NFIB strongly opposes a new effort by the U.S. Department of Labor to expand the number of workers eligible for overtime pay. Timing for the initiative could not be worse, as it comes on top of other anti-business policies such as increased minimum wage proposals, rising healthcare costs, and a tidal wave of additional federal regulation.
Last month, President Obama announced that he was directing the DOL to develop and issue a regulation that would increase the number of workers eligible for overtime. Though details are not yet known, logic dictates that the new mandate will be costly and complicated for small businesses to comply with.
What will the regulation do?
• DOL will aim to raise the minimum weekly salary above which workers can be exempt from overtime. Currently, if an employee earns more than $455 per week he or she can be exempt from overtime.
• It is likely the DOL will look to states like California and New York, which have raised this threshold at the state level to $800 and $600 respectively.
• In addition, the regulation is expected to require employers to calculate the percentage of “executive” work performed by employees, to determine which workers are exempt from overtime.
What are some other concerns?
• Labor costs are already high for small businesses – the cost of providing wages and benefits for employees has skyrocketed and will continue to increase under Obamacare.
• Like most government mandates on business, increasing the number of workers eligible for overtime will have a deep and disproportionate impact on the small-business sector.
• The vague detail offered by the administration on what the regulation will look like only increases uncertainty for small businesses, and makes them less likely to add new workers.
The timeframe for the rule is uncertain. At any point, the DOL may propose a rule. At that time, the public must be given time to comment on the proposal, likely for 60 days. Once the comment period closes, the DOL must consider all public comments before moving forward with a final rule.