Overtime Laws concern: Food Marketing Institute & National Grocers Association

New Federal Overtime Laws concerns

Grocery stores are only one of many industries impacted by the new Federal Overtime laws, but that may mean a subtle increase in food costs over the next year. The Food Marketing Institute (FMI) and National Grocers Association (NGA) expressed concern over the new overtime rules that the Department of Labor issues and that go into effect on December 1, 2016. Jennifer Hatcher, the Chief policy officer and SVP of government relations for FMI said that the new rules will have “significant operational consequences for how food retailers structure their businesses and pay associates.” She also said that “We still have significant concerns with a number of changes included in the final rule that will have serious scheduling and financial impact that could drive up costs and productivity.”

Overtime Rule will affect time tracking of many managers.

The new rule will affect many store level managers, assistant managers and department managers. Most managers are exempt employees who are able to schedule employees schedules, as well as their own schedules to make sure that the store is stocked and customers are satisfied during the busiest times. This may mean that during a busy season, a manger works overtime to keep the department running smoothly, but then can take off and work less during the slower weeks that follow. The new overtime rule will take many of those managers out of exempt status and make their schedules less flexible. This will make it harder for stores to manage FTE or will drive up the costs of overtime.

In addition, going back to punching a time clock can feel like a demotion and be demoralizing to a manager who has had more control over their schedule and who has not have to account for every break, and every minute on the clock. Employers need to take care to explain the new overtime laws to employees so that it isn’t as discouraging to employees who have to make the shift.

Short deadline estimated to cost grocers more

Then there is the deadline. In the food industry, the deadline imposed by the DOL of December 1 comes during the busiest shopping season of the year. Kara M. Maciel, the NGA’s labor and employment counsel believes that it would take grocers 12 months to adequately prepare for a change and “to take the time to do it right and avoid costly mistakes that could lead to employee confusion and operational disarray. We are disappointed that the DOL has only provided a six-month implementation window.”  Grocers will need to look at their timekeeping solutions for managers, make decisions on which employees will need to be moved up to the new threshold of $47,476 and be kept exempt and which ones will be converted to overtime. They will also need to decide if they raise other exempt employees in a rising tide situation. Then they will need to train managers of newly converted non-exempt employees to properly track time and log every minute. This will take resources, time from management and human resources and equipment.

NGA President and CEO, Peter J. Larkin, said that “the Administration unfortunately proceeded with finalizing a ‘one-size-fits-all’ rule that will significantly impact the independent supermarket industry.”  That’s because the grocery industry is highly competitive and has very low profit margins. This could mean that food prices rise as the additional cost is passed onto consumers. It could also mean the closure of smaller, specialized, or local grocery stores who cannot afford to buy in the quantities needed for greater bulk, but that still have to pay increased wages and salaries to employees.

Let SwipeClock help you

Fortunately there solutions that can help to make this transition easier and less costly. SwipeClock offers a workforce management system that allows for the scheduling of FTEs according to busier times so that employee time can be optimized. This will make compliance with the overtime laws easier. Timekeeping devices like scanning clocks, mobile clocks and more can help to avoid the fraudulent use of overtime and buddy punching. Contact a SwipeClock partner for more information or SwipeClock for a partner near you.

Written by Annemaria Duran. Last updated September 30, 2016