Federal Injunction Blocks Federal Overtime Law 8 Days Before Enforcement Date
Late yesterday U.S. District Judge Amos Mazzant in the Eastern District of Texas granted a preliminary nationwide injunction against the Obama administration initiative mandating overtime pay for all workers making less than $47,476/year. Had the new overtime rule continued as planned as of December 1st (only 8 days away) many employers nationwide would have had to treat all salaried workers making between $23,660 and $47,476 as hourly workers, and pay them overtime time-and-a-half for all hours over 40 hours per week.
According to the New York Times this ruling means only a temporary hold, but it could be permanent. “While the injunction is only a temporary measure that suspends the regulation until the judge can issue a ruling on the merits, many said the judges language indicated he was likely to strike down the regulation.”
As cleaning business owners very few field workers are paid by salary, but it is common for Field Supervisors, Area Managers, Administrative Staff, and company Managers to be paid salary, and generally make within the income ranges affected by the overtime rule. Had the ruling not been placed on hold, small business owners were bracing for impact because of the ways it would affect their companies and their staff. Some of the concerns that are related to the new potential overtime rule were:
Salary changes – For business owners who have workers that make a salary between $23,660 and $47,476 and work over 40 hours a week on a regular basis, to comply with this rule would have to decide to either (1) boost the salary up to $47,476, often prematurely, (2) split the one job into 2 part time jobs to avoid the risk of overtime, (3) convert the employee to hourly, but reduce the hourly pay enough to cover the costs of expected overtime (this can be morale-crushing), (4) Just convert the worker to Hourly, make no changes to wages, and just pay the overtime.
Flexibility of Hours – Many of the salaried positions in cleaning businesses where workers work more than 40 hours/week often are making a trade-off with employees for them to work whatever is needed, with the flexibility of schedule they need. For example, a salaried manager wants to go to his/her kids soccer games that are early afternoon, and they can do so and then work later in the evening or weekend to complete the tasks needed. The tracking required for this rule, might make this flexibility of schedule no longer make sense.
Commission – Many Supervisors, specialty cleaning area managers, business managers and sales managers are paid a portion of their wages by way of commission. To comply with this ruling and still keep the commission in place, and not affect the costs to the company, the employees will have to have their hours capped at 40. Although the ruling will exclude some sales employees, it only excludes “outside sales employee”.
On-Call, Cell-Phone Use and Unauthorized Hours – All non-exempt employees must be compensated for all of their time spent at work. The rules can be complicated but basically if employees are prevented the freedom of doing other things they are considered “on call” and should be compensated. Persons required to carry a cell phone for emergencies are generally only considered working while they are responding to calls and texts, however walk a fine line about when they may be “on-call”. Another surprising labor regulation is about “unauthorized hours”. If you have an employee who is working from home or after hours (for paperwork, follow-up, etc.) without your express authorization and you know that, then you are required to pay for those hours. All of these regulations in effect now, and are not changing with this hold placed on the new update, but currently only affect employees who are currently hourly or make less than $23,660. (Department of Labor)
Benefits, Comp. Time, Vacation, PTO, Holiday Pay, etc. – Because business owners are always under the grueling pressure of how to remain profitable, overly generous perks that may be offered with a salary, may be reduced to be able to afford the new labor costs.
Perception of Opportunity – Another consideration is the employees’ perception of opportunity at the company. Getting a “salaried” job traditionally means you are no longer “blue collar” and are part of management. By changing the wage threshold for non-exempt employees, and limiting the number of salaried jobs, the perception of opportunity at the company may be decreased.
But…the Overtime order has been halted, so why are we still talking about it? Two reasons. (1) This is a temporary hold. It is very likely this halt could become permanent, but right now this is just temporary. (2) More importantly, the cat is out of the bag on what worker’s should consider “fair”. There has been an increasingly louder beat of the drum of worker’s resetting their concept of what is “fair”, and local and more widespread changes to labor laws and expectations have been changing regularly. Increased minimum wages, paid sick pay requirements, scheduling rules, and other labor expectations are changing, so business owners can use this as an opportunity to prepare for what may be coming. Objectively look at your staff, career opportunities and labor rules and build a begin to move towards a plan that is ahead of the game. Employees stay and are satisfied at companies where they feel the environment is consistent, fair and workable for their lifestyle. And business owners need highly effective productive workers and create an environment that can attract great people and deliver a strong profit. Plan to succeed!