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New Overtime Pay Regulations and Your Business

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By Ephrat Livni, Esq. on May 19, 2016 12:55 PM

The Labor Department this week announced the expansion of overtime pay for salaried workers. This is expected to affect millions in the middle class. The Obama Administration hopes the measure will improve pay for people working over 40 hours a week on salaries of up to $47,000.

"The middle class is getting clobbered," Vice President Joe Biden said, explaining the rationale for the regulation. But already opposition is gathering on the right. Meanwhile, reports The New York Times, some business leaders predict negative consequences for workers. Let's look at what this might mean to your business.

Overtime Expansion

Under the new regulation, most salaried workers earning up to $47,476 a year must receive time-and-a-half overtime pay for more than 40 hours of labor during a week. This is up substantially since the previous cutoff salary of $23,660, set in 2004.

The move is meant to alleviate the problem of underpaid middle-class workers who find themselves in a strange situation. For some, as the week progresses it becomes decreasingly profitable -- hours increase beyond forty and pay stagnates. The new measure is meant to counter this. Paul Porter, a trucker who does get overtime pay, explained to reporters. "I have friends who are managers who get taken advantage of terribly," he said.

The regulation goes into effect on December first. There are some exceptions. Teachers, doctors and outside sales representatives are reportedly exempt.

If you have employees, you need to follow the news on this matter, as it is likely to impact your operations. Although there is some debate about the figure, it is expected that about nine million workers will be impacted.

Opposition and Downsides

Opponents to overtime expansion are many and much more will be said about this matter before any worker makes an added dollar. Republican opponents have promised to block the measure. Labor activists on the left welcomed it but mixed consequences are already being predicted.

Some businesses may choose not to allow overtime, cutting work hours so as not to raise pay. That respects worker time but won't accomplish the goal of raising pay for millions of Americans. Some business leaders say they will have to scale back hiring, which means slower growth generally.

The overtime expansion raises interesting questions that every business faces. Do you try to hire more people for less or give your employees the best in the hope they will do the same for the business? Your decision will depend on many factors, and this measure may soon be part of what you must consider.

Talk to a Lawyer

If you have concerns about labor or legal issues, or any aspect of business operations, speak to a lawyer. Get guidance and advice so that you do the right thing for your business and your workers.

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