Overtime rules stake claim

Attorneys and accountants across the region have held seminars for businesses and warned clients for months about new federal overtime rules that go into effect Dec. 1.

The rules raise the annual salary threshold for employees exempted from overtime from $23,660 to $47,476.

But Tampa-based restaurant giant Bloomin' Brands, in its latest earnings report, took the conversation from classroom to boardroom. The company, behind the Outback, Carrabba's, Bonefish Grill and Fleming's Prime Steakhouse and Wine Bar chains, warned investors that it's looking at a high seven-figures tab in 2017 to cover the increase.

A Wall Street analyst, in a transcript of the company's Oct. 28 third-quarter conference call posted on Seeking Alpha, asked what level of management and what brands will trigger the overtime increases. Bloomin' Brands CFO Dave Deno says it could be the assistant managers.

“We really don't want to get into the kind of detail because we'll be communicating to our people over the next few weeks,” Deno says. “But as we looked at the rules and we looked at how we're going to go about it and things, we think this could be a $9 million impact to next year.”

The timing of the increase isn't great for Bloomin', which has introduced several initiatives and programs over the last year to overcome tepid sales. CEO Liz Smith, in the same earnings call, says “traffic was softer than we anticipated.” 

So there could be more pain points to come, beyond the overtime bill.

“In the short term, industry headwinds are pressuring traffic growth,” Smith says on the earnings call. “While we are certain that we are making the right investments to restore healthy traffic, it is clear that they will take longer to manifest in this environment. This is particularly true given that we are being disciplined about the level of discounting activity that we engage in. We will remain competitive and provide value to our consumer in this environment. However, we will not overspend in the short term to boost traffic.”