In the last quarter of 2016, President Barack Obama took an unprecedented amount of action as he attempted to sign and implement hundreds of new regulations before leaving office in January of the following year. While there was no shortage of red tape put into place, one of the new regulations that impacted the most people was his proposed rule on overtime pay.
As it stands today, hourly workers in many retail and fast food establishments must be paid overtime if they work more than 40 hours in a week. The overtime pay rate is time and a half. For salaried workers, the current law states that if they earn less than $23,660 per year, they are eligible for overtime pay if they work more than 40 hours in a week. The new regulation from the White House said that the cap would nearly double to $47,476.
This sort of regulatory burden is another example of how President Obama worked to “improve” the country through the power of his pen rather than the authority of Congress. This sort of regulation left many businesses, both small and large, trying to figure out how they would be able to comply. Most individuals that fall within this salary range, more than 4.4 million in total, are white-collar managers in retail establishments.
There are only two simple options for employers: face the financial responsibility and pay the employees for their overtime (which is unlikely due to already high labor costs), or cut the employee’s hours. While President Obama argues that this improves work-life balance (and it does), it doesn’t help the businesses affected.
It leaves stores and chain establishments with management in the building for a lesser amount of time, and forces the firms to hire more managers to fill those gaps of time. It also forces those employees affected to stay off the clock after they hit their 40 hours, even if there is work that must get done in their capacity.
While I agree that these workers deserve more compensation for the long hours that they put in, the Obama administration didn’t allow enough time for companies to figure out their options and implement the regulation in the most efficient manner. Luckily, a federal judge blocked the rule from taking effect in early December and, as it stands, the Trump administration is likely to dismantle it.
Going forward, these employees could benefit from President Trump’s plan to raise the minimum wage or from states implementing their own overtime pay measures.