Taking care of business, everyday, taking care of business, every way
Taking care of business, it’s all mine, taking care of business,
I’m working overtime
—Takin’ Care Of Business, Bachman-Turner Overdrive, 1973
Ask almost any American business owner what is the most significant challenge—and cost—in running his or her business and you’re almost certain to hear one word in response: labor.
Little wonder, then, that business owners from sea to shining sea are awaiting nervously the arrival of new federal guidelines pertaining to overtime pay for employees.
Commencing on December 1st, there will be new federal rules regarding employees eligible for overtime; under the new guidelines, the annual federal salary threshold for employees considered to be exempt from overtime pay will double—jumping from the current annual salary of $23, 660 to $47,476. That change will mean that employees whose salary is below the federal threshold must be paid time-and-a-half for any work hours that exceed the 40-hour workweek.
As you would expect, employers—particularly smaller employers—nationwide are scrambling to calculate what this change in federal law will mean for both their staffing plans, as well as their related budgets. In addition, lawmakers in both the House of Representatives and the U.S. Senate had previously introduced legislation that would delay the implementation of the new overtime rules until next June; not surprisingly, the overheated political environment of the forthcoming November election has meant that the efforts—at least to date—have resulted in gridlock.
Some legislators promoting the idea of a delay—as well as some business owners who also support a delay of implementing the new regulations—still hold out hope they may be able to reach a compromise bill in the “lame duck” session of Congress to be held after the election, but prior to the end of the year.
Still, even if both Houses reach a compromise bill, it would have to avoid a Presidential veto; to date, the White House has indicated it would veto any such measure.
Meanwhile, the new federal overtime law looms in the near future for American businesses. More than 4.2 million additional white-collar workers in the U.S. will become eligible for overtime under the new criteria, according to the U.S. Labor Department. In addition, going forward, the government states that the annual salary threshold will be updated every three years, rising to more than $51,000 in January 2020.
Opponents of the new federal rules point out that, while the legislation may indeed be well intentioned, it comes at a very high cost. The Labor Department estimates that implementation of the new overtime rules will cost private employers $1.8 billion in the first year alone.
In fact, some opponents argue that the cost will be even larger; employers expected to feel the ‘pinch’ of the new overtime law the most include retail shops, restaurants, call centers, nonprofits and small businesses.
Still, despite some strong opposition among the business community, the idea of expanding overtime pay remains popular among the general population; according to a Gallup survey of more than 2,000 U.S. residents conducted earlier this year, 67 percent of Americans favor expanding the number of workers eligible for overtime pay.
The bottom line for American employers—at least as of now—is that barring any last minute delay by Congress, on December 1st there will be a new set of federal rules governing overtime pay–and business owners would be well-advised to adjust their business plans accordingly.