Will the Proposed Overtime Rule Change Hurt My Business?

July 7th, 2015

The Obama Administration recently proposed a new rule that would allow salaried workers making less than $50,440 per year eligible for overtime pay.  Under the current law, salaried workers may receive overtime pay only if they are making less than $23,660 per year.  If it goes into effect, it will affect over 5 million workers nationwide.  The rule was last changed in 2004.

The proposed rule would also have an impact on businesses, if enacted.  In some cases, this may mean business owners opting to hire more part time employees in lieu of full time employees to whom they would need to pay overtime.  Increasing the threshold for overtime eligibility would raise salaried workers’ pay by 1.3 billion across the board.  Business groups and the U.S. Chamber of Commerce are concerned about the effects the rule could have on the welfare of small businesses.

The U.S. Chamber of Commerce also argues that the effects of the rule would be contrary to its intent, and instead limit worker’s potential for advancement, cause employers to reduce base salaries, and cause workers to lose benefits and flexibility by turning salaried positions into hourly ones.  Those in favor of the proposed rule suggest that it will create fairness for those who put in over forty hours a week who do not see extra pay for the extra work.

The proposed change will not take effect immediately, but first will go through a public comment period for two months, until September 4, 2015.  The Department of Labor will take the comments into consideration in determining whether to adopt the change to the rule.

To review the proposed changes to the rule, click here.

If you own a business and are concerned about the possible need to implement changes due to the proposed overtime rule, contact an experienced business law attorney who can guide you and help you make prudent decisions.  Call Bellavia Blatt, PC at (516) 873-3000 or (631) 224-7000.

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