A hearing was held July 23, 2015 on the Department of Labor’s proposed changes to federal overtime rules. The hearing, held by the Subcommittee on Workforce Protections, chaired by Representative Tim Walberg, explored the potential impact of the proposed changes on employee choice and opportunity, as well as the costs it would create for job creators.
“Of all the concerns we’ve heard about this proposal, the ones I find most alarming are those that it will limit flexibility and opportunity in the workplace,” Chairman Walberg said. “As employers struggle to cope with the added costs of these new overtime rules, many salaried employees will be demoted to hourly workers with lower pay and stricter schedules. With that shift come fewer opportunities for on-the-job training, talent development and managerial experience. All of which lead to fewer opportunities to advance up the economic ladder.”
The administration’s proposal would raise the salary level under which employees qualify for overtime pay from $455 per week to an estimated $970 per week in 2016. However, as the department has stated, relatively few workers who stand to benefit from the change may actually see a rise in take home pay. Witnesses explained that many employees would instead experience negative consequences as a result of the additional costs the proposal would generate.
“Eligibility for overtime does not necessarily mean earning overtime,” said Tammy McCutchen, an attorney specializing in wage and hour compliance and former administrator of the Department of Labor’s Wage and Hour Division. Describing just one of the advantages many workers may lose, McCutchen explained the proposal is effectively consigning millions of employees who are currently able to build their schedules around important family commitments to “an entirely different work life tied to being on the clock.”
Describing his own professional experience – rising from a crew member at a fast-food restaurant to franchisee and chief operating officer of CKE Restaurants – Eric Williams echoed concerns that “many talented young adults will be stuck in jobs focused on time spent on the clock rather than time well spent.” He added, “I fear the department’s proposal will severely limit hardworking, talented Americans from realizing their dreams,” emphasizing that in addition to limitations in pay and bonuses, some workers “may never reach their potential or realize their career dreams because of this change.”
Elizabeth Hays, a human resources director at a nonprofit serving troubled and abused children and youth, discussed how the administration’s proposal “literally presents the risk of [the organization] closing its doors.” Hays continued, “Given our nonprofit status and tight costs, we are unable to provide pay increases and hire additional employees.” She explained the proposal would assign an unfunded increase to the organization’s budget and force them to “do more with less.” This reality, she noted, would undermine continuity of care and “significantly impact my organization, our employees and the youth and families we serve.”
“What the American people deserve,” Chairman Walberg concluded, “is a balanced approach that will strengthen employee safeguards, eliminate employer confusion and uncertainty and encourage growth and prosperity for those working hard to make a living … We will continue to urge the administration to improve these rules and regulations responsibly and in a way that doesn’t destroy opportunities for hardworking Americans.”