If you run multi‑unit locations, GMs, sous chefs, and shift leads sit right on the line between exempt vs non‑exempt under the FLSA. This guide breaks down the 2025 overtime rules for restaurants, the exempt salary thresholds by state (California, Washington, New York, Colorado), and how to decide—raise pay to stay exempt, reband the role, or convert to hourly + overtime.
You’ll get simple rate‑setting math, scheduling moves that reduce OT creep, and manager‑ready talking points. Use this to tighten compliance, protect morale, and budget with confidence for the year ahead.
Who this is for?
Independent and multi‑unit restaurant operators in the U.S. working with GMs, AGMs, Sous Chefs, Service/Bar/Kitchen Managers, and Shift Leads.
What changed?
A federal court vacated the U.S. Department of Labor’s 2024 overtime rule on November 15, 2024. The DOL says it is enforcing the prior (2019) federal salary minimum of $684 per week ($35,568 per year) for the EAP exemptions while litigation continues. In plain terms: unless your state sets a higher bar, $684/week is the federal floor today. (dol.gov)
Why it matters now?
Fall scheduling, holiday coverage, and 2026 budget planning are on your desk. Getting classifications right avoids back‑pay exposure and it protects morale!
Here’s a basic summary of the 2025 salary checkpoints:
- Federal baseline (many states still default to this): $684/week ($35,568/year). Litigation is ongoing so DOL enforcement guidance points back to the 2019 rule. (dol.gov)
- California: State minimum wage is $16.50/hour as of January 1, 2025; the exempt salary floor is 2× the state minimum wage for full‑time work: $68,640/year. (dir.ca.gov)
- Washington: Minimum wage $16.66/hour in 2025. Exempt salary floors are $69,305.60/year (≤50 employees) and $77,968.80/year (51+). Hourly computer‑professional rate is $58.31. (lni.wa.gov)
- New York: Weekly salary minimums for Executive and Administrative exemptions since January 1, 2025 are $1,237.50 in NYC/Long Island/Westchester (≈$64,350/year) and $1,161.65 in the rest of the state (≈$60,405.80/year). The Professional exemption follows the federal salary level. (dol.ny.gov)
- Colorado: Exempt EAP salary floor is $56,485/year for 2025. Colorado’s “highly compensated” exemption is set at 2.25× the annual EAP salary, or $127,091, with weekly pay meeting the EAP salary. (law.cornell.edu)
Something to remember: salary is not enough
To treat a role as exempt you need both the salary threshold and the duties test. Exempt EAP (Executive, Administrative or Professional) roles primarily manage people/operations and exercise independent judgment (e.g., direct two or more full‑time employees; input on hiring/discipline; set schedules; order inventory). Job titles alone don’t decide exemption status. (dol.gov)
How to decide, role by role
Start with a simple grid—locations down the side; GM, AGM, Sous, Service/Bar/Kitchen Manager, Shift Lead across the top. For anyone who travels, apply the rule where the work is performed that day. Then confirm duties actually match an exempt profile; if a role spends most of its time on station shifts without real management authority, treat that as a red flag for non‑exempt.
Three paths (pick one per person)
A. Raise pay to keep the role exempt. Best when you’re close to the state threshold and the duties clearly qualify. Example: a California GM at $67,500 moves to $68,640 to preserve exempt flexibility. (dir.ca.gov)
B. Reband the role (title, scope, pay band). Best when the work has shifted away from primarily managerial tasks or the gap to the threshold is large. Example: Sous becomes Lead Line/Shift Supervisor (non‑exempt) with a premium on inventory nights and MOD shifts.
C. Convert to hourly + overtime—and make it a win. Best when hours are predictable enough to budget OT or the threshold gap is big. Set the base rate so base pay plus expected OT lands at your target total comp; add differentials for clopens, training, or inventory.
Here’s a simple rate‑setting recipe you can use as an example:
Target total comp for a Sous: $70,000. Assume five OT hours per week. Choose an hourly base that, with time‑and‑a‑half on those OT hours, lands near $70k. Keep nondiscretionary bonuses in the “regular rate” for OT calculations; tighten timekeeping: no off‑the‑clock work and pre‑approve OT.
Scheduling moves that reduce OT creep
- Lock two short “office blocks” per week for admin—protect them like a reservation.
- Cross‑train a MOD bench (senior bartender, lead line, trusted host) to absorb peaks.
- Time‑box closings: the closing MOD wraps by a set time; remaining items roll to the opener.
- Pull paperwork forward before the rush (pars, labor targets, interviews) to avoid late “just 30 more minutes.”
How to explain the changes without tanking morale
Lead with trust and facts: “We’re updating classifications to match 2025 rules in our state(s).” Affirm value: “Title and growth path stay intact—this is about compliance and predictability.” Make money and life clear: base, OT eligibility, bonus structure, and “no off‑the‑clock work.” Close the loop: “We’ll review in 60 days; tell us what’s working and what’s not.”
Restaurant‑tested examples you can borrow
- GM (full P&L): If weekly hours run 50+ and you’re within a few thousand dollars of your state’s exempt floor, a small bump often costs less than expected seasonal OT.
- Sous Chef: Convert to hourly with seasonal comp planning—more base hours in Q4 banquets, then pull back in Q1 with a training‑heavy schedule.
- Service/Bar/Kitchen Manager: Keep one salaried Manager above the threshold; build two senior Shift Leads (hourly) with a clear path to promotion.
- Shift Lead/MOD: Add a $1.00–$1.50/hour keyholder premium on designated MOD shifts to reward responsibility without creating an exempt profile.
What to do this week
- Build your location‑by‑title grid with the correct 2025 thresholds and duties tests (add any city/county rules that apply to your footprint). (dol.gov)
- Make your call for each manager: raise to stay exempt, reband, or convert.
- Update job summaries so actual duties match the chosen classification.
- Train supervisors on timekeeping, OT approval, and documentation.
- Communicate one‑on‑one using the script above; follow with written confirmations.
Notes and reminders
- Federal law sets a floor; states and some localities set higher standards. You must follow the most protective rule that applies to the work performed. (dol.gov)
- As of September 23, 2025, the DOL says it is applying the $684/week federal minimum while the 2024 rule remains vacated and appeals are pending. Recheck before year‑end in case litigation shifts again. (dol.gov)
California’s exempt salary floor is tied to the statewide minimum wage (local city wages don’t change the exempt floor, though they do affect hourly workers). Washington’s exempt floor is tied to the state minimum wage and varies by employer size. New York sets weekly salary levels for Executive and Administrative exemptions by region; Professional follows the federal salary test. Colorado indexes its EAP salary floor annually and sets a separate “highly compensated” threshold at 2.25× the EAP annual salary. (dir.ca.gov)
Whew! We hope this helps you navigate the overtime roller coaster with a little more info that you had before.