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5 Ways the Flawed Overtime Rule Will Do More Harm Than Good

The Department of Labor has released a controversial new rule doubling the salary threshold under which employees qualify for overtime—a drastic change that President Obama is touting as a “win for working families.”

When the White House claims a new regulatory scheme will be a “win” for workers—watch out. We’ve seen this sales pitch before, and it usually means they are about to hurt the very people they claim to help. That is certainly the case when it comes to the department’s flawed overtime rule, and here’s why.

The flawed overtime rule will stifle workplace flexibility. Many salaried employees will feel they’ve taken a step back in their careers when they are suddenly forced to clock in and out of work. Others will no longer be afforded a flexible work environment that helps them better balance work and personal obligations, or find their benefits like bonuses, paid time off, and health insurance are in jeopardy.

  • “These rules are a career killer,” the National Retail Federation said. “With the stroke of a pen, the Labor Department is demoting millions of workers … hundreds of thousands of career professionals will lose their status as salaried employees and find themselves reclassified as hourly workers, depriving them of the workplace flexibility and other benefits they so highly-value.”

  • “Many employees will lose the professional ‘exempt’ status that they have worked hard for and the flexibility from rigid schedules that they care deeply about,” the Society for Human Resource Management said. “While changes in regulations were meant to benefit employees, a change of this magnitude will do the opposite.”

The flawed overtime rule will limit opportunities to climb the economic ladder.
Employees shifted from a salaried position to an hourly one will realize they have fewer opportunities for on-the-job-training, career development, and managerial experience. As for the millions of Americans still looking for work in an anemic economy, they’ll find little hope under a new rule that will ultimately lead to fewer jobs. 

  • “If the goal is to … create disincentives to opportunity, then mission accomplished,” the National Association of Manufacturers said.

  • “Key management positions will be eliminated, restaurant employee career advancement will be derailed and workplace morale will plummet,” the National Council of Chain Restaurants said.

The flawed overtime rule will create new hurdles for small businesses.
The administration can’t just wave a magic wand and expect small businesses with limited resources to be able to afford the department’s new mandate. On top of dramatically higher payroll costs, small businesses will continue to confront a confusing and complex regulatory scheme because the administration refused to take any steps to help streamline it. 

  •  “Small businesses everywhere will be affected,” the National Federation of Independent Business said. “They’ll have to make tough choices that might affect the very workers whom the Department of Labor thinks it is helping.”

  • “Franchising is a unique business model that provides working Americans the chance to operate and own a small business, yet government regulations like the new overtime rule are continuously jeopardizing this ladder of opportunity and stripping away employees’ ability to negotiate their future,” the International Franchise Association said.

The flawed overtime rule will hurt college students and young adults beginning their careers.
In addition to increasing costs for small businesses, the overtime rule will also raise costs on America’s colleges and universities. Many young Americans will face even higher tuition, and then struggle to find good-paying jobs. As Chairmen Kline and Walberg stated, “While the president and his Democrat allies pay lip service to college affordability, they are pushing a rule that will increase college costs and make it harder for graduates to begin their careers.”

  • “Requiring such a dramatic and costly change to be implemented so quickly will leave many colleges with no choice but to respond to this regulation with a combination of tuition increases, services reductions and, possibly, layoffs,” the American Council of Education warned.

  • “The final rule presents tremendous issues for colleges and universities, which would face annual cost increases in the millions and be forced to make difficult decisions for the 3.9 million higher education workers nationwide and the students they serve,” the College and University Professional Association for Human Resources said.

The flawed overtime rule will jeopardize the ability of nonprofits to deliver important services.
For months, nonprofits nationwide urged the administration to pursue a more balanced approach that didn’t threaten to pull the rug out from underneath them. Their concerns were ignored, and now organizations providing important services in their communities are worried about how their employees and the people they serve will be impacted. 

  • “Nonprofits in Maine and across the nation are extremely concerned about the overtime change,” wrote Habitat for Humanity Greater Portland Executive Director Godfrey Wood. “Services to those in need will be reduced and organizational funding will decline as resources are spent on overhead instead of programs.”

  • “We are particularly challenged because of the way we are funded,” said Tina Sharby, chief human resources officer at Easter Seals in New Hampshire. “Even today, I had a staff member ask me how this is going to work. She said, ‘I enjoy the flexibility that I have.’ That’s going to have to change.”

Despite the administration’s misleading rhetoric, it’s clear the American people will lose under the new overtime rule. And that’s why House Republicans will do everything possible to protect families, students, workers, small business owners, and non-profit organizations from the painful consequences.

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