Millions more workers would be eligible for overtime pay under new federal rule


#1

Last summer, President Obama announced plans to revisit rules for overtime pay, and so he has:

The Obama administration will unveil a new rule Wednesday that would make millions of middle-income workers eligible for overtime pay, a move that delivers a long-sought victory for labor groups.

The regulations, which were last updated more than a decade ago, would let full-time salaried employees earn overtime if they make up to $47,476 a year, more than double the current threshold of $23,660 a year. The Labor Department estimates that the rule would boost the pockets of 4.2 million additional workers.

The move caps a long-running effort by the Obama administration to aid low- and middle-income workers whose paychecks have not budged much in the last few decades, even as the top earners in America have seen their compensation soar. The last update to the rules came in 2004, and Wednesday’s announcement is the third update to the salary threshold for overtime regulations in 40 years.

“Along with health care reform this is one of the most important measures that the Obama administration has implemented to help middle-wage workers,” said Jared Bernstein, a former chief economist to Vice President Biden and a senior fellow at the Center on Budget and Policy Priorities.

About 35 percent of full-time salaried employees will be eligible for time and a half when they work extra hours under the new rule, up significantly from the 7 percent who qualify under the current threshold, according to the Labor Department.

…The administration’s rule would benefit women, minorities and young workers the most, according to estimates from the left-leaning Economic Policy Institute. The change will go into effect Dec. 1 of this year.

Naturally, just as they did when the President first proposed a change, some employers are having a hissy about it:

The shift was swiftly criticized by small business owners, nonprofit groups and universities that say they may have to switch some salaried workers to hourly positions to afford the new threshold. And instead of seeing bigger paychecks, some salaried workers may be assigned fewer hours, they said.

“For many of these types of employees they’re going to be viewing it as a demotion,” said David French, senior vice president of government relations for the National Retail Federation. “They’re going to have to clock in and clock out. They’re no longer going to have flexibility at work.”

But some labor groups and unions said the change was long overdue. Many people putting in 50 to 60 hours a week without overtime are actually earning less than the minimum wage when all of their hours are taken into account, they said.

Which is entirely the point. Employers don’t like the rule because it makes it harder for them to exploit workers, and their concern trolling on behalf of their employees is rubbish. Their workers won’t get “a demotion” unless their employers cut their hours. They won’t lose “flexibility” unless their employers take it away.

So, you know, employers could just not do that.

Of course, if employers were inclined to do the right thing, we wouldn’t need our President to issue guidelines instructing them to pay their employees a livable wage in the first place.


#2

I Never understood the philosophy that making it more expensive to hire people would increase employment . The end result of this law will be that employers will cut their employees hours and or outsource as much they can

Having been an employer for over 35 years and dealing with thousands of small businesses during that time I’ve seen firsthand what the heavy hand of government regulation does to suppress employment . So when these employees lose their jobs the government will wring their hands and blame evil employers and, of course, come up even with more regulations to supposedly the fix the problem which will put even more people on the streets .


#3

May I ask how many people you employ in your business?


#4

Company I work for has a flexible work schedule program, where if you worked an extra hour on one day you could use it for leave at another time during the CY.

We can’t budget for overtime, because we bill by the hour, have a ceiling for what we can work, and our billing rates are approved and by the feds ahead of time and audited. We’d burn through the budget too fast as well.

So I’ve been told that when this goes into effect basically all the junior folks lose the flexible work schedule program.

I’ll get to keep it though. So that’s nice.


#5

I know you weren’t asking me but in my case 8 now-a little over 20 before I started cutting back.

A large number of the small businesses I have dealt with over the years did not allow themselves to grow over 50 employees as the regulations get to be particularly egregious once you reach that point .


#6

Yes the flexible schedule will not be allowed for nonexempt employees . This will fall especially hard on working mothers who, with a flexible schedule, were able to work their schedule around their children’s school events.

As with nearly all government regulations on employment it is the lowest paid workers who are hurt the worst


#7

Needs a link to a news article


#8

Here’s the link
washingtonpost.com/news/get-there/wp/2016/05/17/millions-more-workers-would-be-eligible-for-overtime-pay-under-new-federal-rule/


#9

They have already started. An additional negative to the workers is that they will be expected to complete everything they need to do for the work day within the work day. In many businesses and industries, they’re already overloaded because employers are trying to do what they need to do with as few people as possible. It’s harder and harder to remain competitive against all the foreign competitors who don’t have any work rules at all, don’t dedicate workers to regulation compliance and pay their workers a fraction of what ours get.

Obama is pushing on a string here. There are reasons why income hasn’t risen for people in the middle class, but it isn’t because of work rules. Forcing employers to avoid overtime for salaried workers won’t improve salaries at all.


#10

Thanks, Bob.

A lot of people don’t understand the choices that business owners and employers have to make. It seems to be easier to just paint them all as some sort of Simon Legree.


#11

As someone who has been an employee who wished I was eligible for OT and as someone who has managed people, this new rule is NOT going to have the desired effect.

At my previous place of employment, a number of exempt employees who used to be granted a small bonus for OT (less than time & a half), saw their work schedules change once full OT became mandatory.

Don’t get me wrong… I love OT and wish I was eligible… but I also know it’s a trade off. When you are OT eligible, flexible work schedules are SOMETIMES abandoned and staggered work schedules are sometimes created. This depends on the state rules.

For example in CA, you must be paid 1.5 OT for anything over 8 hours in one day. In most of the other states, you don’t start getting 1.5 OT until 40 hours worked has been reached.

Flexible work schedules in CA are not practical because working a 10 hour day would include 2 hours of OT in CA, while it wouldn’t necessarily in other states.

However, even if you get to keep flexible work schedules, OT is closely managed. So many people don’t actually get to work OT. Further, it forces workers to work harder during the business day.

When you work in an office environment with deadlines, sometimes no OT is better because you can work a 12 hour day to get caught up. But you can’t do that when you are eligible for OT. When employees are moved from exempt to “Non-exempt” they do often feel like they are being “demoted” because the clock makes it see like big brother is watching. It also eliminates their ability to work OT to get caught up or to get ahead. Many young employees like to do this in order to get promoted, etc.

But non-exempt employees are unable to do so.

I would have been much better to look at job types and make sure there were not other job types that should be making OT that currently are not, instead of using a blanket salary requirement.

I know people who make $80 or $90K who are not eligible for OT, but really should be based on what they do all day. The govt should have been looking at those job types and provided for people who do tasks that are similar to other non-exempt and currently are not, making them eligible for OT.


#12

I think this policy is pushing against a problem that may not really exist. For example, my wife is an hourly employee and if she goes over 40 she gets time and a half. If they made her position salaried, she would demand a raise to cover her expected overtime, or else she would quit. I would imagine most workers are like that, they are pretty good at determining which job differentials need compensation.


#13

I don’t think understand what is happening. I am being impacted by this personally. I will be reclassified from being a PT professional employee to being a PT non-exempt. That IS a demotion and a loss of flexibility. My hours won’t be cut; in fact my employer would be happy to change me to FT in order to let me stay in the exempt professional category but I don’t want to work FT.

The group that is being impacted most adversely is first line supervisors. They want to be able to put in the extra effort to be moved up in management but now will be restricted by the OT threshold. If they work more than 40, they get the OT but also have to show lower profitability for their units. Restaurants and retail establishments have a lot of people in this category. Not many employees want to have the extra headaches of supervision if they don’t get the recognition as being in an exempt category.

BTW, the government approached this from a position of pure ignorance of the workforce. They entirely missed the category of workers who are currently exempt, part time and focused only on $$ per week. A professional working PT and making the equivalent of $200 per hour is non-exempt under this new proposal. That’s just stupid.


#14

And after she quit the company quickly find somebody take her job working at the Salary they want to pay . Of Course had the government not gotten involved your wife and her employer could’ve worked out an accommodation based on salary, flexible hours and comp time that probably would’ve made both patties happy


#15

#16

The new rule probably won’t affect federal workers. The current rule doesn’t.
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#17

It’s a fine line. Still, if people are going to be held away from their families beyond the normal work hours, they should be compensated for it somehow.

Of course, in Albuquerque, the big fight is paid sick leave (there are estimates that state that over 40% of employees in Albuquerque can’t afford to take off due to illness to self or child because they’d be docked pay).


#18

:mad:
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#19

Once again, King Obama decrees it, so it is done…

Congress? Congress? Hello? Are you out there? Time to stop raising money for your re-elections and get your head into the game! The King is going crazy lately, haven’t you noticed!!!:mad:


#20

Likely work quality will suffer for some.

There are no few professionals who are not regarded as professionals by the government within the salary limitation. Psych techs, for example, come to mind, as well as a number of others. The quality of their care depends a lot on the charting they do. If they have to leave at a certain time, they’ll just have to shorten their charting. And what if more patients come in than are expected? Again, patient care will suffer.

I know one organization with an impossible situation. They care for disabled people. The in-place caretakers are on an hourly schedule and work in shifts, so they’re not a problem. The problem is with the lower-level supervisory people who have responsibility for more than one residence and are expected to stay through any kind of crisis regardless of their scheduled hours. The organization is on a pretty thin budget, so, what to do?

Perhaps amusing to some, there are no few beginning lawyers who don’t make any more than the limitation but are expected to work 50 hours per week or more. They’re also on production quotas (number of billable hours, which is not the same as hours spent). Now, the paralegals they direct are not “professional employees” under government rules, but often make more than the beginning lawyers do. So, the beginning lawyers can be made to work 60 hours without receiving overtime, but the paralegals can’t, even if they are making more. So, it will be cheaper to hire more lawyers and fewer highly skilled paralegals.

Registered nurses might or might not be exempt under the law, depending on what they do in the job. They’re exempt if most of what they do is applying a highly skilled body of knowledge most of the work day. ICU nurses spend most of their time watching the patient and seeing to his/her comfort, but since an RN must be in ICU at all times, whether they’re doing anything or not, it’s questionable that they would be exempt.

LPNs are not considered “professional” employees, so in some contexts it might be cheaper to send the LPNs home and keep the RNs at work, possibly doing the very same things.

A person can think up all kinds of reasons why that ought to be regarded as okay. But what is not okay is raising salaries by fiat and pretending somehow that the economy can deal with it. Either the production is there to justify paying it, or it isn’t. Simply decreeing raises does not increase the ability to pay them, and it has to be made up somewhere.


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