Are the new overtime rules a ‘career killer’ for retail workers?
Under new regulations set last week by the U.S. Department of Labor, employees earning up to $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours in a week. That’s more than double the previous cutoff for overtime pay, set in 2004, of $23,660.
The move is expected to make overtime pay available to 4.2 million additional workers.
Companies are expected to make a number of adjustments.
At the higher wage level, employers may raise workers’ base pay to the new threshold to avoid paying overtime. C-stores and dollar stores, where store managers in rural areas earn close to the new threshold, are seen as particularly impacted, according to Goldman Sachs.
Salaries could also be lowered below the threshold. Workers may be limited to 40 hours per week and salaried employees may be shifted to hourly pay. Critics say workers may lose benefits and be demoralized by not being able to work unlimited hours and needing fill out time sheets.
“These rules are a career killer,” said David French, NRF’s SVP for government relations, in a statement. “The one-size-fits-all approach means businesses trying to make ends meet in small towns across America are now expected to pay the same salaries as those in New York City.”
Republican lawmakers have vowed to challenge the rule during a mandated congressional review.
Proponents say the higher salary threshold, originally designed to exempt high-paid executives, is long overdue. Only seven percent of full-time workers qualify for overtime today versus 62 percent in 1975. The new rule, which would take effect Dec. 1, allows 35 percent to qualify.
The Economic Policy Institute said the new salary threshold will provide millions of workers with higher wages or more time with their families. Hourly and part-timers would also pick up work that might have otherwise been done during overtime by full-time, salaried workers.
“It’s really restoring rights that people had for decades and lost,” Ross Eisenbrey of the Economic Policy Institute, told The New York Times.
- White House Increases Overtime Eligibility by Millions – The New York Times (tiered sub.)
- These retailers will be hit hardest by overtime rule: Analysts – Reuters
- Millions more Americans to be eligible for overtime pay – USA Today
- NRF Calls New Overtime Rules A ‘Career Killer’ – National Retail Federation
Photo: Dollar General
DISCUSSION QUESTIONS: Do you expect the new overtime rules for salaried workers to spark a major overhaul of pay structures at retail? How should stores respond if the changes are enacted?