![Determine Your Overtime Rules Strategy By Knowing Your Staff's Effective Hourly Rate [Hack #068]](https://images.squarespace-cdn.com/content/v1/56a2785c69a91af45e06a188/1472570888692-B9BASHA3EJ574VC7ZVPM/AdobeStock_107061768.jpeg)
Working hard for the money!
The new overtime rules that were announced by the Department of Labor this past spring, have a lot of people in our industry scrambling for ways to make it all work. The first step is to determine the effective hourly rate (EHR) of your current managers. This is done using the simple formula below.
We have given you two examples of the calculation so you can see the net effect and determine your own response compared to these samples.
Weekly Salary / (40hrs + 1.5x Hrs Above 40) = Effective Hourly Rate
Examples:
- $35,000/year: ($673 / (40 +1.5(10)) = $12.23/hour EHR
- $47,474/year: ($913 / (40 + 1.5(10)) = $16.60/hour EHR
Armed with the EHR for these pay levels, you can now determine if you convert a manager to hourly or increase them to the national exemption level of $47,476. Finding that balance will be tricky. The average restaurant manager salary in the 2015 was $41,387, so there is a significant difference between that and the exemption value.
Got a cool restaurant hack of your own? Let us know!
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