US Senator Mike Rounds’ Weekly Column: Overtime Rule Will Hurt South Dakota’s Workforce and Employers

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By Sen. Mike Rounds

The Obama administration recently issued a new regulation—one of the 195 new regulations issued so far in 2016—to more than double the salary threshold under which employees can qualify for overtime pay of time and a half. Like so many of the administration’s regulations, the new overtime rule is a one-size-fits-all mandate that doesn’t take into account individual needs and regional differences. In fact, it will actually end up hurting the citizens it is meant to help: employees and the job creators who hire them.

Currently, employees making $23,660 or less per year automatically qualify for overtime after 40 hours per week. The new rule issued by the Department of Labor (DOL) would raise that threshold to $47,476, effective Dec. 1, 2016. Labor costs will go up, and many hard-working, mid-and-entry-level employees will feel the squeeze. Employers will be forced to either pay these new labor costs or reclassify salaried employees as hourly workers and limit their hours. Additionally, employees who will be converted from salaried to hourly will lose the flexibility they have today. Not only is this bad for business, it also makes it more difficult for new and mid-level workers, many of whom live paycheck-to-paycheck, to support their families and advance their career.

By forcing small businesses, restaurants, retailers, colleges and universities to comply with yet another costly new mandate, the administration is hindering economic growth and stifling innovation. The best way to strengthen the middle class is to boost our economy by lowering the tax burden, removing costly regulatory mandates and increasing workplace flexibility. Unfortunately, this new overtime rule will have the opposite effect.

Earlier this year, I cosponsored the Protecting Workplace Advancement and Opportunity Act, which would require DOL to pursue a balanced and responsible approach when updating federal overtime rules. Under this legislation, DOL would be required to perform a deeper analysis of the impact changes to overtime regulations will have on businesses, nonprofits, local economies, healthcare providers and colleges. Senator Lamar Alexander, Chairman of the Senate Health, Education, Labor and Pensions Committee, has pledged to file a Resolution of Disapproval to stop this new rule, which I wholeheartedly support.

Since the rule was first proposed in 2014, DOL received nearly 300,000 comments, many of which came from employees, business owners and local government officials, who tried to explain that the rule would stifle growth. Still, the DOL pushed forward with the rule, disregarding the input from those it says it is trying to help. Additionally, the administration failed to take into account regional differences when finalizing this new mandate.  What’s good for South Dakota may differ greatly from what’s good for California and New York. This is especially true when you’re talking about cost of living and family budgets.

Employees deserve fair pay for an honest day’s work, but forcing employers to comply with this rule is irresponsible. It threatens businesses, employees, state and local governments and the economy as a whole. If the president wants to truly help the middle class – he should start by withdrawing this misguided rule.

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