State News

Obama Administration rule on overtime pay

On May 18 the Obama Administration issued a new rule that will make millions more Americans eligible for overtime pay. The Vermont Department of Labor (VDOL) estimates that 8,500 working Vermonters may become newly eligible for overtime pay above 40 hours per week as a result. The new rule, which goes into effect Dec. 1, 2016, strengthens overtime protections by raising—for the first time since 2004—the salary threshold that triggers overtime. The threshold has been $23,660 annually, but now moves to $47,476 annually, and will be reviewed by the U.S. Department of Labor (USDOL) every three years. Occupations expected to be affected by the change include supervisors in the food and retail industries, office supervisors, paralegals and research assistants. The state does not collect information on the number of hours that employees work, so all estimates are rough.

That being said, USDOL estimates that 56 percent of the employees who will be affected by this change are women, and that 2.5 million affected employees are parents of dependent children.

Some employers and business groups claim that the new overtime rules will adversely affect employees. The National Federation of Independent Businesses (NFIB) warned that the new overtime rule will mean higher costs for small employers and that some salaried workers might find themselves sliding back into hourly jobs.

“Small businesses everywhere will be affected, but most of the damage will occur in places like Vermont, where the cost of living is lower than major metropolitan areas. Once again, our small businesses will be disproportionately impacted by Washington D.C. thinking that a one size fits all approach to business is appropriate,” said NFIB’s Vermont representative, Kris Jolin.“We anticipate that entry-level management positions will become scarce thanks to this regulation, and the employees impacted will fall back into hourly jobs.”

The change “means higher labor costs yet again for Vermont small businesses. Regardless of whether they’re generating more revenue, the increase in costs will have to be offset one way or another and consumers are sure to notice,” said Jolin. “Many small employers are struggling now, and they’ll have to make the tough choice to increase prices or negatively impact the very same workers whom the Department of Labor thinks they are helping.”

Gov. Peter Shumlin was enthusiastic about the change. “This change will help continue our efforts to increase incomes and ensure wage security for more Vermonters, especially women,” he said. “I applaud President Obama’s initiative to use his authority to help middle class Americans all over this country.”

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