4.3 Million Workers About To Learn That Demanding OT Doesn’t Always Work Out Like They Expect

In fairness, there certainly are issues with deeming some employees as “exempt”, meaning they are salaried and cannot get OT. Some companies will deem supervisors at the low end exempt to avoid paying them OT when they do not really have much in the way of power. Still, this may not go well

4.3 million more workers will soon get OT pay. Here’s who qualifies.

About 4.3 million U.S. workers who previously didn’t qualify for overtime pay could soon receive time-and-a-half for working more than 40 hours a week thanks to a new rule from the Biden administration.

The U.S. Department of Labor on Tuesday unveiled a new rule that will extend overtime pay to salaried workers who earn less than $1,128 per week, or $58,656 annually. Previously, only workers who made $684 or less each week, or $35,568 annually, were eligible for OT.

Businesses are required to pay workers 1.5 times their pay if they work more than 40 hours a week, but that protection has been limited to hourly workers and lower-earning salaried employees. Because of the salary cutoff, many salaried workers were performing the same duties as their hourly coworkers, but weren’t able to qualify for overtime, Acting Labor Secretary Julie Su said in a statement.

Most who are making $58K annually really do have supervisory status, and shouldn’t qualify for OT. They knew what they were getting into when they took the job. They knew they could, and probably would, be working over 40 hours a week. Going forward, companies could scale that pay back and refuse to let them work more than 40 hours a week.

The new rule could result in an additional $1.5 billion in pay for employees, according to an estimate from the Economic Policy Institute, a left-leaning think tank.

“Employers will be more than able to adjust to the rule without negatively impacting the overall economy,” wrote EPI director of government affairs and advocacy Samantha Sanders and President Heidi Shierholz.

Well, it’s easy to say for people who aren’t having to run a business and make payroll, eh?

Who won’t qualify for OT?

First, overtime pay isn’t available to salaried workers who are considered “executive, administrative or professional” employees.

That makes sense

Some researchers have pointed out that corporations give fake titles to low-ranking workers like “grooming manager” for a barber in order to make them appear like managers.

The new rule stipulates that only “bona fide” executive, administrative or professional employees are exempt from the expanded OT rule.

I do agree with that. But, really, how many of these folks are actually working 20-30 hours extra a week? That seems extreme and very rare.

Some industry groups are pushing back against the overtime rule, saying that it will harm their operations and lead to job cuts. Some are also threatening legal action.

“We fear many hoteliers will have no option other than to eliminate managerial jobs that are long-established paths to advancement,” American Hotel & Lodging Association (AHLA) interim President Kevin Carey in a statement. “AHLA is reviewing all available options, including litigation, for defeating this ill-advised regulation.”

This rule is mostly about pandering to workers in order to receive votes, with no consideration of the consequences, as passed by people who mostly never worked in the private sector and never ran a business. Those 4M workers are about to go from salaried to hourly positions and have their hours cut under 40 per week which will end up being a massive pay cut. Bidenomics.

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