New Overtime Rule Add Costs to Small Businesses and Hurts Workers

Date: February 09, 2016

What is the DOL Seeking to Do?

  • DOL wants to make any salaried worker who earns less that $50,440 eligible for overtime. Currently, the overtime threshold is $23,660. DOL’s new rule is an inexplicable 110% increase!
  • The new rule would also permanently link the overtime threshold to the 40th percentile of earnings for full-time salaried workers. This means the overtime threshold would increase every year going forward
  • DOL has said the rule will be released and go into effect later this year.

How could this affect my business?

  • NFIB estimates that about 40% of small businesses will have employees newly eligible for time-and-a-half overtime pay. If a business cannot afford to pay managers over $50,000 per year, the business will have to change these employees from salaried exempt to hourly nonexempt employees and prohibit overtime work.
  • In order for small businesses to avoid the costly overtime pay, managers moved from their salaried positions to hourly jobs will need to keep time cards and be prohibited from working overtime. This will be a burden for businesses who depend on managers and supervisors to work when needed in exchange for flexibility and other benefits.
  • Worker morale would likely decline. NFIB anticipates the proposed changes, if finalized, would especially hit low-to-mid level managers. These managers may currently make less than the $50,440 proposed threshold, but enjoy perks such as flexibility of hours and benefits like health insurance.
  • Fewer salaried, managerial positions would signal to employees that there is little opportunity for growth at the company.

What is NFIB doing to fight the proposal?

For more information, please visit the following links:

Overtime Rule in the News:

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