U.S. Department of Labor Overtime Rule Will Cost Employers

Columbus Chamber
The Columbus Chamber provides connections, resources and solutions that help small businesses and Fortune 500 enterprises grow Central Ohio's economy.

Columbus, OH— The Columbus Chamber of Commerce President & CEO, Don DePerro issued the following statement today regarding the U. S. Department of Labor’s final overtime rule:

“We all support making sure employees–who are critical to the success of any enterprise–are fairly compensated. However, the Washington DC-imposed rule to regulate overtime pay will impact thousands of employers and could potentially lead to less available jobs and more administrative burden for small businesses. This dramatic doubling of the overtime salary threshold will significantly impact small businesses and could negatively impact the workers they employ and support.”

The U.S. Department of Labor unveiled the new overtime regulation today.  The salary threshold will be increased to $47,476 annually ($913/week)—an increase of slightly more than 100% from the current threshold of $23,660 annually ($455/week).  Employers will have until December 1, 2016 to come into compliance with the new requirement—a period of about 200 days.

If implemented, this higher overtime salary threshold will mean many employers will have to either increase their employees’ salaries to keep them exempt, or reclassify them as hourly employees and possibly pay them overtime. For many of our large and small employers, this regulation could mean a disastrous financial hit, or reduce the ability of many businesses to serve their customers. Such a sharp increase to a small business payroll could lead to potential lay-offs and staff reductions.

“This change gives employers less than a calendar year to budget for the increase,” adds Don DePerro, “and we fear that staff reduction might be the easiest solution. The other quick solution would be reclassification—which could lead to employees losing vacation time, opportunities to work remotely, and other benefits they have earned.”   

The Columbus Chamber earlier this year wrote a letter of support for the Protecting Workplace Advancement and Opportunity Act (S. 2707/H.R. 4773) which would address the problems with the proposed rule. First, it would nullify the proposed regulation—either in its proposed stage, or if it has been finalized. Second, this bill would require the Secretary of Labor to conduct a detailed and extended economic analysis identifying the impacts on employers that were ignored in the proposed rule such as nonprofits, small governments, Medicare and Medicaid dependent health service providers, and academic institutions. The economic analysis must also identify the impacts in different regions of the country and non-financial impact such as employee benefits, workplace flexibility, and career advancement opportunities.

The Columbus Chamber initially had our eye on this proposed rule change back in September 2015. Here is a link to an infographic outlining the impact of this proposed act and how it could impact your business.

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The Columbus Chamber of Commerce is a resources-based non-profit organization serving over 1,300 businesses in Central Ohio. Providing support in areas such as research, marketing, talent advisement, networking, and government affairs, the Chamber has been in existence for 132 years, helping businesses thrive every step along the way.

Contact:
Dilara Casey
Director, Marketing and Communications
DilaraCasey@columbus.org
Office: 614.225.6062/ Cell: 614.893.1564