The Department of Labor is finalizing a rule to update overtime protections for workers. “In total, the new rule is expected to extend overtime protections to 4.2 million more Americans who are not currently eligible under federal law, and it is expected to boost wages for workers by $12 billion over the next 10 years.”
Source: Taking Action to Expand Overtime Protections | whitehouse.gov
This is a difficult subject for everyone involved – workers and business owners alike. Increases in minimum wage, increases in employee health care costs, and adjustments to wage and hour regulations all serve complicate and cost businesses more. Fair payment for time worked, a living wage, and protections for workers from employer abuse are things that are expected – deservedly so – by employees. Definitions vary, as do circumstances, so a one-size rule never really fits all and someone, somewhere, feels the burn.
A USA Today article on the subject describes Labor Secretary Thomas Perez as saying “the salary threshold was originally intended to exempt high-paid executives but instead has denied overtime to low-level retail supervisors and entry-level office workers who often toil 50 to 70 hours a week.”
On the other hand Dan Bosch, head of regulatory policy for the National Federation of Independent Business, was described as saying that “many small businesses can’t absorb the added cost and will instruct employees to work no more than 40 hours a week, bringing on part-time workers to pick up the slack”. From Trey Kovacs, policy analyst with the Competitive Enterprise Institute: “The Obama rule puts a huge cost and regulatory burden on employers, who will face pressure to cut back on benefits and full-time employees”.
A bill was introduced on Thursday by Republican congressional leadership hoping to block the proposed overtime rule. The proposed legislation, Protecting Workplace Advancement and Opportunity Act, is intended to ensure that the Department of Labor takes a “balanced and responsible approach to updating federal overtime rules.” Sponsors of the legislation include members of the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Education and the Workforce.
Part of the bill’s consideration may be the burden of record keeping and information management that just keeps growing ever larger. The current DOL changes, for example, now suggest that businesses must keep time and attendance records in detail for their salaried employees who might qualify for overtime compensation. Getting employees to keep time cards or complete timesheets may not be an easy thing to do, yet punching a timeclock and tracking their hours may become their new normal. Some employers, on the other hand, will elect to simply raise workers’ base pay to the new threshold, avoiding paying the overtime and skirting the need to keep detailed time records.
The extension of overtime protection to another 4.2 million Americans, and boosting wages by $12 billion over the next 10 years is the expectation for the new rule’s impact, although opponents suggest that employment (and employers) will suffer, reducing their workforces while absorbing costly HR management processes just in order to comply.
The rule is likely to touch nearly every sector of the U.S. economy, with the most notable adjustments occurring with nonprofits, retailers and hospitality (hotel and restaurants), as these are the industries generally having management-level workers whose salaries are at or below the new threshold. Whether the outcomes of the rule will be as expected remains to be seen, but it is certain that many businesses must now put in place software, systems and processes which will help not just help them comply with new wage and hour rules, but deliver enough intelligence to support better personnel management, employee scheduling and labor cost containment.