December 1 Implementation Of Labor Department Rule Would Harm Small Businesses
Before breaking for the Summer recess earlier this month, several Congressional Democrats introduced the Overtime Reform and Enhancement Act, designed to delay implementation of the Labor Department’s controversial changes to overtime rules that would increase the annual salary cap for workers to be eligible for overtime pay. Reps. Kurt Schrader (D-OR), Jim Cooper (D-TN), Henry Cuellar (D-TX), and Collin Peterson (D-MN) sponsored the bill. Rather than increasing the cap on overtime eligibility to the Labor Department’s proposed $47,476 threshold on Dec. 1, 2016, as the current regulation states, this new measure would increase that threshold from the current level of $23,660 to only $35,984 on Dec. 1, 2016. For each of the next three years, the salary cap would then increase by $74 per week until Dec. 1, 2019, when the original $47,476 cap would be implemented. In a press release, Schrader said, “Since the DOL’s immediate phase-in date was announced, we’ve heard from business owners and their employees who are worried about implementing this increase overnight. Without sufficient time to plan for the increase, cuts and demotions will become inevitable, and workers will actually end up making less than they made before. It’s long past time we strengthen overtime pay protections for American workers in a meaningful and effective way.”
What Happens Next
The measure may be taken up in September when Congress resumes work following its Summer recess. If no action is taken, the Labor Department’s changes to the overtime rule take effect December 1.
What This Means For Small Businesses
There are many issues that the new overtime rule poses for small business owners. For starters, the rule set to be implemented Dec. 1, 2016 essentially doubles the salary threshold beneath which an employee must be paid overtime. This would create an enormous financial burden that small businesses can ill afford. As an article in Foster’s Daily Democrat (NH) noted, the NFIB has previously warned that doubling this salary threshold would force many business owners to cut hours and managerial positions. This in turn would likely lower employee morale, making the workplace tense for many small businesses. Though the overtime rule should be scrapped, House Democrats’ efforts to delay its implementation are a step in the right direction.
Additional Reading
The Hill and Small Business Trends also reported on the House Democrats’ measure to delay implementation of the overtime rule.
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.
