Experts offer options for adjusting to new DOL overtime rules

Dive Brief:

The Department of Labor recently released its proposed overtime rules, which will extend overtime pay next year to the 40th percentile of income -- a minimum salary of $921 per week or $47,892 annually (2013 numbers). However, by the time the final rule is issued in 2016, the DOL estimates that the salary level will climb to $970 per week or $50,440 per year, reports Risk & Insurance magazine.
Other proposed changes involve continuously increasing the salary level each year and setting a higher standard for highly compensated employees, from the current $100,000 level to $122,148.
According to the White House press release, the proposed overtime change is expected to impact nearly 5 million workers — 56% of whom are women and 53% of whom have at least a college degree — and better reflect the intent of the Fair Labor Standards Act, writes author Carol Patton

Dive Insight:

Experts in the R&I article offer some potential strategies employers might use to navigate these dramatic changes.

For example, Gregory Kamer, founding partner at Kamer Zucker Abbott, a management labor employment law firm in Las Vegas, told R&I that the new regulations, if adopted, will require employers to decide whether they want to pay overtime or employ more workers. “Clearly, the wage will go up or there will be more employment or [job] openings. That can be a hard call,” he said.

Lee Schreter, chairman of the board at Littler Mendelson in Atlanta, said employers will need to spend time and money analyzing the regulations and informing employees of the changes. “It’s a mistake to focus solely on the salary level,” she said, adding that the changes to the "duties" requirements may create new legal standards for the courts to interpret.

Kerry Chou, senior practice leader at WorldatWork, an HR association based in Scottsdale, Arizona., told R&I that some employers may mitigate the expense by preventing employees from working more than 40 hours each week or laying them off. Chou singled out retail and fast-food restaurants as segments most affected, because their first-line supervisors tend to earn a lower average wage when compared to employees in other industries such as engineering or technology manufacturing.