At EyeSpy, we’re always watching for changes that impact restaurants. One big concern this year was the Department of Labor’s (DOL) proposed overtime rule. It threatened to increase costs for operators already struggling with rising expenses. Thanks to a recent federal court decision, restaurants have a reason to relax.
The rule aimed to expand overtime eligibility by raising the salary threshold. Salaried workers earning over $35,568 weren’t eligible for overtime. The new rule sought to increase that to $43,888 in July 2024 and $58,656 by January 2025. The threshold would then update every three years, adding millions more to those eligible.
For restaurant owners, this meant tough choices. They would either absorb higher payroll costs, reduce hours, or restructure roles. A coalition, including the Restaurant Law Center and Texas Restaurant Association, challenged the rule in court.
The group argued that the rule improperly prioritized salary over job duties. This conflicted with the Fair Labor Standards Act (FLSA), which bases overtime eligibility on duties. They also said automatic updates violated the Administrative Procedure Act (APA) by skipping public input. Smaller businesses, especially in lower-wage regions, would feel the biggest impact.
The judge agreed. The court ruled the DOL had overstepped its authority. Salary levels can act as a filter but shouldn’t outweigh job duties. The automatic updates were also rejected, as they require Congressional approval or formal rulemaking.
This is a huge relief for restaurant operators. Labor costs have risen over 30% in the past five years. Many restaurants are already increasing wages to attract and keep managers. This ruling lets them do so at a pace they can handle.
Franchise owners and small businesses benefit most. The decision helps them avoid reducing hours, reclassifying salaried employees, or cutting jobs. Michael Layman from the International Franchise Association praised the court’s action. It protects jobs and gives franchises room to grow without unnecessary mandates. The DOL hasn’t said if it will appeal. For now, operators have a chance to focus on their teams and businesses without extra regulatory hurdles.
We all know how quickly the rules can change. These shifts make it harder to stay on top of operations, training, and compliance. We’re here to help. Reach out today to make sure your restaurant is compliant across the board: [email protected].
