Employer-employee freedom is under constant attack by the Federal Government. Sweeping policy demands such as mandatory paid sick leave, the “fight for $15” minimum wage hike, and byzantine new health care requirements are a few examples of the threats facing hardworking job creators.
The latest effort being pushed by the Obama administration is the Department of Labor’s new Overtime rule, which increases the ceiling for eligible non-exempt overtime from $23,660 year to $47,476 a year. This is set to become effective December 1, 2016, affecting thousands of small businesses in Arizona.
The individuals who fall under this rule are likely lower to mid-management employees, poised in the pipeline to eventually fill roles of greater responsibility and professional opportunity. Most employees within this range are not “punch-card” workers, and have responsibilities that extend beyond the traditional 40-hour work week.
It is painfully obvious that the Department of Labor did not take into consideration the rapidly changing work environment which allows for greater-than-ever flexibility in the workplace. This mandate instead forces all employment relationships into a one-size-fits-all box that will inevitably harm both the employer and employee.
Additionally, all of these employment decisions will require tremendous costs to implement and manage. Some are considering “demoting” employees to punching a time card to ensure they do not work more than 40 hours. Others are hiring part time employees or contracting out additional work. Another option is to pay overtime but reduce base pay, bonuses, or other incentives. Make no mistake, employees will lose under every scenario.
After the rule was announced, the Obama administration crowed that the new overtime standards will inject $1.2 billion in additional wages into Americans’ paychecks. Not mentioned in the press release was that recent estimates show that compliance costs will be $18.9 billion the first year and $3.4 billion in subsequent years. Judging by these numbers it is clear Obama and the Washington establishment has little experience or understanding on how to run a business.