Wednesday, September 16, 2015

A Bad Rule For Business

On June 30, the U.S. Department of Labor (DOL) announced a Notice of Proposed Rulemaking to update overtime eligibility for salaried workers that work over 40 hours in a workweek.

The Department of Labor's proposed changes will more than double the salary threshold for a worker to be exempt from extra-hour pay protections. The regulation will raise the salary level for exemption from $23,660 to $50,440 in 2016.

This approach to "pro-growth" policies is anything but pro-growth. Companies (small and large) will alter how they do business, they will cut benefits and the customer service we are accustomed to will be impacted. There are many reasons that this rule is bad for business, here are a few: 

•An unprecedented rate change: The proposed minimum salary 113% increase exceeds the rate of inflation and salary increases over the last decade. The proposed salary threshold is higher than minimums set under any state laws and does not account for varying industries and economies across regions.

•Negative impact on workers: Studies show that while a few workers will experience pay raises, many will see their hours, benefits or salary reduced.

•Business will be mired down by changes: The proposals will reduce a business' ability to offer a flexible work schedule that is adaptable to the needs of employees, it will be large logistical task for employers to monitor and detail work schedules to avoid lawsuits. This additional responsibility will add legal and administrative costs that will leave less revenue for business development.

•Significant impact on the way you do business: Do your employees check emails after work? With these proposed changes an employer will be responsible for tracking every minute that is spent checking emails from home. Consequently, impacting the benefit of a flexible work schedule and also impacting business' ability to connect with customers at different times of the day.

In order to attract and retain talent, businesses are increasingly focusing on creating office environments that offer flexibility to staff, where employees have more of a voice in their schedules. These changes threaten that by creating a legal and administrative nightmare for employers. This could be an attempt by the DOL to "shoot for the stars and still land on the moon". Either way they need to go back to the drawing board on this one and bring something to the table that businesses can at least consider.