The following originally appeared in the CT Post on June 5, 2016 and features comments from OperationsInc CEO David Lewis. The view the original article, please click here.
Business Question Impact of New Federal Overtime Laws
by Keila Torres Ocasio
Starting in December, millions of salaried workers across the nation will find they have to begin keeping track of their hours.
Last month, the U.S. Department of Labor announced that the overtime threshold for salaried workers would be increased from $23,660 to $47,476 a year. That means any salaried employees earning up to the new threshold who work more than 40 hours a week must be paid time-and-a-half for those extra hours. The change goes into effect Dec. 1.
In the weeks since the announcement, business owners have been trying to figure out exactly what the new law means for their employees and their bottom line.
“I started receiving some calls from member companies,” said Mark Soycher, human resources counsel for the Connecticut Business & Industry Association. “Some of the calls are very basic: ‘Do I have to do this now?’ Others are sorting out how it is going to apply, who it is going to affect and what area of the payroll practice it will affect.”
Labor officials estimate the change will extend overtime protections to 4.2 million people, including 46,000 in Connecticut.
Pelletier said the new law will end up putting more money in people’s pockets and, consequently, more money into the economy. It is expected the new law will raise wages by an estimated $1.2 billion every year over the next decade.
The threshold will also be updated every three years.
“I think it’s a way of helping boost the economy,” Pelletier said.
The new threshold will make it necessary for newly eligible employees to now keep track of their hours, something they may not be used to as salaried employees. “This creates a situation where everything become more rigid,” said Eric Gjede, assistant counsel at CBIA.
Soycher noted that employees with flexible schedules may find they will be unable to take work home or work remotely.
“Especially with the electronic connectivity, we have some people who can work from anywhere,” he said. “Now that’s going to be a questionable practice. If I can’t reach out and touch or see the person, how do I know they’re working?”
But Gjede noted Connecticut differs from other states because of the salaries offered here. “Hopefully it won’t have as big an impact on Connecticut because Connecticut wages are pretty high,” he said.
In fact, Connecticut is expected to have the lowest share in the nation of salaried workers that will directly benefit, at 16.2 percent, according to the Economic Policy Institute.
Gjede said the law may also not work the way advocates expect it to work. “Just because people are eligible for overtime doesn’t mean employers will allow overtime,” he said.
Some businesses are already considering cutting base pays so that when overtime is included the person makes the same salary, keeping the employers’ costs the same, experts said.
“If the goal was to have a more equitable level of pay, there’s loopholes that will allow for that goal to not be realized,” saidDavid Lewis, president and CEO of Norwalk-based OperationsInc, a human resources outsourcing and consulting firm. “I think it’s a good first step but I think 15 more steps are needed to be taken to correct or fix this law.”
He said the Fair Labor Standards Act should have been made more clear for businesses and should have included specific information about what jobs are exempt and which ones are not exempt.
Pelletier said she found the idea of cuts in base pay or hours to be “troubling.”
“If employers want to keep good people, they want to give them incentives to stay,” Pelletier said. “Cutting hours or finding loopholes is not a good way to do that at all.”
Dhrupad Nag, political director for the Connecticut Working Families Party, said even if some companies use loopholes to prevent paying employees more, the new law will still go a long way toward cutting unfair scheduling practices.
“I do think, for the most part, responsible business owners will adhere to these rules,” Nag said. “Workers will no longer be expected to work long hours without being fairly compensated.”
For now, businesses will have to figure out the details before the law goes into effect in December.
“Business owners should really take notice to the fact that this is not going to be something that they should ignore,” Lewis said.