Working overtime to eliminate jobs

Glenn Hamer

May 20, 2016

This White House is hell-bent on short-circuiting any economic recovery.

The Obama administration recently released a new rule on overtime pay that continues the administration’s commitment to making job creation more expensive and cumbersome. Give the president credit; he’s nothing if not consistent.

The new rule dramatically raises the salary threshold for workers who will be eligible for overtime pay if they work more than 40 hours in a week. The salary cap under the new rule has gone up more than 100 percent, from $23,600 annually to $47,476 annually, so employers will now face a huge increase in the number of workers eligible for overtime pay.

Grab the aspirin, because this is another bureaucratic headache for the HR department. Employers should break out the calculators, print out some timesheets and install a time clock, because they will be tracking the hours of employees that previously were exempt from overtime rules.

What’s not made clear in the rule is how employers are supposed to foot the bill for the new mandate. Much like the administration’s push for a big minimum wage hike, there’s plenty of magical thinking here. The Department of Labor would have Americans believe that companies are secretly flush with cash and just need the heavy hand of government to pry it loose.

So how what options do employers have? They’re not good ones for job creators or their employees.

Employers could cut their workers’ base pay to compensate for the new overtime pay. That’s hardly the raise for the middle class that the administration touted. But don’t worry, says the White House, at least you’ll have more time to spend with your family. Thanks, Mr. President!

Or maybe you’re close to the new salary threshold. You might see a raise so your employer can avoid the new rule, but you could also see your benefits cut since only 10 percent of benefits can be calculated as part of your salary.

Or maybe your employer will reclassify you as an hourly worker. So much for that flexibility you once enjoyed.

Employers will also need to prepare to see the wage threshold readjusted upwards every three years based on the 40th percentile of wages in the lowest geographic wage region of the country, which is currently the South. It doesn’t matter if we’re in the midst of a boom or bust economy, employers’ payroll costs will likely go up.

Given the uncertainty in the presidential campaign, we can’t bank on the next occupant of the White House eliminating this new regulation. Congress could employ the Congressional Review Act or pass the Workplace Advancement and Opportunity Act, which would roll back the new rule, but each effort would be met with a presidential veto. Still, it’s worth Capitol Hill shining a bright light on the other end of Pennsylvania Avenue’s constant anti-job agenda.

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.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry