The Department of Labor recently issued new rules governing how employers must compensate employees for hours worked in excess of 40 hours per week. The new rules dramatically increase the number of workers who must qualify for overtime, and therefore must have their hours tracked. Supporters of the new rule claim that it will be a boon to workers, putting more money in their pockets. However, many workers will be worse off under the new overtime rules, which will discourage flexible work arrangements, create costly administrative requirements for businesses, and constrict opportunities for many workers. Workers currently guaranteed a set salary regardless of the number of hours worked will now face the prospect of lower pay if they are unable to work enough hours.
There are better ways to help ensure that workers are fairly compensated. Policymakers can help workers by cutting back on red tape so more employers will create jobs, giving people a better chance to find the arrangements they prefer, whether that’s working in an hourly job with overtime potential or a salaried position. Policymakers should also take a fresh look at the outdated, Depressionera Fair Labor and Standards Act, which is the foundation of these overtime regulations, and reform the law to give employers and workers greater flexibility to design mutually beneficial work arrangements.