May 18, 2016, President Obama and Labor Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations. These changes go into effect in December.
The plan is to reduce overwork, which was not a problem most salaried workers faced, according to the Labor Department’s own data. The data show 60 percent of salaried workers do not work more than 40 hours a week, and only 20 percent regularly work overtime. So this rule was not needed for 80% of the population. This will impact up to 4.2 million employees and the overtime limits jump from $23,600 to $47,476.
But the impact to employees will be different. No longer will employers allow a driven employee to work long hours to get ahead. The employee with great aspirations and goals will find the overtime rule a roadblock to such career pursuits.
That is not to mention, the employee morale are likely to take a hit as salaried employees who have not punched a clock in years are forced to do so.
Employers will also be looking to reduce salaries to offset the cost of overtime or demote workers to hourly status and reduce workers’ hours. People who remain salaried employees and qualify for overtime may see benefits disappear.
To further control costs, employers will likely cut back on health care benefits, paid leave, and restrict flexibility work schedules since more employees’ hours will need to be tracked and recorded.
How will this impact your business and employees? Call to discuss.