The U.S. Department of Labor issued a final rule on May 18, 2016, modifying overtime eligibility under the Fair Labor Standards Act, implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer technology employees. The new rules mandate overtime pay for 4.5 million employees earning salaries between $23,660 and $47,476 who previously weren’t guaranteed this benefit. Companies will probably react to overtime by both cutting base wages and hiring more workers.
It is all but certain that employers will have additional costs. The rule projects that employers will pay an additional $12 billion over the next 10 years. Compliance and reporting costs will be in the tens, if not hundreds, of millions of dollars. It is also reasonably certain that employers will reduce available overtime for some employees, restructure or demote other employees, and hire part-time help without benefits to comply with the rule. DOL has acknowledged this and sees this as a positive benefit as it could provide some workers with “more family time.”
NAMIC filed comments on the 2015 opposing proposed rule, and when the Senate Committee on Small Business and Entrepreneurship held hearings in May, NAMIC submitted testimony. The rule may be challenged in the courts and Congress, and NAMIC will provide support where appropriate.