Business groups blindsided by Obama's proposed overtime regs

Business groups expressed surprise and concern over new regulations being proposed by the White House that would make an estimated 10 million workers eligible for overtime pay who are currently barred from receiving it.

The Hill:

Business groups and congressional Republicans are blasting regulations President Obama will announce Thursday that could extend overtime pay to as many as 10 million workers who are now ineligible for it.

While liberals lauded the plan as putting more cash in the pockets of millions of workers, business groups warned it would damage the economy and Republicans said it was another example of executive overreach.

Trade associations already battling the White House over a proposal to raise the minimum wage to $10.10 per hour said they were blindsided by the announcement.

“This came as a shot out of the blue,” said David French, the National Retail Federation’s senior vice president for government relations. “Just on the surface, this looks like an enormous new administrative burden.”

Few details were released Wednesday about the initiative, which the administration is expected to detail on Thursday.

“What we’re trying to take a look at is how we can make the labor force as fair as possible for all workers and that people get rewarded for a hard day’s work with a fair wage,” Betsey Stevenson, a member of the White House Council of Economic Advisers, told reporters Wednesday.

Current regulations require employers to pay overtime to salaried workers making less than $455 a week. Obama’s proposal would redefine which employees can be classified as “executive or professional” and thus ineligible for overtime pay. 

The action would expand the sphere of eligible employees to include, for instance, fast food shift supervisors and some office workers now being denied overtime pay. It was unclear how high the weekly pay threshold might be raised. 

Employees would also be required to perform a minimum percentage of “executive work” to qualify for the so-called white-collar exemption, narrowing a loophole that allowed companies to exempt certain workers.

Labor Secretary Thomas Perez pledged that his agency would conduct a “complete” and “thorough” rulemaking process before final regulations are issued. 

He would not say if that could happen this year.

“I’m all about getting it right,” Perez told The Hill. “We’re going to take whatever time is necessary.”

Employers are likely to respond by cutting workers' hours or cutting their base pay. And, as Editor Lifson pointed out to me, the new regs may very well prevent ambitious young people from showing their dedication to the job by working long hours to both impress the boss, and get things done.

When I worked in DC years ago, if you didn't work 10-12 hours a day, you were dogging it. And if you preferred to punch a clock rather than give that extra effort, then someone else would. No doubt, these new regs are going to make clock watchers all over America very happy.

The real burden of the new regs will no doubt be the reams of paperwork the government will require to prove that you're doing as your told. Human Resources Departments will be busy hiring new Federal Compliance Officers to make sense of the whole thing.

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