The Overtime Game for Hotels: 3 Ways the Hospitality Sector Can Adapt to New Rules

For U.S. employers of almost every stripe, things will change significantly – at least when it comes to scheduling and payroll – on December 1, 2016. That’s when new federal overtime provisions take effect, and when all workers who earn less than $47,476 in salary annually will be entitled to overtime pay (no less than time-and-a-half) if they work more than 40 hours in a given workweek.

The new overtime rules, which increase the current overtime salary threshold more than twofold, are unwelcome across almost every industry – but perhaps nowhere more than hospitality in general, hotels in particular.

New Pay Rules Require New Thinking
For decades, the hotel sector has relied heavily on its modestly paid middle managers to work long shifts at irregular hours. The former overtime salary threshold of approximately $23,000, unchanged since 2004, made it easy for hoteliers to overschedule their certainly-not-overpaid workforce.

But with the overtime game changing on December 1, that won’t be the case ever again. In fact, the salary threshold will be revisited - and likely increased - every three years from here on out.

As U.S. hoteliers grapple with new overtime expectations, there’s only so much they can do from a limited-scope, short-term perspective. They can pay their middle-range salaried staffers more. Or they can work them less.  But in the broader picture, there’s a lot more the hospitality industry – and even individual hotels – can do to make the new guidelines more manageable long-term.

Here are three suggestions:

#1 Change the Perception of "Paid Hourly" and Focus on "Upticking"
Unlike other sectors, many hotels still operate the “old-fashioned way” when it comes to workforce development. They promote workers from hourly positions into salaried roles. As such, the ability for a staff member to stop “punching the clock” – literally or figuratively – is presented by employers, and perceived by employees, as way to move forward in their careers. Industry thinking goes that hourly-wage workers have less license to work independently, take breaks, or make their own judgment calls than salaried workers do. But is that attitude outdated?

With a top-down approach, hotels can make it clear to new talent that escalating hourly pay is part of the “moving up package” within the organization. Provided they deliver clear expectations of what’s expected of employees at various (hourly) pay grades, hotels could also pose the slowly-upticking hourly pay as a good thing for workers. How? Hotels can provide additional, slowly-upticking benefits such as low-cost health insurance, travel or food stipends, bonus programs, discount partnerships with retailers, education reimbursement, or other financial incentives.

#2 Provide More Part-Time Positions
Alternatively, hotels could make a just-above-the-minimum salary threshold the absolute baseline for management positions and rely on smaller pool of managers across the board (perhaps using tactics outlined below). With a lessened management bandwidth, hotels could then open up more well-trained part-time positions, at various low to high pay rates, to cover their gaps.

In fact, that approach may be a smart way for employers to stay well-staffed in the years to come. It's no secret that the U.S. population is aging. Many professionals want to continue working beyond traditional retirement age. As such,  employers like hotels are wise to hire more seasoned workers and invest in developing a well-trained part-time workforce to help them scale up during busy seasons and support a smaller management crew.

#3 Shift to a Smaller, Higher Skilled Workforce
Ultimately, training could be the best approach in adapting to changing pay expectations. Especially with their  middle-management positions, hotels have always leaned heavily upon “on-the-job” training as employees scale up the old-fashioned way. But by changing their approach to recruiting and onboarding, and placing a greater emphasis on intensive up-front training, hotels can develop a workforce that’s well-equipped to handle concerns on all sides of the house.

Consider the approach of citizenM Hotels, a boutique chain with six locations, including New York City, London, and Amsterdam. The brand has a highly selective recruiting process and trains new mid-career hires on its  processes, expectations, and systems across every department in every hotel. The chain can now schedule staffers more freely based on availability and hours, not departmental specialty.

With a similar approach, more hotels can do the same.  In fact, other industries might benefit from this approach, too.