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Overtime exemption headaches


"Oh, boy!" That's likely to be the understandable reaction to many employers in reaction to the new U.S. Department of Labor overtime regulation issued last week. The overtime rule increases the threshold below which workers are entitled to overtime to $913 per week, or $47,476 annually for a full-time worker, from $455 per week or $23,600 per year.

While certain aspects of the rule are less onerous than what had originally been considered, there is general agreement among experts that the rule is likely to not only create budgetary, structural and morale problems, it may ultimately little benefit its intended beneficiary — the American worker.

For one thing, the threshold below which workers are now considered nonexempt has been dramatically increased “way too high, too fast,” as one expert put it.

As a result, employers may be forced to actually cut back on their employees' hours in order to maintain profit margins, which means the overtime rule's purported beneficiary, the worker, may ultimately not benefit.

It's also going to cause considerable morale issues. Higher-level employees who were already exempt, for example, may find that previously much lower-paid workers are approaching them salarywise because employers would be bumping them up to the exempt level. As firms well know, actions that diminish workers' self-regard are never good business.

It also raises nightmarish logistical issues. Firms are now going to have to keep track of all job-related activities for previously exempt employees, such as emails sent outside the regular workday and travel time, which is going to be a pain for employer and employees alike.

Furthermore, while employers do have until Dec. 1 to implement these changes, which is far better than the 60 days originally anticipated, it still leaves business with an awful lot of work to do in a relatively short period of time.

Experts also warn also that wage-and-hour lawsuits, already a major problem for employers, are likely to increase dramatically with the increase in nonexempt workers.

Unfortunately, there is little to be done at this point. We can only wish the Department of Labor had spent more time considering these issues before issuing this ill-advised rule.


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