Editorial: New overtime rule will hurt employees

Back off, Mr. President.

We understand that you took a beating with the labor movement over fast-track authority for the Trans-Pacific Partnership free-trade agreement – nice win on that one, by the way – but that’s no reason to issue new regulations that will make almost 5 million more workers eligible for overtime pay.

The Notice of Proposed Rulemaking was published July 6, with written comments due by Sept. 4. Currently, overtime pay for hours worked in excess of 40 hours in a week is not required for white-collar workers who earn as little as $23,660. The new rule would extend mandatory overtime pay to workers earning as much as $50,440.

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Granted, the threshold has been updated only once since the 1970s and is too low, but to more than double it to the proposed level will be a punch in the gut to small and large businesses alike.

The Fair Labor Standards Act was passed in 1938 and excludes certain white-collar workers from overtime-pay requirements. White-collar employees must be paid a predetermined and fixed salary that is not subject to reduction for quality or quantity of work performed; the salary amount must meet a minimum specified amount; and the employee’s duties must be executive, administrative or professional in nature.

The proposed rule deals with the minimum salary requirement.

Although intended to put more money in the pockets of American workers, the new rule will burden those very workers, who would have to track their hours as if they were hourly workers. (Even workers who do not work more than 40 hours a week will have to track their hours to prove that’s the case.) Additionally, what’s to stop employers from reducing the salaries of workers to a level that can absorb the overtime pay, or taking those workers back to hourly status?

This new rule would be bad for workers seeking upward mobility, providing a disincentive for employers to promote employees to management positions that can include other benefits, such as health-care coverage, vacation, etc. It will also cause employers to drastically limit hours, meaning that the net benefit for workers would be minimal.

The rule is a bad idea and should be dropped.