Survey: Half of Retailers to Honor Suspended Overtime Rules

The following appeared in the Stamford Advocate on November 30, 2016 and features comments from OperationsInc CEO David Lewis. To view the original article, please click here

by Alexander Soule

stamfordadvocateMore than half of the nation’s largest retailers intend to honor new rules on overtime pay that were scheduled to take effect on Thursday, according to a survey, despite a federal judge ordering last week a suspension of those requirements.

Under the auspices of the Fair Labor Standards Act, the U.S. Department of Labor would require employers to pay time-and-a-half to employees who make up to $47,475 — twice the previous threshold and setting a summer scramble for many companies to juggle budgets, wages, scheduling and other steps to avoid absorbing massive increases in their compensation costs. The Labor Department had estimated that an extra 45,000 Connecticut workers and some 4.2 million nationally would qualify for overtime under the new rules.

“The timing of this announcement and decision could not be much worse, and … has created a minor level of chaos at some businesses,” said David Lewis, CEO of OperationsInc in Norwalk, which consults on human resources. “All these decisions had already been made — you are talking three or four months of preparation to get to this point.”

Shopping MallIn a survey published Wednesday, the Hay Group division of Korn Ferry (NYSE: KFY) found that 56 percent of big retailers plan to comply with the FLSA overtime requirements as promulgated last May, despite a preliminary injunction issued Nov. 22 by a federal judge in Texas that puts the plan on hold.

Hay Group surveyed 68 retailers with combined annual revenue of $1 trillion, between Nov. 25 and Nov. 29. About a quarter of respondents said they will not implement changes and will wait for a final ruling or resolution, with a fifth saying they will make changes on a case-by-case basis. Bentonville, Ark.-based Walmart raised salaries of its own managers to ensure they clear the threshold at which overtime pay kicks in.

Walmart was not alone, with many other retailers and other large organizations having already either communicated or implemented plans to their employees, making any reversal an unpalatable option, according to a statement by Craig Rowley, a senior partner with Hay Group. He added that they many companies remain in a “wait-and-see” mode on any future legal action as well as the incoming Trump administration’s stance.

“It’s probably the biggest employment law news this year,” stated Daniel Schwartz, an employment attorney in the Hartford office of Shipman & Goodwin, on his Connecticut Law Employment blog. “It’s possible that this may be appealed but that seems unlikely with a new (president) set to take office in less than two months.”