President Barack Obama's plan to expand the threshold for the class of employees entitled to receive overtime pay will hurt the same managers he aims to help, says the head of a restaurant conglomerate.
Andy Puzder, CEO of CKE Restaurants, parent company of Carl's Jr., Hardee's, and other chains, wrote in an opinion piece in The Wall Street Journal
that Obama's measure will have a boomerang effect by removing the "incentive" or "performance-based" bonus compensation from managers' pay, and replacing it with potentially less overtime pay.
Earlier this month, Obama directed the Labor Department to revive the overtime rules for salaried workers, such as fast-food shift supervisors or convenience store managers, who may be expected to work more than 40 hours a week without receiving overtime pay.
Obama said that that millions of Americans
"aren't getting the extra pay they deserve." He added, "I'm going to do what I can on my own to raise wages for hardworking Americans."
But Puzder wrote, "Currently, if a salaried employee makes more than $24,000 a year and is part of management … that employee is exempt from overtime coverage.
"The president wants to raise this salary threshold, perhaps as high as $50,000, demoting entry-level managers to glorified crew members by replacing their incentive to get results with an incentive to log more hours.
"Workers who aspire to climb the management ladder strive for the opportunity to move from hourly wage, crew-level positions to salaried management positions with performance-based incentives. It can be very lucrative for those willing to invest the time and energy, which explains why so many crew employees aspire to be managers."
Puzder noted that entry-level managers at his chains have a starting salary of $36,000 and can go as high as $65,000, plus benefits, with an average of $45,000. They can also qualify for a performance-based bonus of up to 28 percent.
"Our executive vice presidents responsible for Carl's Jr. and Hardee's both started as crew employees who worked their way up to general managers. Rather than overtime pay, they got an opportunity to prove themselves. Many businesses offer incentives for managers. Public companies may have stock options or stock-purchase programs.
"The idea isn't to squeeze labor by compelling managers to perform physical tasks and work long hours without overtime pay. The idea is to encourage managers to increase their compensation and improve their lives by running profitable businesses as if they owned them, regardless of the hours or tasks required."
Noting that Obama had maintained that his administration would consult with workers and business owners before instituting new regulations, Puzder added, "Maybe he should begin the process by asking managers who make below the new threshold whether they would prefer to keep their current salaries and incentive compensation or, in exchange for this overtime 'opportunity,' go back to being hourly employees without bonus potential or equity incentives. Their answer might surprise him."
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