New overtime rules could impact businesses

New regulations raise threshold for overtime pay

The Obama administration is finalizing new overtime rules that will affect certain workers’ pay.

The new rules released by the Labor Department say that any salaried employee that makes less than $47,476 per year must receive overtime pay after 40 hours of work.

The previous threshold was about $23,660.

The administration says this will help some 4 million workers earn more money, but some in our area said it could have unintended consequences.

UW-La Crosse economics professor Mary Hamman loves looking at numbers.

“I really enjoy data! Most of my research involves very large data sets,” she said.

When it comes to the new overtime rules, however, she said the numbers might force employers to make some changes.

“Logically, if I’m an employer, and I now have people that now qualify for this overtime, even if I love my people, and my people are great, if I can’t afford that, I might be tempted to reassign their hours,” said Hamman.

Anne Hlavacka from the Wisconsin Small Business Development Center says in addition to employers shifting hours, some employers might move their salaried workers to an hourly pay scale.

“If someone was being paid, hypothetically $15 per hour, and that would equal $30,000 a year,” she said. “They may decide they are really going to pay them $14 an hour, and the difference will be made up for those extra hours.”

The Wisconsin Manufacturers and Commerce group also oppose the proposal, but said they understand the need to increase the threshold.

“If you would take that number, so $23,660, and simply adjust that for inflation, it would give you a number just under $30,000 currently in 2016,” said Chris Reader, director of health and human resource policy for the group. “So something like that makes a lot more sense.”

For someone so involved in numbers, it’s a solution that doesn’t quite add up.

“While I think it’s one of the few feasible levers that can be pulled, it’s not entirely clear to me that it’s the optimal policy for increasing middle income,” said Hamman.

The labor department is still working out the details, but there will be exceptions to the new regulations.

That includes jobs in higher education, as well as some government employees.
The administration hopes to implement the new rules by December 1 of this year.