Nearly five million salaried workers in the U.S. will be receiving time-and-half pay for every hour they work past 40 during the workweek if new overtime rules proposed by the Department of Labor go through unaltered. The goal, according to the government, is to protect workers. The unintended consequences, say retail groups, is that workers and consumers are likely to be hurt.
Today, salaried workers that make below $23,660 annually are required to be paid overtime wages for every hour over 40. The Department of Labor proposal would raise the threshold number to $50,440. The new number was arrived at in a 2014 report by the Economy Policy Institute, which indexed it, accounting for inflation, to the government's base in 1975.
The proposed change does not require Congressional approval and will go into effect next year after the Labor Department holds a comment period. Retail industry groups were quick to offer their comments after the Labor Department's announcement.
"Retailers will have two options if this rule is implemented: raise prices in order to absorb a dramatic increase in labor costs, or take away the benefits, such as flexibility and leadership opportunities, that come when an associate works their way into management," said Kelly Kolb, vice president of government relations at the Retail Industry Leaders Association (RILA), in an e-mail to reporters. "Neither of these are outcomes that will raise standards of living for our employees or our customers."
Photo: Walmart
Peter J. Larkin, president and CEO of the National Grocers Association (NGA), said members of his group are "proud to be an employer of choice in their communities, offering stable, reliable jobs and opportunities for career advancement. Unfortunately, the proposed rule that was announced today creates new barriers, potentially forcing employers to reclassify thousands of salaried workers back to hourly non-management positions, likely also impacting employee benefits and flexibility."
The National Retail Federation (NRF) published an analysis conducted by Oxford Economics that looked at raising the threshold for overtime pay to $610, $808 and $965 per week. The conclusion was some workers would do better as a result of the change while others would suffer.
Businesses, according to NRF, would definitely be hurt as costs would increase by "$874 million if the threshold were raised to $984 per week, $648 million under the $808 scenario, and about $297 million under the $610 scenario."
- Notice of Proposed Rulemaking - U.S. Department of Labor
- Rewarding Hard Work - U.S. Department of Labor
- Overtime - Economic Policy Institute
- New rule could affect up to 5 million workers - USA Today
- If you make less than $50,440, proposal could increase overtime pay - Chicago Tribune
- Overtime - National Retail Federation
- Rethinking Overtime - National Retail Federation
- Retailers React to DOL Overtime Proposal - Retail Industry Leaders Association
- NGA Expresses Disappointment on DOL Overtime Rule - National Grocers Association