New DOL Overtime Rule Creates Rift Between Employers and Employees

Last week, President Obama’s Department of Labor (DOL) finalized its new overtime rule making roughly 4.2 million salary exempt American employees eligible to receive overtime pay.

The finalized rule raises the threshold for overtime pay eligibility from $23,660 a year to $47,476 – a 100% increase that has many business owners worried.

The Obama administration claims that the new rule will translate into a pay raise for millions of employees; however, business owners can’t generate additional income out of thin air. The costs associated with this rule will force many business owners to reclassify employees from salary to hourly, hire more part-time employees and layoff salary employees, or reduce base wages.

State Director of the Alabama National Federation of Independent Business (NFIB), Rosemary Elebash, is encouraging employers to be open with their employees about the changes: “I think (these rules) could create a sense of, ‘I’m not going to be advancing in this business’ because of the new overtime rules, because the business owner changed them from a salary position to an hourly position. With the way the new law is implemented, it’s the only thing the employer can do. So, I think that open communication, using just the bare facts, (saying), ‘This is why I’m having to do this. This is not my choice to do this; this is the government telling me to do this.”

The new overtime rule will most certainly create strains between the employer and salary exempt employees, many of whom work in management and enjoy a steady income, managerial benefits, work flexibility, and opportunities to advance within the company. Congress should prevent the implementation of the rule by passing H.R. 4773 – Protecting Workplace Advancement and Opportunity Act or look for ways to defund the rule during the appropriations process.

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