Proposed Overtime Wage Changes
Posted: August 1, 2014
President Obama just won't leave small businesses alone. Earlier this year, the President ruffled a number of business owners' feathers when he proposed to raise the salary floor at which overtime pay kicks in. Under current law, salaried employees who earn at least $455 per week, or about $12 an hour, are exempt from overtime. Now, the President wants the U.S. Department of Labor to consider raising that to as much as $50,000 a year.
Not surprisingly, small business owners are not happy. The basic argument is that the new rule would hurt the workers who wish to climb the ranks and become managers or supervisors.
To be exempt from overtime pay, the Fair Labor Standards Act requires employees to be a "bona fide executive" whose primary duty is to "manage" the business. According to a Labor Department fact sheet, managing the business must be the "principle, main, major or most important duty that the employee performs. He/she must also supervise two or more employees and have the authority to hire and fire personnel."
The new law would essentially force small business owners to pay overtime wages to their managers and/or supervisors. Fortunately, the President has said on numerous occasions that he would consult with small business owners and their workers before the Labor Department rules on the proposal. In fact, the business community will be able to weigh in on the proposal during a 90-day comment period once the Labor Department issues a ruling on the idea.
There is no doubt confusion about what constitutes overtime pay. Some business owners have told me that it would be difficult pay managers and supervisors extra money because, many times, their job description calls for them to work late.
Meanwhile, the National Federation of Independent Business, a business lobby group, says it intends to fight an extension to overtime eligibility. The organization has sent out newsletters to its 350,000 members informing them of the possible change and is holding meetings on the state level to gather input.
Since the President has apparently gained some traction with his proposal to raise the federal minimum wage to $10.10 an hour, and some states have already increased their minimum wage, he apparently thinks this idea will be well-received. On the contrary, however, small business owners should unite and fight this proposal from becoming law.