Overtime Rule Hurts Small Businesses, Witnesses Testify Before House Committee

Small businesses may soon be forced to lay off employees, reduce benefits and lower wages to cover the costs of implementing the Department of Labor’s (DOL’s) new overtime rule, small business owners testified before the House Committee on Small Business.

Witnesses representing associations with members spanning across the economic spectrum testified June 23 that the DOL’s new overtime rule would harm the very employees that it was trying to help. Witnesses also expressed concern with the short implementation window for the rule, which goes into effect Dec. 1.

The Partnership to Protect Workplace Opportunity(PPWO), of which NATSO is an active member, issued a statement for the record commending Chairman Chabot for holding the hearing and shedding light on the serious hardships the new overtime regulation imposes on employers, their employees, and the people and the communities they serve.

"As a result of this misguided regulation, many currently exempt, salaried professional employees will have to be reclassified as hourly wage earners--a change that is frequently considered a demotion. Employers will have no choice but to limit employees' hours to less than 40 hours per week and reduce access to training opportunities and workplace flexibility," PPWO wrote in its statement for the record.

In May 2016, DOL finalized new rules governing which employees are eligible for overtime pay.  The new rules double the minimum salary threshold that employees must earn in order to be exempt from overtime pay, increasing the figure to $47,476/year ($913/week), up from the previous salary of $23,660 ($455/week).  This number will be automatically updated every three years based on wage inflation.  The new rules do not change the so-called “duties test” applicable to employees who earn more than this salary threshold.

NATSO's analysis of the final rule and compliance guide can be found here.

Committee Chairman Steve Chabot (R-Ohio) said in his opening remarks that the DOL has heralded this rule as a long-overdue action that will provide tremendous benefits to workers, “However, like so many of this Administration’s policies, this one-size-fits-all mandate will do more harm than good.”

Chairman Chabot said small businesses are still struggling with the implementation of the Affordable Care Act five years after it enactment. “This window of compliance seems barely cracked open,” he said. 

NATSO is asking its members to support legislation that would counteract the DOL's forthcoming regulations. The legislation, introduced by Senators Tim Scott (R-S.C.) and Lamar Alexander (R-Tenn.) and Representatives Tim Walberg (R-Mich.) and John Kline (R-Minn.), would nullify DOL's proposal, prohibit automatic increases of the salary threshold and force the Department to complete a comprehensive economic analysis of the proposal to better identify its significant and devastating effects on businesses large and small. 

NATSO is urging its members to contact their Senators and Members of Congress asking them to co-sponsor the Protecting American Workplace Advancement Opportunity Act (S. 2707/H.R. 4773). NATSO members may contact their Senators and Members of Congress by clicking here.

Shannon Meade's photo

Shannon Meade

Shannon Meade implements NATSO's legislative and political agenda in Washington, D.C. She also directs NATSO's political engagement efforts.
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