New Overtime Rule Has Business Groups Declaring Overreach

This week, the Department of Labor published a proposed rule to extend overtime protections to nearly 5 million white collar workers, which the Obama administration says is a critical first step toward ensuring that “hard-working Americans” are compensated fairly and have a chance to get ahead.

But several industry groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, lambasted the proposed rules as “counterproductive” to high-paying, good jobs and employment growth.

“Today, the Department of Labor announced the demotion of at least 5 million Americans. Manufacturers are proud of the modern workplaces and high salaries they offer their workforce, and this proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation,” Joe Trauger, NAM’s vice president of human resource policy, said in a statement.

The Atlanta-based Job Creators Network, led by former Home Depot co-founder Bernie Marcus, said the Labor Department rules are symptomatic of a troublesome trend caused by “government overreach” and too many onerous regulations.

On Friday, the year-old advocacy group that includes a number of business and industry trade associations such as the National Restaurant Association, Americans for Prosperity and National Federation of Independent Business (NFIB), said the Labor Department’s robust June jobs report was overshadowed by the troubling first quarter report on U.S. productivity growth.

“A nation working harder to create less needs to question whether its economy is really in recovery,” said Jamie Richardson of White Castle System Inc., a member of the Job Creators Network. “A large number of economists tell us our problem is a lack of business investment due to too much regulation, and we saw a fresh example just this week with these new overtime rules.”

Richardson said it will cost White Castle between $8 million and $12 million annually to comply with the new overtime rule. “This is on top of burdensome health care regulations and a potential minimum wage increase,” he said.

The U.S. Chamber of Commerce said the Obama administration was “completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact.”

“Making more employees eligible for overtime by severely restricting the exemptions will not guarantee more income, but instead will negatively impact small businesses and drastically limit employment opportunities,” said Randy Johnson, the chamber’s senior vice president of labor, immigration and employee benefits. “Additionally, many reclassified employees will lose benefits, flexibility, status, and opportunities for advancement.

Despite mounting criticism from business groups and industry executives, the Obama administration did have allies on the proposed overtime rule. United Steelworkers (USW) International President Leo W. Gerard called the Obama administration proposal “a win for workers and a win for the economy by raising the threshold under which overtime must be paid.”

“The likes of the U.S. Chamber of Commerce and fast food CEOs will whine that businesses can’t pay workers more, no matter how many hours a week they work.” Gerard said in a statement. “Workers should point out that every year, corporations find tens of millions to hand over to CEOs demanding excessive pay increases.”

FULL SPEED AHEAD
Meanwhile, the Department of Labor on Monday was moving full speed ahead with plans to implement the new rules, creating a new infographic on its website that explains how the overtime regulations will benefit the middle class and working families.

In a notice of proposed rulemaking released last week, Labor Department officials said failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year.

In one example cited on the agency’s website, Labor Department officials said a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay.

The White House Office of Management and Budget (OMB) has reviewed and approved the Notice of Proposed Rulemaking (NPRM) for the new overtime regulations. Upon publication of the proposed rule, interested parties will be invited to submit written comments on the proposed rule.

The comment period will close on September 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.