New Overtime Rule Puts the Squeeze on Retail Margins

Last week, the Department of Labor announced their final overhaul of the overtime rule for pay regulations which, beginning December 1st, will force retailers to reevaluate their current labor expenses and make adjustments to avoid incurring out of control overtime costs.

The implementation of this rule will coincide very closely with the holiday shopping season when labor costs can already be very high. Managers and other employees previously categorized as exempt may no longer be able to work more than 40 hours without additional, and much more expensive, wages. During previous holiday seasons, retailers may have leaned on these exempt positions to work longer hours to provide guidance to seasonal workers. However, this policy will need to be revisited to evaluate the cost-effectiveness of the strategy.

Retailers who have the ability to visually interrogate sales and wage data from previous holiday shopping seasons using Salient’s performance accounting solutions will be far better positioned to make the transition into the new world of overtime pay. The visual data mining ability offered by Salient’s solution can provide retailers with an unparalleled method of making better-informed decisions regarding staffing levels and what hours of operation justify or require potentially expensive overtime coverage.

Armed with the ability to drill through retail data and more informed decisions, restructuring exempt employee definitions will require a great deal of effort on the part of retailers. To tackle this aspect of the new overtime regulations, Chain Store Age has identified Ten Steps Employers Can Take Now To Prepare For The Final Overtime Rule. This article evaluates considerations including implications for legal compliance, effects to employee morale, and accounting for previously undocumented hours for currently exempt employees.

Contact Salient today to learn more about how our decision support software can help deliver information faster, to the decision maker at the point of value creation.