A private club in South Florida is the subject of a new lawsuit by a former employee who claims that the club did not pay him the overtime wages he was rightfully owed. The plaintiff worked as a sous chef at the club from October 2014 to May 2015 and was classified as a nonexempt employee, according to the plaintiff.
The former sous chef alleges that he worked more than 40 hours a week but was not properly compensated due to the club’s decision to refuse to issue overtime pay. The suit claims the club also failed to keep proper time records, as required by the Fair Labor Standards Act.
Making matters more complicated for the club, the plaintiff is seeking to lead a group of employees in this case that also allegedly did not receive owed overtime pay.
This case hinges on whether the plaintiff was a nonexempt employee or not. Although the case has yet to be heard, this proves to be a cautionary tale for clubs that have nonexempt employees especially as the new overtime rule is expected to be released sometime in 2016. Under current law, salaried employees making at least $455 per week ($23,660 per year) and who meet the requirements under the “primary duty” test are exempt from overtime compensation. Under the Department of Labor’s (DOL’s) proposed rule, the minimum salary would increase to $970 per week ($50,440 per year) or the 40th percentile of weekly earnings for full-time salaried employees in the U.S.
This is a crucial issue many clubs will face when the final overtime rule is released. As you know, the proposed overtime rule poses several challenges to clubs, such as its failure to account for differences in costs of living, automatic salary threshold increases and variable employee schedules.
With an uncertain implementation date, clubs should prepare for the rule change today. Clubs should reevaluate their relationships with their exempt employees and clearly define employees’ roles and duties to comply with the regulation.
Clubs should also be aware of the increased scrutiny regarding overtime by DOL and the nation as a whole. The recent movement for increased employee pay and benefits is considerable as issues such as paid sick leave, minimum wage and others have gained more prominence. More than ever before, clubs must be certain they are in compliance with these regulations.
While the overtime rule was certainly due for updating, the hope was that it would have less impact on clubs and their employees. NCA and our allies have already taken significant measures to stop or change the rule. NCA will continue to work with DOL and allies on Capitol Hill to find reasonable ways to modify the rule before it is finalized, and we will keep you updated on any further developments regarding this case and the overtime rule.
For more information, please visit the NCA’s advocacy page on nationalclub.org and read “New Rules Regarding Exempt Employees,” featured in our fall 2015 edition of Club Director.
Phillip Mike is NCA’s communications manager.
