September 1, 2017 – Don’t Let the Federal Government Limit Your Salary
Overturning the Department of Labor’s Overtime Rule
Repealing the Obama Administration's Overtime Rule
What Does This Regulation Do?
A 2016 regulation issued by President Obama’s Department of Labor doubled the salary threshold at which workers are eligible for overtime if they work more than 40 hours in a week. The rule would also require an automatic increase of the salary threshold every three years.
Why Is This A Problem?
Although the Obama Administration argued that increasing the cap would allow more U.S. workers to be eligible for additional pay, it is more likely to have a perverse impact. When the rule was finalized last year, many employers began reclassifying their employees and adjusting salaries to avoid compliance and increased labor costs. If this rule were to go into effect, it would disproportionately affect less affluent areas of the country, including the Southwest, where the cost of living and average wages are lower, and would likely lead to reduced hours, lower wages, and decreased hiring for employees.
What I am Doing About It
In June, the Trump Administration signaled its intent to review the rule by reopening the public comment period. I will be submitting comments to the administration outlining my concerns. If you would like to submit comments of your own, you can do so before September 25, 2017 by clicking here. It is policies like these that I believe should be debated in Congress rather than implemented by unelected bureaucrats. I will continue to monitor this rule and look for opportunities to reinstate Congress’ authority over the matter.
What Are They Saying?
“The Obama era overtime rule caused bureaucratic headaches that had HR departments reaching for the aspirin. Any new overtime rule should be focused on worker flexibility, ease of implementation and economic growth. The nation’s overtime regulations deserve a thorough review, but employers should have a seat at the table.” - Arizona Chamber of Commerce and Industry President and CEO Glenn Hamer
“The previous administration’s overtime rule would have placed manufacturers in difficult situations where they may be faced with having to tell an employee they will have to be converted into an hourly wage-earner rather than on salary because the employer cannot afford to increase the employee’s salary to the new exemption level. While the employee may not be taking a pay decrease, based on the individual company’s policies, the employee may be losing certain benefits that are afforded to only those in a salaried position, which may include the status of a job title, being able to attend to a family or personal matter without having to “punch a clock,” or even being eligible for end-of-the-year bonuses, which may only be available to salaried workers. On the other hand, a manufacturer who decides to increase the salary of several of its employees, may be faced with financial hardships and unable to hire or promote new managers, or may be forced to cut training costs for current employees. Furthermore, manufacturers may be forced to hire more part-time employees rather than full-time in order to ensure production keeps moving. All of these possibilities resulting from the overtime regulation would make it more difficult for young men and women to find positions where they can get the training and experience that would help them move up to jobs with more responsibility and flexibility later in their career. These costs could be significant and would fall almost exclusively on those this rule is supposed to help. The rule will surely do that for some subset of this cohort, but it is also true that it will raise the cost of labor, increase regulatory burdens, decrease hours worked, and cause deadweight loss in the market. During the next decade, we estimate the overtime rule could have caused more than $24 billion in aggregate economic costs, including 25 million paperwork hours. The NAM is encouraged by the steps the Department of Labor is taking to further examine the rule and listen to all stakeholders.” - National Association of Manufacturers
“Providing stable, high paying jobs with great benefits is very important to us here at John’s Refrigeration. The current overtime rules hurt us because bonuses have to be included in overtime calculations. Raising prices to compensate for this would hurt our customers and our coworkers. It also effects the benefit plans we are able to offer.” - Andrew John, John’s Refrigeration