Obama to Announce New Overtime Regulations, But Will They Really Matter?

So, what do we know about these new regulations?

• The salary-level at which employees will qualify for either the administrative, executive, professional, and computer employee exemptions will increase from $23,660 a year (or $455 per week) to $50,400 (or $969.23 per week) (could they not make it an even thousand?)
• The earliest these new regulations will take effect is sometime next year.

These rules are not final. They still must first undergo a public-comment period. Nevertheless, this announcement is the first concrete details about these long-rumored rules, and could become a key part of President Obama’s legacy, which, unlike the Affordable Care Act, will be done without Congressional approval.

 

These new rules will change the pay structure for millions of American workers. Yet, they may not result in the sweeping pay increases envisioned by the White House. American businesses, many of which already run leanly, need not absorb increased payroll from the switch of workers from exempt to non-exempt status. Instead, a company could simply calculate how much to pay an employee, on an hourly basis (anticipated overtime included), to reach the employee’s current salary level. Or, a company could ban overtime altogether. Thus, gross compensation probably will not change. What will change, however, is the flexibility salaried workers enjoy. Will Johnny Manager appreciate having to punch a time clock, especially if his 2016 W-2 reads the same as his 2015 W-2? And will that change undermine the authority certain employees need to have to effectively perform their jobs?

While the White House has laudable aspirations to “strengthen the middle class” and “commit to an economy that rewards hard work, generates rising incomes, and allows everyone to share in the prosperity of a growing America” in reality, it will likely be “meet the new boss, same as the old boss.”

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(Update) The DOL has made available various resources (hat tip: Lawffice Space):

• The Notice of Proposed Rulemaking [pdf] (all 295 pages, which includes the text of the proposed regulatory changes)
• A helpful one-page fact sheet
• A FAQ