Changes in Overtime Pay Rules: Should You Be Worried?

The U.S. Department of Labor’s proposed overtime rule, which would raise the threshold under which most salaried workers are guaranteed overtime pay from $23,660 a year to $50,440 a year in 2016, grabbed the attention of the construction and manufacturing industries this summer.

The public comment period in the rulemaking process closed earlier this month, and the U.S. working world is awaiting the next step in the process. According to the docket on regluations.gov, the rule received 289,935 public comments—many from members of the building industry.

If the rule is enacted, it could turn many salaried workers who are currently considered “professional, executive or managerial” and who make less than $50,440 into hourly employees — and thus eligible for overtime pay.

According to the National Association of Home Builders (NAHB), the rule change could affect at least 116,000 construction supervisors, as well as many other workers in the industry. NAHB chair Tom Woods says his association “is concerned that changes to the current overtime standard will reduce job-advancement opportunities and the hours of full-time construction supervisors . . . . In addition to construction supervisors, the proposed rule could affect other occupations in the industry, including sales representatives, administrative staff and local trade association employees.”

NAHB says the rule changes would most likely force business owners to drastically restructure their workforces by cutting hours to avoid overtime, converting salaried employees to hourly workers, and scaling back on pay and benefits.

“[S]uch a dramatic surge is unlikely to result in an increase in workers’ take-home pay,” Woods says. “The proposed overtime rule is a ‘one-size-fits-all’ standard. Given the potential broad impact of the proposed rule, an obvious issue concerns the fact that wage amounts vary greatly from location to location, as well as among business sectors.  Construction wages are very regional, and what one construction supervisor makes in one part of the country is different than what one earns in another–sometimes wages varying significantly.”

Those sentiments were echoed by Jay Timmons, the CEO of the National Association of Manufacturers, in a guest blog post for The Hill.

“The administration’s new overtime rules will effectively demote 5 million workers and take away flexibility in many workplaces,” Timmons writes, adding, “What is more, contrary to the administration’s claims, rather than raise wages, more employers will likely reduce workers’ hours or reclassify them. So much for helping middle-class families.”

The Obama administration, which supports the proposed rule changes, argues that the salary threshold requirements for overtime pay haven’t kept up with the rate of inflation.

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