Tags: obama | overtime | pay | authority

Obama's Overtime Pay Tactics Earn Short-lived Celebration

Obama's Overtime Pay Tactics Earn Short-lived Celebration

By    |   Friday, 20 May 2016 11:23 AM

In yet another outrageous overreach of his authority, President Barack Obama has ordered employers to pay overtime for workers making under $47,476 a year.  

And like many Obama mandates and regulations that have been imposed on business – like onerous EPA regulations — this one is not predicated on any research or data. For one thing, it fails to demonstrate that there is indeed a rampant problem of underpayment and overwork in our labor force.

Under the Fair Labor Standards Act, since 2004 most employers had to pay time-and-a-half for overtime hours (usually understood as hours worked above and beyond 40 hours per week) for salaried employees who don't have sufficiently advanced job duties or make less than $23,660 annually. Employers only had to track the hours of salaried employees eligible for overtime.

Under the new rules, the salary threshold would be raised to $47,476 — and employers would track the hours of salaried employees making less than this amount, no matter how advanced their duties.

The National Retail Federation, according to the Wall Street Journal, estimates that this new regulation will impact 2.2 million retail and restaurant workers, or 64 percent of salaried employees in the industry.  They estimate the proposed overtime changes would cost restaurants and retailers between $5 billion and $9 billion per year.

Lest you think that this new regulation will just impact retail workers, “Inside Higher Ed” online newsletter writes that the “proposed changes would nullify opportunities for thousands of people just starting out by essentially removing entry-level positions that recent college graduates rely on.

With beginning base salaries of $47,000, employers nationwide, including colleges and universities, would have to hire workers with previous experience and a greater knowledge of the position than a first-time job applicant.

In addition to the removal of entry-level positions, midrange positions would need salary adjustments as well, so that employees at that career level are not making less than those previously considered to be entry level. Such salary adjustments across the board would significantly pressure the budgets of virtually every academic institution.”

Reason.com puts the issue into perspective by noting that the underlying assumption behind the proposed rules is that employers are forcing their employees to work long hours without paying them appropriately. Increasing the salary threshold, the administration claims, would force employers to dish out higher pay to their employees, hire new workers or give part-time ones longer hours rather than overwork their current workforce.

Some 270,000 comments from employers bombarded the Labor Department predicting that the rule would force them to cut workers’ hours and slow hiring of full-time employees.

While Goldman Sachs estimated that the ruling would create a measly 120,000 new jobs in the first year, most of these will be lower-wage hourly positions—the exact kind of jobs that we need to convert to higher paying jobs requiring skilled workers.

Workers will find that instead of seeing their take-home income rise, they will find that their work hours will be reduced so fewer will work over 40 hours a week. It is highly likely that employers will be forced to fire good workers who are working over 40 hours and hire part-time workers instead.

In the longer run, employers could reduce the base wages so that total compensation (base wages plus overtime pay) would be the same as before the implementation of the new rule.

With the loss of income will come the loss of flexibility in the workplace.  Since employees will only be paid for the hours they work, workers would lose salary if they choose to take advantage of increasingly popular flexible work arrangements and telecommuting options that many rely on to balance their work and family lives.

Randel Johnson, Senior Vice President of Labor, Immigration and Employee Benefits for the U.S. Chamber of Commerce, issued the following statement: “Making more employees eligible for overtime by severely restricting the exemptions will not guarantee more income, but instead will negatively impact small businesses and drastically limit employment opportunities. This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact.”

I am an entrepreneur who has taken enormous risks to create U.S.-based manufacturing companies that employ some 400 workers.  High taxes, high healthcare costs, and draconian regulations are making it harder and harder to run my business and hire.  The U.S. government should be creating an environment where entrepreneurs can succeed and create jobs.

This new overtime regulation does the opposite.  Is the president going to accompany our small businesses owners when they have to tell some of their employees they are being forced to cut their hours and income and let some of them go?

We know the answer. We have a president without any sort  of business sense who has never made payroll or paid benefits, making rules that impact millions of hard working Americans and equally hard working small business owners. This is an overreach of authority that will have a far reaching impact for job creation and our economic future.   

Neal Asbury is chief executive of The Legacy Companies. To read more of his work, CLICK HERE NOW.

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We have a president without any sort of business sense who has never made payroll or paid benefits, making rules that impact millions of hard working Americans and equally hard working small business owners.
obama, overtime, pay, authority
Friday, 20 May 2016 11:23 AM
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