Local employers react to DOL’s overtime rule

Local business owners said the Department of Labor’s new overtime rules may have a large impact on their businesses. (Contributed)

Local business owners said the Department of Labor’s new overtime rules may have a large impact on their businesses. (Contributed)

By MOLLY DAVIDSON / Special to the Reporter

On Dec. 1, around 4.2 million more workers nationwide, and 60,000 workers in Alabama, will qualify to receive overtime pay on top of their salaries. The United States Department of Labor recently published updates to the overtime rule, raising the overtime eligibility salary threshold from $23,660 per year to $47,476 per year.

Similar to hourly-wage workers, certain salaried workers qualify for compensation for hours worked on top of the traditional 40-hour workweek.  The overtime rule updates are designed to protect and expand the right to overtime payment.

According to Department of Labor Secretary Tom Perez, the overtime eligibility salary threshold has “failed to keep up with the rising cost of living” in America.

Roughly 62 percent of fulltime workers nationwide qualified for overtime payment in 1975. Today, that number is around seven percent. With the instatement of the overtime rule updates, 35 percent of workers will qualify for overtime compensation.

Additionally, the eligibility threshold is scheduled to increase every three years, and is estimated to include those earning $50,000 per year by 2020.

“If you work full-time in America, you should be able to get by; when you work extra, you should be able to get ahead,” Perez wrote in a news release on the Department of Labor website.

While the overtime rule revisions are meant to benefit laborers, they also may have unintended consequences, Hoover Area Chamber of Commerce Board of Directors member and local business owner Terry Shea said.

“I think the premise of the rule, the heart of the rule is a good one…it’s really to protect the worker,” Shea said. “I think how the rule came out, it’s not going to help the worker.”

Shea said much of her management staff will likely be effected by the changes to the overtime rule. In the past, Shea said she would bring some of her management staff with her to market to introduce them to the buying side of the retail business. Now, similar learning experiences will not be possible, Shea said, as all time away from the store will be counted as on-the-clock.

Additionally, Shea said businesses may have to move some salaried workers to an hourly rate, and young college graduates may have to start out as hourly workers rather than salaried employees.

“(As an hourly worker) you’re not guaranteed 40 hours a week anymore, you’re not guaranteed those hours,” Shea said. “I feel like this is making the businesses out to be the big bad guy…and that’s not how it is at all.”

Nonprofit organizations will also be effected by the overtime rule updates. According to Alabama Association of Nonprofits CEO Shannon Ammons, the rule will hinder the flexible schedule and hours of many nonprofit organizations and their employees.
“Because many of the essential services we provide are delivered after typical business hours and weekends, nonprofits will absolutely be impacted,” Ammons wrote in an email interview. “We work when our clients and individuals need us.”

Although the overtime rule may pose challenges for nonprofits, Ammons echoed Shea’s sentiment about the underlying premise of the revisions.

“On the positive side of this issue, I believe individuals should be paid a fair wage for the work they perform,” Ammons said. “However a blanket ruling and huge increases that seem punitive may not be the answer.”

United States Rep. Gary Palmer, R-Alabama, expressed concern about the effect the overtime rule will have on the Alabama economy.

“The Department of Labor’s proposed overtime rule is a recipe for higher unemployment,” Palmer wrote in an email. “Congress should be focusing on pro-growth tax reforms, eliminating burdensome regulations and harnessing America’s abundant energy resources in the interest of increasing wages and putting Americans back to work. Washington bureaucrats should not be allowed to tell Alabama employers how they should determine the salaries of their employees.”

Some occupations are exempt from the overtime rule, including teachers, doctors and lawyers.

For more information about the Department of Labor’s overtime rule, visit Dol.gov/featured/overtime.