Right Hooks

Damaging Overtime Pay Regulation in the Works

Jordan Candler · Jun. 10, 2015

The Department of Labor is preparing to unveil a revision to America’s overtime compensation rule called for by Barack Obama last year. Unfortunately, it’s entirely the wrong prescription for even the best economy — let alone our still ailing one. Heritage Foundation research fellow James Sherk writes, “Reports indicate the Department plans to require overtime for any salaried employee making less than $45,000 to $52,000 a year.” That’s significantly higher than what the current law requires, and though it may not sound like a big deal the repercussions are far fetched— impacting everything from base salaries to scheduling and office flexibility. As Sherk explains, “Economists have studied how businesses respond to overtime requirements. They find that overtime doesn’t affect workers’ total pay or hours much. Instead, businesses offset new overtime costs with lower base wages.” Moreover, he says, “[T]he overtime regulations will have a major unintended side effect: They will force entry- and mid-level salaried employees to track their hours.” That means more micromanaging, and many employers will nix work-from-home options altogether to avoid lawsuits. Just like minimum wage laws, this new rule may seem like a good idea at first glance, but the results are economically damaging.

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