When my sister was a department manager for a retailer, she worked horribly long hours for a meager paycheck and received no overtime. Some weeks, we barely saw her and joked that when she calculated her per-hour fee, she actually was earning less than the sales people.
There are lots of women and men in jobs like the one she held, trying to support families and putting in the long hours that are expected of people in salaried positions.
Now, changes are in the works that could help more American workers get paid for some of the extra time they put into their jobs, or at least reclaim their work/life balance.
Those changes will come from proposed new overtime rules that force businesses to pay overtime to most workers who earn a salary of less than $50,440 a year, instead of only those who earn less than $23,660 a year. The change in salary (to adjust with inflation) would extend overtime at 1.5 times pay to 5 million more Americans workers. In Florida, the salary change would extend overtime to about 370,000 additional employees.
On the surface, that sounds like great news — more money in the pockets of relatively low earners who regularly put in more than 40 hours a week. But we will have to wait to see whether the reality plays out the way the proposed rule changes are intended and how it will affect our work patterns.
Until now, there have been claims — even lawsuits — contending that employers easily avoid paying overtime currently by giving employees manager titles and paying them just above the $23,660 annual threshold, even though those exempt workers are supposed to perform mostly administrative, executive or professional duties.
That will change.
“Now, no matter what your boss calls you — store manager, shift supervisor, assistant to the regional manager — if your salary is below the threshold, you have to be paid for your extra hours,” Ross Eisenbrey, vice president of the Economic Policy Institute explains in policy memos. “This is a simple and important protection.”
Labor Secretary Thomas Perez told the media the new rules could add as much as $1.3 billion nationwide to workers’ pockets. For employees, however, the changes may take significant adjustments. Maria Calvo, a manager at a Pembroke Pines smoothie store, explained to me that she does what it takes to get the job done. Sometimes that means working more than 40 hours or making phone calls to staff members at night. Sometimes it also means being able to run an errand during the day without answering to anyone as long as she returns and stays a little later to ensure that all runs smoothly.
Under the new rules, she and others might no longer have the discretion to decide whether to put in extra hours to do their jobs. Workers like Calvo will need to track their hours and likely will be told to hold their work schedule to 40 hours per week. Of course, the upside is they regain some of the work/life balance they have been giving up without pay.
In an interview with NPR, Elizabeth Suffern said she quit her job as a call-center manager after discovering that salaried work was not a career stepping stone for her. She fell outside the bounds of overtime rules because her salary was $24,000 but ended up working early mornings, late nights and Sundays. Under the new rules, Suffern would be entitled to overtime, but she also would have to be OK with punching a clock and tracking her hours, a tradeoff some managers could consider frustrating or demeaning.
Businesses could get creative
President Barack Obama has said the new rules are not only good for employees, they also help businesses, particularly those who already are paying their employees what they deserve and are undercut by competitors who aren’t.
Business groups insist the overtime rules change won’t actually benefit the workers as intended. In fact, businesses already are looking at alternatives to paying overtime. “Most will get as creative as possible,” says Mark Neuberger, a labor attorney with Foley & Lardner in Miami. Rather than fattening paychecks, employers could simply hire more part-time workers, send workers home after 40 hours, boost a salaried worker a few thousand to avoid paying overtime, or lower a worker’s base hourly pay to offset any overtime he would be owed.
All would be possible and legal.
“You are going to have employers rethinking how they use their workforce,” says Laura Marks, president of the Greater Miami Society for Human Resource Management. “It’s a potentially big expense … You will see businesses re-evaluate job classifications. There are so many ways you could see a shift.”
Flexibility takes a hit
Aware of what the change means for work/life balance, I immediately thought about how flexibility could be affected by overtime rules. By turning managers or other salary workers into rank-and-file hourly workers who need to track hours worked, their ability to work from home or clear email from their phones outside the workplace could be limited. Overtime-eligible employees historically have had much less freedom over when and where they work.
In poll after poll, workplace flexibility ranks as highly important to job satisfaction. But when the burden is on the employer to accurately track hours, experts say flexibility will suffer.
Michael Eastman, an attorney and vice president of Public Policy with Norris, Tysse, Lampley & Lakis, says employers are more likely to eliminate overtime and prohibit job-related tasks outside the workplace rather than risk a violation of the new rules. He also foresees businesses setting policies that require more rigid adherence to a particular schedule such as 9 to 5 with a one-hour break.
“I think we will see employers prohibit practices that they have allowed and that we view as flexible,” Eastman says.
As a small-business owner, Paul Klugerman, owner of Signarama in Kendall, says he already pays all his employees overtime after 40 hours a week, even those on salary. Doing so, he says, increases loyalty: “No one wants to feel like they are being cheated. In a small business, you need that trust level.”
The National Retail Federation has a different perspective. It sees a more detrimental outcome to raising the salary eligible for overtime. The organization estimates more than 2.2 million retail and restaurant workers would be affected by the rule changes and would see their job advancement opportunities reduced. It also claims the proposed changes would turn salaried professionals into clock-watchers.
Brent Upchurch, the owner/operator of 29 McDonald’s restaurants in South Florida, says the proposed new rules could affect his managers-in-training — salaried employees who are trying to get experience to become store managers. “Instead of salary, they may have to go to hourly,” Upchurch says. “With overtime, I can’t afford to pay wages that high.” Upchurch says he will carefully monitor changes to overtime rules and hopes they will be implemented over time rather than become fully effective all at once. “That way, I can at least plan for it,” he says.
Cindy Goodman writes regularly on workplace issues. Connect with her at BalanceGal@gmail.com, follow her @balancegal or visit worklifebalanceingact.com.
Weigh in on proposed DOL rules
The Department of Labor will hold a comment period through Sept. 4 in which employers or employees can submit their thoughts on the proposed overtime rule, how bonuses should factor in, and a possible revision of the “duties test” for exemption. Changes could be adopted by the end of the year for implementation in 2016. Submit comments through the Federal eRulemaking Portal at regulations.gov.