Sept. 5, 2023
American companies would have to pay overtime to a larger pool of workers if a new rule proposed by the U.S. Department of Labor (DOL) is adopted.
The rule would raise the minimum salary threshold at which workers are exempt from overtime pay from $35,568 to $55,068. Further, it would implement automatic increases to the threshold every three years, at a rate tied to the 35th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage census region.
Business groups were quick to oppose the proposed rule. “We’re disappointed DOL has decided to move forward despite repeated requests from [the Partnership to Protect Workplace Opportunity] (PPWO) and the regulated community to abandon or at least delay the rulemaking until the economy stabilizes,” said Josh Ulman, spokesman for PPWO, an organization comprised of associations, businesses and other stakeholders representing businesses. “Right now, we’re still recovering from the COVID-19 pandemic’s impact as we face continued inflationary pressure as well as a cooling job market.”
The U.S. Chamber of Commerce has also called on the DOL to adjust the proposed overtime change. “The Department of Labor’s proposed overtime regulation is the wrong rulemaking at the wrong time,” Marc Freedman, vice president of workplace policy, said in a statement. “It represents a more than 50 percent spike in the salary threshold and will increase costs for small businesses, nonprofits and other employers at a time when businesses already face persistent workforce shortages that are hindering the economy. The proposed regulation also includes an automatic escalator clause that lacks statutory authorization and guarantees the salary threshold will become unworkable in just a few short years. The U.S. Chamber hopes that DOL heeds the comments and input from employers and makes significant changes to its proposal.”
The change would wipe out the already thin margins that most restaurants operate on. “Restaurant operators are once again feeling the weight of uncertainty because of a Department of Labor change that will increase their operating costs,” Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in a statement. “The average small business restaurant runs on a 3-5 percent margin, but DOL found that the changes proposed in this rule will increase costs for affected restaurants by 2.5 percent. Adding this kind of cost to the already high price of food and years of increasing labor costs will leave many of these operators in the untenable position of raising prices, cutting costs or closing their doors.”