor, FastCasual.com

Whether the U.S. Department of Labor's new overtime regulations will strengthen the middle class, as Vice President Joe Biden predicted, remains to be seen. One thing we already know, however, is that the ruling, which is expected to boost wages for workers by $12 billion over the next 10 years, has sparked a variety of passionate opinions.

Hoping to find a consensus on how the ruling will effect restauranteurs, FastCasual reached out to several industry leaders. What we found, however, was that while many organizations — including the National Restaurant Association and The National Council of Chain Restaurants — have spoken out against the ruling, some insiders said it was a step in the right direction. Still, others agreed that an increase was necessary, but that the government went too far.

See their opinions below.

"Our Served with Love Culture starts with our Team Members and connects us to our guest. As industry leaders we have a responsibility to continue working, as partners, with our franchisees to ensure our labor model stays in line with running a profitable business - a model that will always put our guests' experiences first, while following all state and federal regulations.

"We will find creative ways to provide a strong livelihood for all of our people that appropriately allocates labor. Uncle Maddio's Pizza will adjust accordingly, and managing this regulation will become the new normal."
— Matt Andrew,founderand CEO, Uncle Maddio’s

"While there are a few wins in the final overtime regulations for the industry (no long duties test and salary increase every three years, instead of annually), the doubling of the salary threshold is still too high for restaurants to absorb. As restaurants operate on thin margins as it is, many salaried employees could be forced into hourly positions once more. We are currently reviewing the regulations and exploring all of our options at this point in time."
— Christin Fernandez, director, Media Relations & Public Affairs, National Restaurant Association

"Out of 330 people on staff we have two individuals making salaries of $45,000, which falls below the threshold. If they work overtime this would impact us. Since 2011, our minimum GM base salary has been $51,000, with the average being well over $60,000. The rest of our team members and managers are paid hourly and receive overtime when they work over 40 hours.

"So in our case these regulations won't have any further effect than have our own policies, which do carry significant challenges in terms of staying efficient, ensuring we only have truly committed people on payroll, and often being forced to accept a business model that generates less profit when our higher-paid teams don't produce extraordinary results, which is always our goal."
— John Pepper, Boloco

"While the announcement from the Department of Labor contains some good news (for example, not tinkering with the existing duties test, and the consideration for including incentives and bonus as part of the equation for achieving the new minimum salary requirement), it comes as very bad news that the Department of Labor has more than doubled the existing salary threshold for qualification as an exempt employee.

"Reasonable people agree that the minimum salary should have been raised. But the new level being implemented by the Administration will almost certainly lead to millions of Americans being converted from salary to hourly positions. This is not something that is desired by currently salaried employees, and will be seen as a negative step in the career path of what are arguably some of the most dedicated, enthusiastic members of the American workforce.

"The management ranks of the restaurant industry are going to be particularly hard-hit by this development."   
— Don Fox, CEO, Firehouse Subs

"The Department of Labor salary based exempt increase was well past due, but the increase level was just poorly thought out. The increase level of $47,476 will harm many low-volume businesses that are barely surviving and, in my opinion, will be a job killer.

"Unfortunately, this is another government program that was meant to help the public, but will actually push companies to think differently and will most likely hurt the next generation of managers. It is my opinion that this will be the biggest negative outcome of this change and will have a negative long-term side effect. 

"The $47,476 starting level threshold will harm many young up-and-comers who were once offered entry-level management positions that will no longer be available. The simple truth is that the majority of businesses will not be able to employ as many salaried managers and this will reduce much needed life training skills for our future generation."
—  Carl T. Howard,presidentand CEO, Fazoli's 

About Cherryh Cansler

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Cherryh Cansler is VP of Events for Networld Media Group and publisher of FastCasual.com. She has been covering the restaurant industry since 2012. Her byline has appeared in Forbes, The Kansas City Star and American Fitness magazine, among many others.

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