Revised Overtime Rules: An Effective Solution?

Revised Overtime Rules: An Effective Solution?

June 2015 – Revision on regulations for overtime exemptions are being proposed by the Department of Labor (DOL) which will benefit salaried workers of different businesses. Some considered this rule as a good idea since workers can earn more through this proposal, while there are some who believes that this rule may lead to bad results for most organizations, especially small businesses.

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Unsplash (Farzad Nazifi)

The Mechanics

With this law, salaried workers who are working more than 40 hours a week are considered “eligible” for this overtime pay, while changes are made for salary thresholds of higher ranked employees like managers and executives, changing the overtime eligibility threshold from $23,660 to $50,440 a year. This new overtime rule will take effect this 2016.

A Game Changer for White Collar Workers

The proposed rule is intended to help millions of employees, especially those who are performing white collar jobs like office staffs and other administrative positions. Imagine the growing ratio of almost 5 million white collar employees who wants to earn the salary they deserve. Imagine an office manager who even works at weekends should have been paid extra for staying at the office, but some companies are not following that labor procedure, and the manager does not earn even a little from his hard work.

The rule is actually related to the Fair Labors Standards Act of 1937, which states that employees who work extra should always be paid extra, and the government believes that workers should have that right.

This serves as a protection for white collar employees from treacherous companies, an opportunity for them to earn back what should be theirs, and this gives them the reason to work harder, and yes, stay longer in their workplace.

Mixed Responses from Businesses

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Flickr (City of Philadelphia)

This proposal received mixed reactions from most businesses, while other companies tend to agree with this act, there are some who thinks that the rule would never help employees that much, for reasons that it may cause negative impact to businesses due to increase of employee expense, and possibly cases of payroll miscalculations (if overtime rate of this rule will be neglected) which leads to employees suing their employers because of these unwanted errors.

This may also lead to companies doing budget cuts or to make matters worse, the company might close because it cannot afford the increase in salary margin, since many employees will be eligible for this sudden change. Of course, if there would be no businesses operating, there will never be jobs for employees, which will again result to unemployment rates.

As this law comes into play, expect that companies will indeed be very strict in compliance of employee policies like their way of logging in and out the office and an imminent possibility for companies to track the total hours of their employees and their work schedule. Businesses might also command workers to provide them a detailed summary of all the tasks that they’re doing, and reclassify them based on a new hourly rate.