Federal Bureaucrats Create New Mandates on Businesses: Department of Labor Finalizes Overtime Rule

By: Carolyn Johnson

Today, the Department of Labor released their long anticipated overtime rule, marking yet another burdensome federal mandate created by bureaucrats that will significantly impact businesses across the state and nation.

The rule, which takes effect December 1, 2016, doubles the salary threshold for which businesses must pay overtime. Employees making less than $47,476 a year are now required to receive overtime for any hours worked over 40 hours. The White House estimates that this will cost businesses $12 billion over 10 years and impacts 4.2 million workers. The salary threshold will automatically increase every three years to the 40th percentile of the lowest salary region in the country. Based on current projections, this would result in an increase to $51,000 on January 1, 2020.

The result is that job creators will have to make tough decisions on how to control costs while examining how they classify and pay employees. Businesses can increase salaries to above the threshold, switch employees from salaried to hourly, or limit overtime hours. This new mandate will increase costs to businesses, which can actually stifle job creation, result in employees losing benefits or job classifications, and could result in some businesses increasing costs to pay for additional overtime pay.

The Florida Chamber has actively fought this new rule since it was announced last summer, including submitting comments to the Department of Labor expressing concerns with the proposed rule, which can be found here. Additionally, the Florida Chamber led a team of business owners to Washington, D.C. last week to meet with Florida’s congressional delegation on the impact of this issue to Florida businesses.

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