Obama Eliminated Salaried Work for Millions

For most of my adult working life, I was salaried.  Sure, I worked overtime without any compensation for it.  But, usually that was my choice. Often, I would take paperwork home to catch up.  At the same time, it was generally accepted that I could ask to come in late, leave early, take a longer lunch, run an errand, or go to a doctor during the workday without being docked.  As long as my work was being done and the absences were approved and not excessive.

President Obama has changed all that.  With a stroke of his pen, he has basically eliminated salaried pay for anyone making $50,440/year and put them on the clock. That's because, if you are salaried and you work more than 40 hours in any week, you will be paid time-and-a-half per hour based on whatever your equivalent hourly rate is in your 40-hour work week.  By making this change, Obama claims he is giving 5 million workers a raise. But, is he really?

First of all, just because you are salaried and make less than $50,440 doesn't mean you are automatically eligible for overtime pay.

The company you work for must have revenues in excess of $500,000.  If your job is task-defined as executive, administrative, managerial, or professional, you are exempt from the overtime benefit. If you supervise two or more people, or have input in hiring and firing, there's no overtime pay. Also, contract labor and field sales personnel that work on commission are excluded.  Other rules apply as specified by the Fair Labor Standards Act which the President's pen can't touch.   Only Congress can.

As usual, Obama seems to think that employers will roll over and accept his dictate without making changes to avoid the new overtime rule.

In some cases, startup and existing companies who are either unprofitable or only marginally profitable, and who depend on everybody pitching in after hours could go out of business and, as a result, people will lose their jobs; salaried or otherwise.  A generalized rule like this makes no exception for a company in hard times.

Some salaried workers, depending on how close they are to $50,440 and depending on how much overtime they put in, will see a raise to just above $50,440 to avoid having to pay  them overtime.  Others may lose their jobs to outside contractors; a growing trend as a result of ObamaCare.  Some may be replaced with part time workers. Even, a change in duties and responsibilities with a small pay increase could bypass it.  Lastly, anyone left and eligible will be changed to an hourly worker.  They won't get paid for lunch or breaks, coming in late, leaving early, or for exceeding sick days.  Also, their quality of work and timeliness of completing responsibilities will be closely scrutinized.  Employee relations may greatly suffer as a result of the new rule.

My guess is that, maybe, a million workers will benefit, but far more will be hurt. That is usually the case when government intervenes in the business of the private sector.


References:

New overtime rule could affect up to 5 million workers: http://www.usatoday.com/story/theoval/2015/06/30/obama-overtime-rules-huffington-post/29500349/

Fair Labor Standards Act: http://www.flsa.com/coverage.html

Large Companies Double Use of Contract Labor: http://www.computereconomics.com/article.cfm?id=1331

Small Business Is Using More Contractors - Entrepreneur: http://www.entrepreneur.com/article/236391