Obama Will Seek Broad Expansion of Overtime Pay


#1

From the NY Times:

President Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement.

Mr. Obama’s decision to use his executive authority to change the nation’s overtime rules is likely to be seen as a challenge to Republicans in Congress, who have already blocked most of the president’s economic agenda and have said they intend to fight his proposal to raise the federal minimum wage to $10.10 per hour from $7.25.

Soaring profits, huh? (last time I checked, 5-6% in 2014 was the same as 5-6% in 1980)

Before the leftists here celebrate too much, I can tell you that this will end up hurting the very employees that it purports to help. First, when they are converted from “salaried” to “hourly”, their pay will go down. Second, they’ll have work harder when they’re at work. If a salaried employee needs to stay late, he stays late. If he ends up spending a little time in the office chatting or socializing…at the price of spending a little bit of extra time at the end of the day, so be it. Not with hourly workers! If they aren’t “on task”, a manager goes and slaps them upside the head. Why? If they’re in the middle of a conversation when the clock strikes 8 hours, they are expected to drop everything, clock out, and leave the premises.

And, so far as the idea of this causing employers to hire more people (as asserted later in the article), that is incredibly pollyanish. If an employer had enough work to do to hire an extra FTE, the employer would hire an extra FTE. Hourly people do overtime because there’s extra work, but not enough to justify an FTE. Same with salaried people.

Geez, I love it when the government tries to “help”.


#2

More giving away of someone else’s money in a effort to buy votes.

DGB


#3

While I am no fan of the President and it disturbs me that some Catholics have actually voted for him in 2012, this is however good legislation.

For the record McDonald’s net profit margin for 2013 was 20% with net profit being $5.5 billion dollars. They can certainly afford this.

finance.yahoo.com/q/is?s=MCD+Income+Statement&annual

I don’t know if they can legally lower the wages if they are forced to switch from salary to hourly but I would hope that the legislation be worded that it can’t.

Here in Canada bank employees face such problems and the Supreme Court will be hearing a case on it

theglobeandmail.com/report-on-business/industry-news/the-law-page/supreme-court-clears-way-for-employees-overtime-suits-against-banks/article10055109/


#4

A few things:

  1. This is not legislation. This is regulation and can be imposed by fiat.
  2. You mention McDonalds. The problem with your theory is that McDonalds restaurants are not actually part of MCD. They are independently-owned franchises. What is the profitability of each franchise? I have no way of knowing that one way or the other. I doubt that any of us do.
  3. I don’t know about in Canada, but the vast majority of employment here in the States is “at-will.” It is covered, mostly, by contract law. In essence, with an “at will” employment agreement, the employee and employer agree to certain terms and conditions contained in the agreement. Respecting those terms and conditions, either the employer or the employee can walk away from that agreement at any time. All an employer has to do is to amend the employment agreement (or supersede it with a brand new agreement). If the employee doesn’t care for the amendment (new agreement), the employee is free to walk away without prejudice. Likewise, the employee can demand that the agreement be amended. If the employer doesn’t care for that demand, the employer can walk away from the agreement. *.
    Please note: although I just had my pay cut (using the above method), I am not whining to Uncle Sugar for protection. I will deal with it myself. And when my employer is looking for a replacement, I wish him good luck finding somebody 1/4 as competent as me for the salary that he is now paying me.

One other note: I realize that there are some people hired on term contract (teachers are the first example that comes to mind). Again, in such a situation, the employment agreement can be modified with the new and improved hourly wages (replacing a salary) at the end of the agreement’s term.
4. If something happens that does prevent an employer from using the method outlined above, the employee will still pay for it over time. For example, if an employer is required to convert FTE salaried pay, there is nothing to prevent the employer from converting FTE hourly employees to .75 FTE hourly positions…thus cutting their fringe benefits (as they are no longer required to pay for health insurance). Or, for example, the typical cost-of-living raises that are given employees may end up being deferred or cancelled, as the company can’t afford it…or whatever.

  1. Ultimately, the customers are the one that will pay for any additional expense. And, in this case, the employees.*

#5

It’s not legislation and it is bad.

The main criteria in an exempt/non-exempt job classification is that the person uses professional discretion in doing their job. Managers (even fast food managers) and loan officers most definitely do. I wouldn’t want a loan officer that didn’t. :eek:

And yes, the wages can be lowered unless there is a union involved. There is nothing to say that anyone’s wage can’t be lowered at any time. The employee is free to leave (if in an employment at will state) and may be able to collect unemployment under the criteria of a substantial change in working conditions.

But, come to think of it, being stripped of exempt status is a substantial change in working conditions too.

I fail to understand what McDonalds’ profits have anything to do with FLSA exemption anyway. :shrug:


#6

I notice that the regulation does not include government workers.

When I was working for the guv’mint, the distinction between “hourly” and “professional” was determined by pay grade, not by actual duties. It eventually got to the point where my overtime rate was actually lower than my regular hourly rate.


#7

My overtime used to be taxed heavily; I suspect this is his goal.


#8

The withholding tables assume that a pay period with overtime is your regular pay level, so it almost always puts you in a higher bracket. People who work a lot of overtime normally have bigger refunds when they file their returns.

Obama doesn’t want to tax you. He only wants to tax everyone else. It comes from a core belief that government owns everything and allowing you to keep part of what you earn is a tax break.


#9

Bravo. Companies take advantage of people when they are “salaried employees”. My fiance used to be required to check emails on weekends with no extra pay. My brother does computer programming and there were many times he was required to stay past midnight with no additional pay.

If you are a business that can’t afford to pay your employees properly then you should not be in business. Also, if the work required can’t be done in 40 hours per week, hire more people.


#10

This is true, but it seems few people realize this.

Obama doesn’t want to tax you. He only wants to tax everyone else. It comes from a core belief that government owns everything and allowing you to keep part of what you earn is a tax break

I think both sides fall into this trap and don’t really trust the market. Think of the support on the right for objectively bad tax breaks, such as the exemption of employer paid health insurance premiums from tax or the mortgage interest deduction. Neither one has any economic justification, but there are those on the right who seem to think that the economy would collapse if they were eliminated.


#11

On the other hand, when I have to leave early for a dentist appointment, my pay isn’t docked. If I get in late due to bad weather, my pay isn’t docked. If it takes til 7 p.m. to finish my work, it takes til 7; but if I’m done before 5, I can go home. Sure, I check emails on the weekend, but most of them don’t need a response until Monday anyway.

It depends on the job and the company. Some companies take advantage; with some, it’s worth it.


#12

Do you think they are not fairly compensated? You can’t apply an hourly mentality to a salaried job. It’s a simple equation - here are the requirements of the job, and here is the benefits package. Take it, counter offer, or leave it. The amount of connectedness during “off” hours is cooked into the package.

If you are a business that can’t afford to pay your employees properly then you should not be in business. Also, if the work required can’t be done in 40 hours per week, hire more people.

40 hours is an arbitrary construct. You are talking about two different things - a forty hour work week and fair compensation. You can adjust either side of that and still achieve parity.

For a business, having workers put in 45 hours a week when needed, and fairly compensating them for it, is much cheaper than hiring more workers, due to the cost of benefits such as health insurance, etc. So, if you only want to work 40 hours a week with no evening or weekend interaction, you might not be a good fit for the company. If you always want to be connected, and compensated for it, that might be the right company for you.

What some people fail to realize or acknowledge is that companies offer benefits packages based on expectations of performance. If you need to check emails on the weekends, it’s already accounted for.

As for the people in the story, calling the lead janitor an executive and denying him overtime is just wrong.


#13

As a salaried employee, I have flexibility that I like and don’t want to give up. I can work late when I’m busy, go to a doctor’s appointment during work hours, even go watch one of my kid’s school events that happens before 5PM. Your idea will put an end to that flexibility and mean a lot of people who are currently allowed to leave for a kid’s event, doctor’s appt., etc., will have to go without pay.


#14

I own my own business now and my boss is a real jerk too, he doesn’t pay any overtime and he makes me work seven days a week.

I hate that guy. :mad:


#15

#16

Making less is a risk all salaried employees take for being ineligible for overtime pay and, chances are, you will be earning less based on hours worked overall than you would as an hourly employee. Many people move into salaried positions without realizing that and wind up taking an effective pay cut.


#17

In the US, most employees other than high level executives and union workers are employees at will and do not have employment contracts. That means that the conditions can change and it also means that the employee is free to leave and word somewhere else without repercussion.


#18

I knew, liked, and accepted the responsibilities of my current position. A person should be aware of the risks prior to accepting the position and take that into account when negotiating their salary.

Also, my ability to meet deadlines allows me to differentiate the services I provide to my company. I can avoid having my services commoditized that way. It would be much more difficult if I was shoehorned into a 40 hour workweek.

Lastly, there is a reason why the job growth has been so sluggish under Obama, and why the workforce participation is still at a 35 year low…this is just another log on that fire


#19

I agree with this. Many salaried people (computer technicians come to mind) are required to be on call 24/7. They are required to answer their cell phones in the middle of the night and get up and solve a computer problem. The are sometimes required to work all night, and sometimes all weekend with no extra pay. These companies don’t give a rip that you are a working parent who has kids to pick up at the day care center. They even expect you to take calls when you’re on vacation.

All of this is very stressful and unhealthy. I have known employees who were under this kind of stress who actually dropped dead even though they were only in their 40’s!


#20

In regards to the 5-6%, what I said in the OP immediately following the excerpt was: Soaring profits, huh? (last time I checked, 5-6% in 2014 was the same as 5-6% in 1980). I was talking about corporations in general, not any one specific corporation. Sorry if that wasn’t clear.

A typical employment agreement for a salaried worker does not list the number of hours the employee will work. Typically, corporate policy will list hours of operation and, in some cases where flexible schedules are supported, core hours where all hands are expected to be at work. As far as hourly workers are concerned, they are told whether they are full-time or part-time employees (full time = 40 hours, part time = less than that) and their hours are published on a duty schedule.

Myself, when I hire exempt (salaried) employees for a project, I generally set my resource loading to be about 30 hours per week per full-time equivalent. I do that because something always comes up and that something is always unpredictable. I expect that they should be able to get that 30 hours of predictable work done (along with the pop-up requests) typically in 40 hours. If they choose to lollygag around at work and be less than optimally productive, well, they still have to get that work done. As long as they get the workload I give them done, I don’t particularly care if they surf the web, take longer than expected lunches, go to a parent-teacher conference, or whatever. I don’t make them charge leave hours if they have to take an afternoon off for the kids (or for a doctor appointment or whatever). But the work’s got to get done…and it’s their responsibility to manage their time accordingly.

Having said that, though, there will be times when that employee is going to have to work some extra. A customer may have an emergency change request for a software package; they may have to travel to a distant customer site to install some server racks; and so on. And when something like that comes up, I do try to give them compensatory time off. If one of them has to work a full weekend, I’ll generally let that person take a 3 day weekend the next couple of weeks.

Here’s the thing: the FLSA (“Fair Labor Standards Act”) rules do not allow me to have that kind of flexibility with hourly (“non-exempt”) employees. I am not allowed to let an hourly employee work 42 hours one week and 38 hours the next (if I do, I have to pay him overtime for one week and dock him 2 hours of wages the next). I have had hourly employees ask me if they could do that (because they had some commitment with their spouse or with their kid). The answer has had to be “no.” I remember one hourly employee that I had on a project who used to like to show up 30 minutes early, so he could drink his coffee and read the news for a while before he actually started work. He religiously only clocked 8 hours a day, though he was actually at the work site for 8-1/2. I had to prohibit him from showing up early…even though he, by his own choice, was not on the clock.

A manager has a whole lot less flexibility in managing non-exempt employees than exempt ones. The thing is: a lot of times the non-exempt employees like the lack of flexibility less than I do.

And Obama wants to make more employees non-exempt.

Oh, well.


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