There has been a new Overtime Proposal that has been suggested by President Obama.
Since overtime is based on the minimum wage, this law will affect all those who are classified as exempt employees, by forcing an exempt employee’s wages to equal the new the standards established by this proposed law.
Personally I do not think that this is good for small business nor for the general state of the economy. It is amazing to me that government and politicians have forgotten the purpose that the minimum wage was to serve.
In 1938, the Fair Labor Standards Act established a federal minimum wage to serve as “a floor below wages,” to reduce poverty and to ensure that economic growth is shared across the workforce.
Having forgotten this key point our government acts as though the minimum wage was supposed to be the standard for people to actually live on, and yet it is not the standard that most employees’ wages are based on.
By in large minimum wage is to serve for those employees who are working part time, or who are new on the job.
The point is minimum wage was never meant to be the standard that establishes what employers should pay.,
The minimum wage was instead established as a “floor below wages” for the purpose of reducing poverty and to ensure that economic growth is shared across the workplace.
As time has gone on the purpose of the minimum wage has been changed more by government and politicians than anything else.
On the other hand it is not fair for employers to take advantage of their employees by making them exempt and paying them a salary for the purpose of not having to pay the proper amount or overtime or in the case of exempt employees overtime at all.
Both sides are missing the point of the minimum wage and this new overtime proposal will make employers pay closer to what they should be paying for overtime in the first place.
In a nut shell here is what is at stake for both employer and employees.
The change in rule would increase the salary standard allowing more people to be able to be paid overtime and as a result of not making enough to qualify as exempt. To explain this in more detail managers do not qualify for overtime if they make $23,660 per year.
The proposed New Overtime Proposal if passed would allow an additional five million worker to be eligible for overtime who currently do not qualify for overtime because they are considered exempt.
President Obama feels the current rules are both to weak and are outdated. Obama and others feel that employees are not being paid what they should be paid and this New Overtime Proposal will solve that.
It is no surprise that the unions agree with President Obama.
But there is another side of the story and that side comes from the voice of Small Business who employees well over 70% of the American workforce.
It is worth noting that the Republicans have introduced a bill on Thursday that is designed and aimed to block the new proposed Overtime Proposal. The Republican Congressional Leadership did this because they feel this new proposal will cause unnecessary stress on all business not just small business.
The critics of the new proposal are concerned about the following:
• That businesses will increased and harsh consequences because of the increased labor costs this would put on business.
• The outcome of this would be that employers would have to do what they feel they need to do in order to service which would more than likely reduce the employee’s hours or even limited the number of salaried positions.
Christine Owens, executive director with the National Employment Law Project, had this to say:
“It’s really quite simple: working families need more time or more money, or both. And now, with transmittal of the Labor Department’s overtime proposal to The White House’s Office of Management and Budget for final review, they are one step closer to getting what they need.
“The precise content of DOL’s final proposal is unknown. But if the proposed rules sent out last summer are any indication, what is certain is that updating the “white collar” exemptions, which deny overtime protections to more and more workers each year, is long overdue. Under existing rules, employers can exempt so-called white-collar workers paid as little as $23,600 per year—a poverty wage for families—and require them to put in excessive overtime hours for no pay at all. With standards so low and so easily manipulated, millions of workers struggle at work and at home, paid too little to support themselves and their families and robbed of the personal and family time they need.
“Updating the white-collar exemptions with a more reasonable minimum salary threshold is an appropriate antidote to this crisis, ensuring that millions of low- and middle-income workers will earn more for the extra hours their employers impose or have more time to spend with their families, pursue other interests, or take on a second job if needed. The long-overdue update will also encourage companies to implement business practices like spreading hours more broadly, hiring more employees, or developing operational efficiencies that get the job done effectively, without overloading a smaller number of employees.
“The economy has been on the path to recovery for several years. Job growth is strong and unemployment is declining. But workers have been stuck, putting in too many hours for too little pay. Updating the white-collar overtime exemptions promises to finally jump-start a recovery for workers too, promising more pay or more hours. It’s a win-win for working families, for their communities, and for the economy overall. Along with other important measures, like raising the minimum wage to $15 per hour, a new white-collar overtime rule will help ensure that the economy, at last, is firing on all cylinders, with broad-based recovery that works for all of America’s workers.
“The Labor Department has done its job, and the public has had its say. Now it’s up to OMB to review and approve the final rule. We urge that it do so quickly.