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Obama Administration Harms Businesses Yet Again – In Overtime
Perhaps you haven’t heard, but under a proposed new Department of Labor rule starting in 2016, the overtime rules are changing. Right now, a business can classify any qualifying employee (a rule unto itself) making more than $23,360 per year as a salaried employee, instead of an hourly. This lets many businesses offer flexible hours, or allow working from home, or working “as needed” to get things done. Typical examples include people answering e-mails in off hours, pulling late nights to get important projects done, or any of a near-endless array of little things that just need that extra push. This also means that businesses need not keep track of numerous time clocks, time cards, and all of the added bureaucracy required. No more.
Beginning in 2016, the Department of Labor is more than doubling the hourly salary divide to $50,440. Anyone making less than that figure must be classified as an hourly position, must use a time clock, and must be paid for any applicable overtime hours. This will be disastrous to an already dodgy economy and hiring crisis. Let me quote from Inc. Magazine:
Time clocks. These people all have to record time. If some of your workers are remote, you’ll have to figure out a way for them to record time.
Rules around e-mail and phone calls. Because these employees have been correctly classified as exempt, you and they are probably used to sending e-mail in the evening on the weekend, or having a quick phone conversation after the kids are in bed. No more. These people either need to be strictly forbidden from responding to e-mail and phone calls outside work hours or you need a way to record the time they spend doing these things. Don’t think, “Oh, it’s no big deal to respond to a couple emails.” It is a big deal if you don’t pay them properly.
You’re no longer required to pay for short absences. If an exempt employee has a doctor’s appointment in the middle of the day, you can’t dock pay. But these employees are now non-exempt, which means taking an hour out of the middle of the day, a long lunch, or going home early all result in a cut in pay. Make sure your employees understand how this rule has changed.
Unhappy employees. Being made non-exempt after you’ve been exempt often feels like a demotion. It will especially feel like a demotion if someone who was previously included in after hours discussions is now excluded because the business can’t afford to pay that person for the extra time. While they may get excited at the idea of being eligible for overtime, it’s doubtful that many employees will see an actual increase in take-home pay. After all, it’s not like companies have gobs of money sitting around that they can use to increase paychecks. [emphasis mine] You’ll have to meet with each employee individually to explain how this is going to affect them.
Obama and his cronies are clearly doing this as yet another sop to unions and redistributionists, but I can tell you quite clearly what will really happen: People will suddenly find their hours cut, or their jobs axed. You see, every time you raise the cost of employment, employers find ways to use fewer employees. The people who are already close to the new threshold will probably have their salaries bumped to stay above the entirely arbitrary limit, but at the expense of people who maybe only make $30-40k per year. These people will find themselves denied chances to prove themselves by putting in extra effort. They will not be allowed to participate in the workforce, and the starting rungs of the ladder of economic success will be raised well out of reach.
Furthermore, this change opens all of these people to eligibility for union agitation. Right now, unions can’t touch salaried employees. They can’t even attempt to organize them, and that means vast swaths of the knowledge economy is forever locked out of reach of the thugs. This will change, and it will again be ruinous. The DOL will suddenly find itself called to “arbitrate” an enormous number of new “elections,” where it can put its thumb on the scale to certify bogus elections and card-check fraud schemes. You cannot underestimate the scale of the damage this will cause, but it fits so nicely in with Obama’s designs to socialize the entirety of society.
Expect to hear businesses demonized yet again. Expect more blowhard demagoguery about how rich “tycoons” are fleecing the poor. Expect fewer startups. Expect yet more power shifting to union donors. Just another day in our fascist swamp.
Published in General
Most of the time its used to get people to work unpaid overtime. Lets not pretend that businesses are on the side of angels here.
You said it Skip… The coalitions of trade unions and the Left is nothing new, but they are pushing the pedal to the metal during their last 18 months. Even though SCOTUS found Obama’s NLRB recess appointments unconstitutional, he still has seeded his union cronies into power who are wreaking havoc with their non-market-based policies.
Remind me again where the Department of Labor is authorized by the Constitution?
Remind me again where “federal regulations” are authorized by the Constitution?
It’s long past time to quit pretending you’re a Constitutional conservative if:
Yes, this means executive orders, wholesale letting go with two weeks’ notice of entire departments and bureaus, and a lot of upheaval in the short term. That’s what it’s like when you excise a cancer. All the wishful thinking, coulda-shoulda-woulda, “reach across the aisle” pabulum in the world can’t change it. The Left is the enemy—actively opposed to America—and must be treated as such. They wanted the nuclear option. Let’s ensure they get it, preferably short of actual violence—just using the same political tools they’ve fought so hard for.
Gödel, I agree entirely, and this makes me frothing mad. WTH does the DOL get the authority to even do this? Why aren’t any candidates ranting about this?
This is small potatoes
How a business contracts with its employees should be no one else’s business. The whole hourly / salary divide is yet another millstone dating from FDR and should be discarded. By what right does the government dictate HOW I pay my employees? They work for ME, not the feds.
Disagree. This opens the door to a massive new intrusion, and it will definitely be abused by the unions in yet another attempt to “organize” (read: intimidate).
True, but it also prevents businesses in employers markets from screwing their IT guy. Like I said, there is honest to god no **** abuse going on out there, and I have seen it with my own 2 eyes.
If you want to wring your hands, and have a freak out, Behold BEPS:
https://en.wikipedia.org/wiki/Base_Erosion_and_Profit_Shifting
You are mistaken about exempt employees being ineligible for union organizing. Supervisors, who are one category of employees that qualifies for an exemption, have no legal right to organize under federal law. Other categories of exempt employees, including professionals, can and do organize. By the way, supervisors who are paid an hourly rate will still have no right to organize.
Also, class action lawsuits about whether particular groups of employees qualify to be exempt (for reasons other than pay rate) have become so common that employers are really better off treating as many employees as possible as being hourly. If the base pay rate is set correctly, it really isn’t any more expensive to pay some overtime than it is to pay a salary high enough to attract exempt employees.
Oh, I don’t want to imply that I’m denying abuse. I know it’s out there, but this is the wrong way to address it. If anything, I suspect the IT guys will be even more put upon if this goes down.
I can glean a bit from this, but could you maybe explain it in its own post?
Thanks for the correction. But if the DOL can change the salary rules, could it also make a claim to changing the exemption rules too?
My experience has been that managers become more thoughtful about their requests and changes, especially if they have an after hours change policy. When things have no marginal cost, there is no limit to what happens. Making IT hourly creates a marginal cost that has to be weighed against benefits. So less stupid happens. But YMMV.
I will put it in my master in pile.
…in a locked filing cabinet, in the basement, in a disused lavatory, behind a sign that says “Beware of the Leopard”…
This has caused me so many headaches. I’m adjunct faculty, which would make me exempt from using a time clock. However, I’m also full-time staff at the same college, so that makes me non-exempt for all of my jobs. The payroll people had to create a separate system for me to record my hours spent on teaching. The class I teach is online, so I work in small bits at all hours of the day. Those hours count as overtime, since they are over forty. That would have meant me losing my teaching job, since they aren’t going to pay me 50% more than the other adjunct faculty. Fortunately, I was able to elect to take comp time, so I just take long lunch breaks in my office. If Democrats had their way, I wouldn’t be allowed to take comp time, and I’d lose my teaching job. Recording the comp time on my time clock is a pain. I have to look at when I’m clocked in, and make sure the comp time hours don’t overlap. It’s partly the limits of the technology, but if the government would just allow more flexibility, payroll wouldn’t have to jump through so many hoops to set up a system to pay me that follows the law.
The best form of protection for an employee is a tight job market. If it is harder for an employer to replace an employee than it is for the employee to find a new job, wages and working conditions tend to improve tremendously.
That cannot be said enough. This is just another empty Democrat pose. They want a long list of laws to demand, by fiat, that YOU WILL HAVE A GOOD JOB! YOU WILL HAVE OVERTIME PAY! YOU WILL HAVE MATERNITY PAY! Of course, they aren’t actually providing any of those things. All they’re saying is that if you don’t have a job that meets their demands, they won’t let you have a job at all. Just letting the market grow and provide good jobs naturally means that you don’t need them, and they can’t have that.
This will just result in more independent contracting, and more individuals needing to get their own, unaffordable healthcare. Whatever, I’m already a non-employee. Enjoy your fun, suckers.
I was one of these IT guys that was made non-exempt by an overreaction to lawsuits here in California. A number of programmers sued to get OT and as a result, many companies turned programmers into hourly workers. I was one and yes, I felt aI had been demoted.
The usual argument is that the interference is to protect the other side of the contract, the employee. Implicit in this is that the employee is too damned dumb to know a poor deal from shinola or have a legitimate reason for taking what looks like a poor deal (e.g., trading reduced pay for an opportunity to prove oneself) to the unobservant 3rd-party rule-maker or walk away when he figures out he made a mistake. Personally I’d be happier just to know what’s expected of me and be given an all-cash offer and have the DoL stop doing me favors. Simplifies the decision. You see how dumb some people are? We need our protections.
Throw in the cost of Obamacare, more regulations in every sector and you will see job loss and part-time only as the new norm. How can the government track who works after hours anyway, phone calls, emails? Everyone catches up in evenings and weekends.
It has become harder to do any job because of all the new regulations – medical, education, every aspect of life seems to have become more controlled. I wonder what the ratio is of this president’s new regulations as opposed to past presidents?
I don’t think it makes people more productive or the people they serve, better off. If employers have to spend more time with bureaucratic headaches, they have less time to improve their product or service, and hire more people. Just the expense of all these new regulations, and the overblown government divisions to monitor, is taking tons of taxpayer money while the debt continues to skyrocket. Like tracking your health insurance through your tax return, and paying penalties. Next, they will raise the retirement age to where everyone has to work til 70 or older to claim. Speaking of unions, I have a relative who works in state gov. and part of her pay goes to union dues, although she is not union. They argued that non-union workers benefit from the “gains” that unions make, so they voted that into state law.
What happened to the land of the free and the home of the brave?
I teach part time at a private high school and this will effect me. At my school, teachers plan lessons over the summer, correct papers, write tests, & more lesson planning at home during the school year. We also answer student and parent emails in the evening. So, how do I get paid for working outside of work time? Do I only work when I’m on campus and clocked in?
The gal in payroll & I have been talking about this. Happily she is also a conservative and we exchange knowing glances as our administrators complain about these new rules. They vote Democrat.
So, do I tell my students that I cannot correct their tests over the weekend because the new labor laws deny me that flexibility? They’ll have to wait longer for their grades.
How will conscientious full time teachers get all of their work done in a timely fashion?
I suppose they hope a lot of people are thinking that if they work an average of 46 hours a week on salary, their employer will divide their weekly salary by 46 to come up with the hourly wage, then they’ll get time-and-a-half for the 6 hours. Most employers are probably going to calculate what the hourly number has to be, so that with overtime they’ll still be paying about the same per week as they do now.
They just don’t get it. It’s about value; nothing else.
There are a number of exempt professions to this rule, but I feel this will create an employment watershed, where perfectly happy 35-50k/yr salaried employees will be either getting the part-time treatment, or getting the raise to 51k/year.
But for those that do, I don’t imagine there will be many increases in pay beyond that.
It’s like they want everyone to be working 2 part time jobs instead of one full time job.
I can envision an emergent solution to tracking when one is or is not working: before long, we will all be required to wear an always-turned-on body cam and be assigned a “compliance officer” (actually several, accounting for local, state and federal regulation of work hours and everything else we do), who will review and tabulate all of our activities. Undoubtedly, this will permit additional taxation of our activities and, in all likelihood, a tax on use of certain words – before they are forbidden outright. The NSA will provide cloud(y) backup (of course) of all recordings from our body cams, lest we claim “the dog ate mine.”
Lest you think I muse to excess, know that I am now required by the Board of Medicine of the Commonwealth of PA to obtain “clearance” as to never having been accused of child abuse. I must provide a list of all residence addresses and everyone who has ever lived with me in a household for the past 40 years!!! Every health care “provider” must do so. I haven’t decided whether I will do this or just quit.
I can’t help but believe we have reached an inflection point where productive work has become so burdened, while at the same time government-sponsored parasitism so promoted, that things will simply break down. “The centre cannot hold…”- (Yeats).
I sympathize with you civil westman – I hail from Pgh and hope that you will not be discouraged as a medical professional – your services are needed, as well as the teacher that commented. These are the professions that matter most. I am a writer, and my writers’ group has several teachers in it – they can’t teach – most of their time is devoted to testing – there is no spontaneity in teaching now since Common Core they say – we had such a great education system in PA when I was growing up. There is such a thing as push back – it may have to come to that – each profession coming together and saying enough with the constant regulations. Government sponsored parasitism is true – it seems it has become an entitlement society – with massive debt, yet more regulation – heading down the path of Greece – their story isn’t turning out so well……
Nope. Not that one, anyway. The National Labor Relations Act expressly defines the term “employee” to exclude supervisors. Regulators cannot override the express language of the statute that authorizes their regulatory power. The Courts would overrule them. The NLRA only protects the rights of “employees,” and supervisors do not fall within the definition of “employee.”
However, some employers do voluntarily recognize unions that include supervisors. Those employers are not legally compelled to do this, but they do it anyway. The most obvious example is the motion picture industry, which voluntarily recognizes the Directors Guild of America as the representative of directors, even though directors are clearly “supervisors” under the NLRA.
I took a job four months ago as a contractor. The pay bump was enormous, roughly a 60% increase. I pay half my health care premium instead of the usual 20%.
I can be let go at any time, but that’s true anywhere, for any job. The company has a lot of flexibility in its costs and can shift priorities easily. It’s why they’re willing to pay so much, and the difference between what a contractor makes and a permanent employee makes, in total labor costs, is nothing, since the company doesn’t pay any retirement benefits, etc.
Put simply, DoL exists as a political tool of the Left. That’s basically its function, aside from some relatively useful labor regulation enforcement. Its intrusion into the labor market is generally destructive, it increases cost and complexity, and in the long run probably costs jobs due to compliance costs and periodic re-classifications of employees.
I wonder what John Adams would think of all of this.
Thanks for this.