The National Retail Federation on Tuesday wasted no time in criticizing the U.S. Labor Department’s proposed rule changes defining eligibility for overtime pay.
The DOL’s proposal, which was unveiled Tuesday morning and has now been reviewed and approved by the Office of Management and Budget, would extend overtime protections to nearly 5 million white-collar workers within the first year of its implementation. DOL’s Wage & Hour Division said failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly compensated executive, administrative and professional employees now applying to workers earning as little as $23,660 a year.
“Today’s proposed regulation is a critical first step toward ensuring that hardworking Americans are compensated fairly and have a chance to get ahead,” said a statement on the division’s Web site.
David French, senior vice president for government relations at the NRF, said, “Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private-sector entrepreneurs and job creators that are the true path to middle-class success. This proposal isn’t a law but it certainly reflects one – the law of unintended consequences at a time when the economy and those struggling the most can least afford it.”
French referred to a study the NRF commissioned and was released last month by Oxford Economics that showed the potential cost to U.S. retailers and restaurants could be $5.2 billion a year, under the assumption that businesses make no changes to offset increased costs. The study also concluded that employers will likely modify their base wages so each worker would not see any real income gain and that workers could also see an equal reduction in bonuses and benefits.
Under the Fair Labor Standards Act, hourly wage workers are generally paid time-and-a-half for more than 40 hours a week if they earn below a certain salary, but a white-collar exemption prevents many salaried executives, managers, supervisors and administrators from receiving overtime, according to the administration. The threshold for overtime eligibility was set at $455 a week, or about $23,660 a year, in 2004. The administration said the threshold is below today’s poverty line for a worker supporting a family of four.
In an Op-Ed on The Huffington Post on Monday, President Obama said, “This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay and it’s good for business owners who are already paying their employees what they deserve, since those who are doing right by their employees are undercut by competitors who aren’t.
“That’s how America should do business,” Obama said. “In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.”
French noted that the proposal is now open for public comment before it becomes final.
“We will continue to fight a subjective problem with quantifiable facts based upon the reality of running a business and creating jobs in today’s economy,” he added.