Experts Say White House Overtime Plan Spells Disaster

By Published on May 20, 2015

According to a new report from the National Retail Federation, a plan by President Barack Obama to revise federal overtime regulations could cause significant harm.

“Overtime is a pretty simple idea: If you have to work more, you should get paid more,” the president said during a speech in March. “Unfortunately, today, millions of Americans aren’t getting the extra pay they deserve.”

Obama pointed to the overtime threshold as a major problem when it comes to keeping many workers from receiving overtime pay. Currently at $23,660 a year, the president urged the Department of Labor to raise the threshold so those that make above it on a yearly basis can receive overtime pay. However the report, “Rethinking Overtime” warns the changes could cost millions, hurt the workers it’s meant to help and unfairly impact retailers operating in rural states compared to other industries in less rural areas.

“Although these new regulations would likely impose little net transfer of resources (wages/salary, bonuses and benefits) from companies to workers once companies adjust their labor structures to comply with revised standards, the imposition of these rules will impose transition and structural costs,” the report stated.

Though the exact details of the proposed changes by the DOL are not yet known, the report examines the likely changes based on what the president wants to see.

“The greatest cost is likely to result from the disruption all businesses face as they rearrange their employment pools and work schedules to control costs,” the report continued. “It is likely that hundreds of thousands of workers currently paid a salary will become hourly workers, have their bonus compensation reduced, or some combination of the two.”

“This will place an enormous strain on HR managers and small business owners expected to communicate these changes to affected employees,” it also noted. “In addition, some amount of new part-time positions would be created and filled and time-management computer systems modified, to track time for all of these newly converted (to hourly) employees”

However, other experts have argued the proposed rule changes will actually help workers as opposed to causing unintended harm. According to the Economic Policy Institute, raising the overtime threshold will make worker satisfaction higher while doing little to harm them.


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