Photographer: David Williams/Bloomberg

Here's How Employers Are Gearing Up for New U.S. Overtime Rules

Protections extending to 3.9 million workers take effect Dec. 1
From

U.S. employers are watching the clock.

With federal rules expanding paid overtime eligibility set to take effect next month, business leaders are making moves to contain future costs, according to a New York Federal Reserve Bank survey.

The new regulation, finalized in May by the Labor Department and scheduled to come into force on Dec. 1, requires employers to pay time-and-a-half to salaried employees earning up to nearly $47,500 annually — about double the current threshold of almost $24,000 — after they work more than 40 hours per week.


In the survey, about one-in-three manufacturers and 40 percent of service firms in New York, northern New Jersey and southern Connecticut said they plan to implement one or a mix of responses: from raising salaries for some workers to above the overtime threshold, to limiting employees' hours to 40 a week, or adjusting their headcount, mostly through job reductions. Other actions they're considering include converting some workers from salaried to hourly status, according to the New York Fed survey.

The change has met resistance from businesses and Republicans, the party of President-elect Donald Trump, who on the campaign trail gave conflicting views on his employment policies, saying at different times the minimum wage should be abolished, frozen or raised. Republican governors control all but one of the 21 states that have sued Democrat Barack Obama's administration to block the regulation, saying it could lead to layoffs.

A report from the nonpartisan Congressional Budget Office released Monday found that canceling the scheduled changes before implementation — however unlikely it seems — would reduce payroll costs by $40 million in December and by $470 million in 2017. Employees' earnings would also fall, but real family income would increase by raising firms' profits and making consumer goods and services less expensive as a result, it found.

Some 3.9 million additional workers would gain overtime protection under the new rule, the CBO said.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE