CEI Expert: Devastating Overtime Rule Must be Delayed

This week, the House will consider Rep. Tim Walberg’s (R-Mich.) Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R.6094), which delays the implementation of the Department of Labor’s overtime rule by six months, until June 1, 2017. According to CEI labor policy expert Trey Kovacs, this legislation is desperately needed as many organizations lack the resources and expertise required to analyze and comply with such a long, complex rule.

“The overtime rule is a devastating regulation that is going to increase costs and destroy jobs across the country, particularly at state universities, non-profits, and small businesses. There was simply not enough time allowed for these employers to sort through these consequences and figure out how to comply with the rule,” said Kovacs. “The Labor Department, itself, estimates the rule will add more than 2.5 million hours of paperwork to our communities. While big businesses may have staff on hand to deal with the barrage of regulations coming out of Washington—these entities do not—and forcing them to spend more time on compliance rather than their organization’s mission, threatens their very existence.”

According to Kovacs, to successfully comply, an employer must inspect its entire workforce and determine how many employees will no longer be exempt from overtime pay. Then an employer must determine how many hours these employees work, which is difficult since employers do not need to track salaried employees’ hours. Once the hours worked by employees is established, a cost-benefit analysis is needed to calculate whether any worker will receive a raise above the threshold, demoted to hourly status, or paid overtime at their current salary. These are just some examples of how employers will have to reorganize their workforce to comply with the DOL’s overtime rule.