Dec 1 brings yet another onerous mandate put forth by President Obama that will hurt both employers and employees alike. The Department of Labor’s (DOL) new “overtime rule” drastically changes current regulation on the salaried threshold for overtime pay. This is going to put small businesses, schools, non-profits, and many other types of organizations in a very costly position.
Currently, employers are required to pay employees overtime compensation if the individual makes $23,660 or less annually. With the new rule in place starting in December, the salary threshold for eligible overtime pay will more than double to $47,476. This drastic increase, which is extremely far from typical practice by the DOL, would immediately qualify over 4 million individuals for overtime pay.
On the surface, this looks like a pro-employee policy; however, it is projected to hurt the exact groups it is touted to help: the middle class. And the consequences are going to be real and tangible. Universities are projecting tuition increases to make up the cost of the regulation. Workers are going to be moved from a salaried position to one where they “punch the clock.” Employers will struggle to keep valuable and loyal employees. Telework and remote work opportunities will diminish. Benefits that typically come with a salaried role will decrease. Services offered to consumers will decline. Ultimately, we will see job loss as a result of this overreach. This concept is not only anti-free market and against the principles of capitalism that make this country so successful, but it is a direct penalty on both employers and employees.
President Obama is promoting this new rule as a success, but this means that he is ignoring the obvious facts and the true consequences that will follow. His false advertising of this rule is to make Americans believe he is coming close to completing a campaign promise before the end of his presidency: raising the federal minimum wage. He knows that this can’t happen without Congress on his side, so he believes updating the overtime rule is his only option to claim that he “raised wages” for the middle class. This could not be further from the truth.
I have been vocal in Congress by cosponsoring legislation to completely nullify the rule and by voting for legislation that provides a six month implementation delay to provide relief to those that are struggling to comply in the short window given by the Administration. I do not believe we can wait until the Trump Administration arrives at the White House on Jan. 20 to completely nullify the rule. We must stay ahead of the curve so that Americans do not suffer come December.
I have been hearing from business leaders, employees, and university administrators all across my congressional district on how this will negatively affect them in December. I call upon the Senate to pass the six month delay that the House approved. Although a veto by the President is likely, it gives him one more opportunity to show the American people how anti-free market and anti-middle class he truly is.
As a former small business owner, I understand the tough calls that are going to be made next month if this rule is not stopped. And unfortunately, these tough calls are going to fall right on the middle class.
The views expressed by authors are their own and not the views of The Hill.