Not Much Business Sense on Capitol Hill


Members of Congress, even some Democrats, are finally coming to terms that the Department of Labor’s proposed overtime rule may be bad for business. Why the change of heart? They finally realized that the rule may apply to their staff.

On June 30, 2015, the DOL submitted a notice of proposed rulemaking to modify overtime rules. The federal labor agency wants to make any salaried employee earning under $50,440 eligible for overtime, a huge increase from the current $23,660 threshold. That is more than a 100-percent increase.

To no one’s surprise, when the rule was proposed, Democrats jumped on board. One hundred Democrats in the House and Senate sent a letter of support for the overtime rule to the president.

But the tide is beginning to turn. Congress is starting to realize that they will experience the same troubles as the private-sector due to the rule. As I wrote in The Washington Times:

None of these problems worried cheerleaders in Congress — until they realized the new overtime salary threshold may apply to them. A recent Bloomberg BNA report found that House Democrats, some whom signed the letter of support to Mr. Obama, may have a hard time implementing the new overtime rules regarding their own staff.

“I don’t see how we could pay overtime” for the “17 or 18 people that each of us is allowed to have — that’s problematic for me,” declared Rep. Alcee Hastings, Florida Democrat.

(Rep. Hastings just so happened to be a signatory of the letter to President Obama.)

Well Rep. Hastings, the private sector feels the same way.

The American Society of Association Executives, whose members include trade associations in all sectors of the economy, recently conducted its 2016 Association Advocacy survey. The policy issue of highest concern was the DOL’s overtime rule.

As ASAE commented, “[T]he rule has the potential to dramatically reshape payroll costs, staffing decision, and job responsibilities for America’s associations and tax-exempt sector.”

These concerns mirror that of the private-sector and Congress. While the rule is obviously concerning for employers trying to control cost, workers are also in the rule’s crosshairs. As I’ve previously explained:

“The rule change will have unintended consequences that will negatively affect workers. Current salaried employees on a management track may have their work status degraded to hourly employee. Those former salaried workers may have their hours capped to avoid overtime costs and face new requirements, such as tracking their work hours.

This acts as a governmental roadblock on aspiration for ambitious employees. For junior managers who are reclassified and have their hours capped, it will greatly restrict their ability to receive flexible schedules, a common perk professional employees value. Another downside is that junior managers who are downgraded to hourly employees are no longer on a management track with a higher career trajectory. Another detriment of losing salaried status is that it eliminates employees’ ability to take time off to pick up a child from school, run errands, or deal with an emergency. As an hourly employee, if you must pick up a sick child you lose getting paid for that time. 

Another oversight in the rulemaking process, the DOL failed to take into account the vast cost of living differences across the nation. The rule as proposed is one-size-fits-all. While employers located in large cities like New York and Los Angeles may be able to handle the rise in the overtime rule’s salary threshold, small town businesses may not be able to control labor costs with such a significant change. Such a rule, which impacts workers nationwide, should take into account the disparate impact.

Now that the rule has Congress’ attention, maybe, they will rethink their stance that such a dramatic increase in the overtime salary threshold is a good idea.