DARKE COUNTY — At the urging of President Barack Obama, the U.S. Department of Labor (DOL) announced a proposal on June 30 which it claims would significantly expand the number of American workers eligible for overtime pay.
Under the new rule, salaried workers earning $50,440 per year or less would become eligible for overtime pay. The previous threshold was $23,660 per year.
Senator Sherrod Brown (D-OH) is among a group of nearly 150 Democratic senators and representatives who have pressed the department to raise this threshold.
“While wages for American workers have stagnated, hours spent on the job have increased,” said Brown. “When workers put in the extra time, it should be reflected in their pay. It’s past time to give more middle-class workers the opportunity to earn overtime pay. This will lift up our middle class and boost our economy.”
On the other side of the aisle, Senator Rob Portman (R-OH) is taking a cautious stance on the proposal.
“We are looking at it and its effect on jobs,” he said. “Some small businesses have already contacted us very concerned about it and saying that they may have to cut salaries or jobs to handle the additional costs being imposed on them by this big increase in overtime costs all at once.”
According to Obama administration, nearly five million workers will be newly eligible for overtime pay within the first year of implementation. This figure includes an estimated 160,000 workers in Ohio.
Not everyone is on board with the DOL proposal.
Research Fellow James Sherk of the Heritage Foundation’s Institute for Economic Freedom and Opportunity, contends that employers will offset new overtime costs by lowering base salaries.
“As a result, these regulations will have little effect on total weekly earnings or hours worked,” he writes. “They will require employers to rigidly monitor salaried employees’ hours. This would proscribe the flexible working arrangements that many salaried employees value. These regulations will limit workplace flexibility without improving pay.”
Locally, it is difficult to predict exactly how the proposal would specifically affect Darke County workers and businesses.
Sharon Deschambeau, president of the Darke County Chamber of Commerce, is one of those watching the proposed rule change.
“Anything that relates to wages or salaries is going to cause businesses to reevaluate how they staff or run the business,” she remarked.
“When the Department of Labor and Congress change the rules to try to force higher pay through overtime, the money has to come from somewhere. There are limited places from which it can come: the profits of the business (or perhaps the owner’s compensation), the customers or the employees themselves.”
Deschambeau said the Chamber plans to closely follow the proposal, and its effects, on behalf of local businesses.
“New regulations are coming and this overtime change may force hard choices for businesses,” she said. “I anticipate that the Chamber will schedule a workshop or webinar to provide information to our members on the new regulations. Businesses will want to formulate a plan before the new rules take effect.”
The DOL is accepting public commentary on the proposal until September 4. Those wishing to comment may go online to http://www.regulations.gov/#!docketDetail;D=WHD-2015-0001.