An article published in the Daily Signal in one sentence puts its finger on why the Obama administration's new overtime rules will make life much harder for many salaried employees, who currently enjoy a degree of flexibility in their work schedules:
The administration’s new overtime regulations will effectively turn them into hourly employees.
Flexibility is generally particularly important to women in the workforce so the overtime rules will disproportionately affect women. The Daily Signal explains how the rules will vastly reduce flexibility without bringing more income:
The regulation won’t increase their earnings, but it will greatly reduce their control over their schedules. The Fair Labor Standards Act requires employers to pay hourly workers overtime for working over 40 hours a week.
But the Fair Labor Standards Act regulations exempt many salaried employees. This makes sense: Salaried employees get paid to do a particular job, not work particular hours. They also generally have more control over when and where they work.
Many salaried employees have the flexibility to do things like take off early in the afternoon to attend a child’s soccer game, and then finish their work from home in the evening when their child has gone to sleep. Similarly, millions of salaried employees telecommute at least once a month.
The Labor Department just restricted this flexibility.
On Wednesday it raised the overtime “threshold” test for salaried employees to $47,500 a year. All salaried employees making less than that—no matter how advanced their job duties—now qualify for overtime. Their employers must pay time and a half when they work more than 40 hours a week.
Of course, at a glance the new regulations for overtime may look good. You're an aspiring professional, earning a salary and not paid by the hour. But why not be paid for work after the forty-hour week?
Interestingly, what the Labor Department is now mandating was tried at IBM as part of a lawsuit settlement. When IBM reclassified 7,000 salaried and technical-support workers as overtime-eligible, the company also cut their base pay by 15 percent. Thus their total earnings remained the same.
The Daily Signal points out that even liberal supporters of the rule concede that the “wage offer reflects expected overtime hours” and so there will be “no change at the margin” in pay.
As a way to prevent lawsuits, employers will veto the kinds of flexible schedules many workers now enjoy. You'll need careful records of time worked, too.
So what is the point of the new regulations, announced with such fanfare by Vice President Joe Biden and Labor Secretary Thomas Perez?
With few economic successes to tout, the Democrats hope that these regulations will make them appear to care about working Americans–and give them some overtime in office.