Obama’s Unilateral Overtime Reforms Spark Backlash From Businesses

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With the Obama administration announcing plans this week to unilaterally change overtime rules, business leaders are stepping forward to oppose the reforms.

“The administration seems to be under the distorted impression that they can build the middle class by government mandate,” David French, of the National Retail Federation (NRF), said in a statement. “Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private sector entrepreneurs and job creators that are the true path to middle-class success.”

Last year, the president signed a memo compelling the Department of Labor to change the Fair Labor Standards Act so that more managers could qualify for overtime pay. The changes are expected to raise the salary exemption threshold and force businesses to better track what tasks their managers do and exactly how long they all take.

Secretary of Labor Tom Perez told reporters Tuesday during a press call that he will follow through with the plan. Though the proposal is likely to effect millions of Americans, it legally does not require approval from Congress.

“Retailers will have two options if this rule is implemented,” Kelly Kolb, at the Retail Industry Leaders Association, told The Daily Caller News Foundation in an email. “Raise prices in order to absorb a dramatic increase in labor costs, or take away the benefits, such as flexibility and leadership opportunities, that come when an associate works their way into management. Neither of these are outcomes that will raise standards of living for our employees or our customers.”

While the move has been praised by labor unions, business groups and Republican lawmakers are fearful of the unintended consequences. The problem, business leaders warn, is that the changes don’t match well with what managers do.

“Our research shows that the managers who would supposedly benefit oppose this plan and that few workers would actually see more take-home pay. There simply isn’t any magic pot of money that lets employers pay more just because the government says so,” French concluded.

To be exempt from overtime, a manager must perform tasks the government deems managerial in nature, known as the Duties Tests, and have an annually salary of more than $23,000. The proposed rule change will likely affect both areas by raising the salary threshold to $52,000 annually while requiring businesses to track exactly how much time managers spend on specific tasks as opposed to just what tasks they do.

“The latest Obama Administration ‘pen-and-phone’ evasion of Congress will transform millions of middle-class salaried workers with benefits into hourly workers who punch a time-card, lack benefits, and have managerial responsibilities stripped away,” Aloysius Hogan, a senior fellow at the Competitive Enterprise Institute, said in prepared statement to TheDCNF.

Business leaders even appealed to House Republicans earlier in the month in the hopes they might stop the president and his administration from going forward with the move. Though Republicans lawmakers have shown concern over the rule change, it is not yet know whether they will try to counter it.

“While the bulk of our restaurant managers’ days are spent performing management tasks, they also multitask, stepping in to help serve diners during busy times, and leading and training team members by working side-by-side with them, when necessary,” Jamie Richardson, the vice president of government relations at White Castle, said before the House Subcommittee on Workforce Protections.

According to a study by Oxford Economics, which was commissioned by the NRF, increasing the overtime salary threshold to just $42,016 annually would affect 1.7 million retail and restaurant workers and would cost business owners $5.2 billion per year.

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