Texas and 20 other states have announced a lawsuit to block the Obama administration’s destructive overtime rules, which are slated to go into effect December 1, 2016. With less than 3-months to spare, victory in the case would save businesses and workers across the U.S. from this dehumanizing and economically damaging law.
According to the new rule, salaried workers earning below $47,476 per year must be paid time-and-a-half for work done in excess of forty hours per week. This is up from a previous salary threshold of $23,660. The rule promises more pay for working long hours, more money for lower-income employees and struggling families, and fewer hours for the same pay! Doesn’t that sound wonderful? Unfortunately, that isn’t how it will work out in reality.
I know, because I’m the person at the Leadership Institute who is responsible for implementing the changes. I see the real faces of those it will impact every day, and I am not looking forward to hurting our employees with a counterproductive rule that harms more workers than it helps.
Our salaried employees enjoy being salaried and treated like adults. They are given tasks to do, and they decide how and when to do them. Nobody looks over their shoulders with a stopwatch telling them how long they have to drink coffee.
Sure, they have some weeks that are very busy and which require long hours, but if they want to come in late for a few days in a row, leave early, or take an extra week off during the slow season, they get that flexibility too.
They get the flexibility to work from home or pursue job-related training opportunities. If they need to take a couple hours off to pick up a sick child from school or take care of some errands, they have that option.
Effective December 1, however, I have to take away that flexibility and freedom.
President Obama’s new rule will make it illegal for the Leadership Institute to pay for work product, and instead it mandates that we pay only for time. If we are compelled to pay for time, we have to track time precisely.
That means that we can’t let employees work from home because we can’t track their hours. Employees who leave early to pick up their kids must lose paid hours. An employee who works a late night must take time off that same week even if he would rather have time off the next week. Worst of all, every employee must start punching a clock while every minute of his day is scrutinized.
If the Leadership Institute does not follow all of these practices, we risk fines from the Department of Labor and retroactive overtime payments if anyone alleges uncompensated overtime.
In addition to these dehumanizing workplace changes, we have to adopt additional cost-saving measures.
Administratively, the time keeping requirement is time consuming. For our payroll budget, we have no idea what this will cost since we’ve never tracked hours closely before, but we know this is not going to make things less expensive.
To offset these expected costs, we are planning more unpleasant changes that harm staff, including an end to paid work-related training. Although we take pride helping staff develop new skills to enhance their careers, this benefit becomes too expensive at time-and-a-half.
We also plan to cut staff salaries by the amount of overtime we expect to pay during the year. If staff work overtime every week, they’ll receive the same salary as before, but if they work fewer hours, they’ll receive less money.
Because this rule affects only employees who are paid less than $47,476 per year, effective December 1, we’ll have a two-tier employment system: lower-paid, second-class employees who lose their freedom and flexibility while being treated like children, and higher-paid, first-class employees who continue to enjoy all the benefits of a salary structure.
President Obama talks often about wanting to reduce “inequality” in this country, but he successfully found a way to create more inequality while hurting employees and their families.
Let’s hope that this coalition of states is successful in its effort to block these disastrous changes before they take effect on December 1.
Joseph R. Metzger is Vice President of Finance at the Leadership Institute in Arlington, VA.