Dive Brief:
- An SHRM report says that one major concern for HR professionals regarding the DOL's upcoming proposed overtime rule is how their companies will afford overtime for so many additional people, assuming that the salary threshold for exempt positions is raised and many more employees become eligible for overtime.
- A recent study posits that no matter how much the salary threshold is increased, employers will adapt and use various strategies to keep employees’ overall pay relatively the same, according to the May 2015 National Retail Federation and Oxford Economics study.
- Without intervention by employers, raising the wage threshold from $455 to $984 per week, or to more than $51,000 per year (early estimates have the number between $42,000 and $51,000), would mandate overtime pay for an additional 2.2 million workers in the retail and restaurant industries alone, according to the study.
Dive Insight:
The study says businesses likely would adjust compensation schemes to ensure they do not absorb additional labor costs by: lowering hourly rates of pay to leave total pay amounts largely unchanged, cutting bonuses and benefits to increase base salaries above the new threshold, reducing some workers’ hours to fewer than 40 per week to avoid paying overtime, and cutting compensation proportionally. Employers likely would counteract those lost hours by hiring new, lower-wage, and largely part-time hourly workers, the study predicted.
It's clear that the DOL's upcoming OT rules will have a impact on America's workforce economics, but some experts are not willing to make guarantees on how that impact will actually play out.
