At Work

Behind the Myths: The Truth about Overtime : U.S. Department of Labor Blog πŸ€”πŸ€”πŸ€”πŸ€”πŸ€” Good example of why bureaucrats just don’t get it.Β 

The following is from the Department of Labor. Read the “myth” and then read the response. 

Of course there is nothing in the rule that requires employers to adjust jobs or pay or benefits, but that was never the issue. The point made by critics of the rule is that to cope with the new OT rules and to manage the new costs employers will make adjustments and while those adjustments are not required, neither are they prevented by the rule …  a point the DOL response conveniently ignores. 

In another part of the blog post DOL acknowledges that some workers may have their hours cut thereby giving them more free time to spend with families. 

I wonder how many workers are forced to work fifty or sixty hours a week without any compensation as the DOL assumes? 

I wonder how many of these workers were paid straight time or received a lump sum bonus or even compensatory time; all of which may go the way of the dodo when they are required to be paid time and a half for each hour over forty?

Once again the liberal mindset ignores the consequences of their good deeds. 

Myth: Workers will be demoted. Full-time professional careers and incentives will go the way of the dodo. Truth: There is nothing in the overtime rule that would require an employer to shift an employee from salaried to hourly, or to part-time, or to eliminate bonuses which can now be counted towards the salary threshold for the first time. Employers can continue to pay overtime-eligible workers a salary if they choose, and they can continue to provide the same level of responsibilities, benefits, flexibility, training and advancement opportunities as they do now.

Source: Behind the Myths: The Truth about Overtime : U.S. Department of Labor Blog

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  1. Well, start with the author, Weil. It would be different if he spoke from personal, professional experience. Prior to his assignment at the Department of Labor, Wage and Hour Division, Dr. Weil was an internationally recognized expert in public and labor market policy; regulatory performance; industrial and labor relations; transparency policy; and supply-chain restructuring and its effects. He previously served as a professor of economics and the Peter and Deborah Wexler Professor of Management at Boston University’s Questrom School of Business. He also served as co-director of the Transparency Policy Project at Harvard’s Kennedy School of Government. He has written five books, three regarding labor market policy including the recently published The Fissured Workplace. He has authored numerous articles and publications in a variety of economics, public policy, management, and industrial relations journals and books, as well as numerous publications in non-academic outlets. He served at federal OSHA as a mediator in labor/management settings. He has a B.S. at Cornell University and M.A. and Ph.D. in public policy at Harvard University.

    Dr. Weil is a critic of oursourcing, and of an employer’s focus on the “hedgehog” concept (as described in Jim Collins’ book “Good to Great” as one of the actions prevalent among Great companies – Hedgehog Concept: Three overlapping circles: What lights your fire (“passion”)? What could you be best in the world at (“best at”)? What makes you money (“driving resource”)?

    Instead of having employers focus on what they do best, what they are passionate about, what makes them money, Professor Weil would encourage employers to avoid outsourcing work that can be done by others more efficiently elsewhere. He claims, and correctly I might add, that this drive for efficiency, what he calls “fissuring”, results in:
    (1) Maintaining brand quality, and reputation, and in turn sales and revenues, while
    (2) Reducing wages and eroding benefits (where the wages and benefits paid by the outsourcer, subcontractor, vendor, franchisee, etc. are more consistent with the workers’ (in total) contribution, which results in
    (3) Ever-widening income inequality and lower standards of living for those unlucky enough not to be working at Apple, Microsoft, Amazon, etc.

    Yes, it is true. Department stores are losing out to Amazon and its unique business model – and yes, that includes Amazon competitors like Wal Mart – of the recently, voluntarily adopted, higher wages. Just think, all of those Wal Mart assistant managers will now be subject to overtime. I’m sure they are thankful about how the DOL has given the chance for greater income … of course, Wal Mart is much more likely to eliminate each and every one of those positions and restructure its human resources/organization.

    Most importantly, with respect to Dr. Weil, is the fact that, like so many government bureaucrats and legislators, he has NO, repeat NO identifiable experience in making payroll. He never ran a business. He never had a P&L responsibility. So, how would he know anything about how employers will respond?!

    Dr. Weil states: “Thanks to the rule, they’ll be paid when they put in more than 40 hours per week.” No, they won’t. At best, they will see their hours reduced. And, if their hours are not reduced, if that is not possible, expect to see a reduction in salary to a lower, hourly wage, with overtime – where total compensation remains the same. So, instead of hours > 40 being part of the job, hours > 40 will be an award people will compete for (as it is in many hourly jobs), and an award that is denied – leaving workers at less direct compensation. If I were Wal Mart or another employer facing this new rule, I would terminate everyone who is in a salaried position now affected by the overtime rule, and replace it with positions paid on an hourly basis – and have the current workers compete if they want their old jobs back.

    Dr,. Weil states: “There’s nothing that says workers have to punch time clocks.” What an ass. Try defending your wage and hour complaint/law suit/class action lawsuit without such records.

    Dr. Weil states: (Employers can leave the status quo in place, simply pay overtime, and) “continue to provide the same level of responsibilities, benefits, flexibility, training and advancement opportunities as they do now.” Many perquisites come with salaried employment, one of them is paid time off. No law anywhere in the US mandates employers must provide vacation benefits or paid time off. And, if a state or local government decides they want to make such a mandate, the employer only needs to provide an ERISA-fied paid time off plan offering 15 minutes of funded time off to comply.

    Dr. Weil states: “That brighter line means more protection and less need for costly litigation to receive (overtime).” No. Like all mandates, the plaintiff’s bar will be looking for opportunities to litigate for a new lawyer payday (and the Department of Labor will support their efforts). After all, it is the Department of Labor. Just look at all the litigation underway in California today, all the class action lawsuits.

    But, most importantly, Dr. Weil ignores the disruption in the workplace. Some employers will simply pay more and try to pass along the cost to their customers. But, there will be others who look at this as an opportunity to change the organization. As former White House Chief of Staff, and current Mayor of Chicago Rahm Emanuel once famously said: “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”

    Some employers will look at this as an opportunity to:
    (1) Restructure the workforce,
    (2) Adjust (reduce) benefits, particularly paid time off which historically has been provided as a function of long, past service,
    (3) Adjust wages, and
    (4) Add to flexibility by changing from salaried service to more on call or infrequently scheduled hourly work.

    Corporate benefits weenies like me look forward to correcting the mistakes we ourselves made in the past in the few times we over-promised what the enterprise was able to commit to.

    Dick, you’ll be writing about some other corporation that gave effect to their reservation of rights provisions, and scaled back the pension, retiree medical, etc. And, of course, don’t forget, the IRC 410(b) non-discrimination rules allow for distinctions in tax-qualified plans based on hourly vs. salaried status. How long before employer’s rethink their pension, 401(k) and other commitments to match FLSA non-exempt/hourly status?

    Have a nice day!

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