Backlash Grows Over Costly New Overtime Rule

Date: May 19, 2016 Last Edit: May 20, 2016

New Overtime Rule Expected To Limit Flexibility, Number Of Hours For Many Employees

As Vice President Joe Biden visited Columbus, Ohio to tout the Labor Department’s new overtime pay rule, the Cleveland Plain Dealer reported on the growing backlash from “business groups, their lawyers and Republicans,” all of whom recognize that the policy is a continuation of the Obama Administration’s anti-business inclinations. National Association of Manufacturers Vice President of Labor, Legal, and Regulatory Policy Rosario Palmieri said that the “regulation creates barriers to opportunity, severely limiting flexibility and dramatically increasing red tape, especially for small manufacturers who cannot afford the burdens of a 99 percent salary increase for management employees who are exempt from overtime pay.” Palmieri added, “Even worse, the administration has also required there to be future automatic increases, which creates uncertainty in planning for future years.” International Business Times reports that while businesses knew that the Obama administration was preparing to issue its new rule, it did not make its issuance “any less infuriating.” National Retail Federation Senior Vice President David French also “denounced the final overtime rule as a ‘career killer.’” The New York Times says “many small businesses are scrambling to figure out how to factor the regulations into their bottom line,” and the Milwaukee Journal Sentinel reports that “government and charitable groups” are also saying “the measure would raise their costs beyond their means to pay.” A Wall Street Journal editorial states that the administration is acting to artificially inflate incomes in an election year after seven years of relative stagnation in a political move that will hurt workers.

What This Means For Small Businesses

Small businesses will get hit especially hard by this overtime rule change. A Quartz analysis states that the Labor Department’s new overtime rule may cost US businesses $12 billion in additional pay over the next decade. Additionally, the new rule may further increase the rise in Fair Labor Standards Act lawsuits filed, which “has already skyrocketed, to 8,781 in 2015 from 4,039 a decade earlier.” Quarts notes that “a majority of those lawsuits relate to overtime.” Quarts states businesses must now assess “newly eligible employees and comparing the cost of their potential overtime to the potential loss of their ‘overtime’ productivity.”

Additional Reading

Supermarket News, Bloomberg Politics and FOX Business also covered the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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