Business executives concerned about overtime rule, survey finds

Business executives are bracing for the ramifications of the Department of Labor's (DOL) new overtime rule.

In Littler Mendelson’s fifth annual Executive Employer Survey, 82 percent of executives surveyed said they expect agency enforcement to have an impact on their workplace over the next 12 months. Thirty-one percent said they expect a significant impact – a concern the law firm said that's largely driven by the overtime rule.

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Although respondents completed the survey in the weeks prior to the release of the final rule, 65 percent had already conducted audits to identify affected employees.

The rule, finalized in May, makes anyone earning up to $47,476 a year, or roughly $913 a week, eligible for overtime pay. The cutoff for overtime pay was previously $23,660 per year.

“Employers are clearly feeling the impact of the DOL’s increasingly aggressive regulatory agenda, most notably the new overtime regulations,” Littler attorneys Tammy McCutchen and Lee Schreter said in a joint statement. “While it is encouraging that the majority of respondents started to prepare before the rule was finalized, more than a quarter, 28 percent, said they had taken no action given delays in the rulemaking process.”

The law firm that specializes in employment and labor law also found business executives are concerned about the National Labor Relations Board’s recent expansion of the definition of a “joint employer.”

Of the 844 executives surveyed, 70 percent said they expect a rise in claims over the next year based on the actions of subcontractors, staffing agencies and franchisees. About half, 53 percent, said they expect to see higher costs, and 49 percent said they expect the ruling to make businesses more cautious about entering into arrangements that might constitute joint employment.

Survey numbers increased dramatically when executives were asked how they expect social issues to impact the workplace. Seventy-four percent said they expect more discrimination claims over the next year related to the rights of lesbian, gay, bisexual and transgender workers, up from 31 percent in 2015, and 61 percent said they expect more claims based on equal pay, up from 34 percent in 2015.