An Obama administration proposal that could expand the number of salaried workers eligible for overtime pay isn't worrying some Colorado Springs employers - although they are watching it closely for potential impact on their payrolls.
The proposed changes would make about 5 million salaried workers eligible for overtime pay by 2016. The changes include making those who are earning up to $50,440 in annual pay eligible for overtime pay if they put in more than 40 hours of work in a week. The current threshold is up to $23,660 annually.
Borriello Brothers business manager Chris Stein said the company changed its payroll philosophy three years ago and encouraged salaried workers such as assistant managers and general managers to leave after 40 hours. But, sometimes they work up to 45 hours, he said.
Borriello Brothers, a pizza joint that has served New York-style pizza in the region for about 15 years, has eight locations - one in Monument, Fort Carson and Fountain and five in Colorado Springs. It has about 30 salaried employees and 100 full-time and part-time employees who are paid by the hour.
Most managers put in extra hours while closing the restaurant at the end of the day. They usually send the hourly-wage workers home, he said.
If the rules change, he said, he would pay overtime for about five hours a week for managers that he didn't have to before. Stein said that shouldn't be a problem.
"It will have little to no impact on us," he said. "It could be that some of the hourly employees will pick up the slack."
Sonia Riggs, Colorado Restaurant Association president and CEO, said the proposed changes would make it difficult for mom-and-pop restaurants and small franchise owners to run profitable businesses.
"There will be negative consequences to the restaurant industry," Riggs said.
Restaurant owners might raise food prices and cut labor costs to make profits.
"Labor is a large cost for a restaurant. That is one cost that is controllable," she said.
Riggs said many restaurants have eliminated positions such as bussers - that work is now combined with the job of a server. In some places, customers can use tablets to order food from their table, thus reducing the amount of work for servers.
About one in three adults say their first job was in the restaurant industry, Riggs said. The new rules might discourage small-business owners from entering the franchise-owning business model, she said.
Riggs said this decision might also impact those who are on the payroll of nonprofit organizations such as her Colorado Restaurant Association and charitable organizations.
There are about 2,000 nonprofit organizations in Colorado Springs, said Abby Sienkiewicz, deputy director of the Colorado Springs Center for Nonprofit Excellence. She said 47 percent of nonprofit organizations have annual budgets under $100,000 and 84 percent have budgets under $1 million.
Christy Sports, a ski and snowboard business in University Village on North Nevada Avenue, has two salaried workers and about six hourly wage workers during the summer and 25 in the winter, said store manager Mike Lloyd.
"In light of this announcement, I would make sure that they don't work more than 40 hours a week," Lloyd said of the salaried workers.
Christy Sports sells outdoor furniture during summer and skiing equipment and snowboarding gear in the cold months.
If business is good and the workers need to work more hours, Lloyd would consider paying them for overtime work.
"You want to keep the expenses at a level where you are making a profit," he said.
Lloyd said he doesn't believe the proposed changes in the overtime rules would influence the business in a big way.
"We are always closely monitoring and managing hours of all our employees," he said. "One, they don't burned down and two, they don't get into overtime when it is not necessary."
About 80,000 salaried workers in Colorado would become eligible for overtime pay if the proposed changes are adopted.
The U.S. Department of Labor published the proposed changes Monday on www.regulations.gov where people can comment and share their thoughts. The deadline to submit comments regarding the changes in the overtime pay rules is Sept. 4.