A one-time change that will reduce your overtime expenses forever

Most hotels should consider making a one-time change that will likely pay future dividends in reduced overtime expenses for years to come.

What is this change, you ask?  It’s simple – it’s how you define your payroll week.  Most hotels decide to have their payroll week defined to start on a Sunday or Monday and then don’t give much thought about it after it’s decided.

That’s not smart, because what day your payroll week starts or ends will have huge ramifications for how well your managers control overtime going forward.

First you should know that (in the U.S. at least), a business has a lot of flexibility about how they define their work week for payroll purposes.  This is all outlined in the Fair Labor Standards Act (29 C.F.R. § 778.105), “An employee’s workweek is a fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods. It need not coincide with the calendar week but may begin on any day and at any hour of the day.” 

We have two rules for defining your work week:

1.  A hotel should never end the workweek during the ‘busy’ part of the week. The easiest example is a resort whose occupancy peaks on the weekends – it’s almost always a bad idea for these properties to have their payroll week end on a Saturday or Sunday.  If there are employees close to overtime, it’s much harder to send them home early when business is really busy.  So if your hotel is slower on Tuesdays or Thursdays, for example, it may be a good idea to end your workweek there instead.

2.  A hotel should not end the workweek when managers will be off-property.    If your managers are on-property, they will be able to monitor overtime risk and change schedules to avoid unnecessary overtime.  They can communicate the schedule change to any employees at risk of overtime.  Managers will also be available to cover for hourly employees if they need to send them home early to avoid overtime.

Two rules of thumb:

For Business Hotels that peak mid-week – Avoid ending your payroll week on a Wednesday or Thursday.  Consider ending your payroll week on a  Friday or Monday.  Your occupancy is usually not at its peak and your managers are probably on-site

For Leisure Hotels that peak on the weekend –   Avoid ending your payroll week on a Saturday or Sunday.  Often a weekday like Thursday can be a good one to end the payroll week.