Are you one of the millions of employees who Obama wants punching time-clocks?
Are you fortunate enough to have a flexible job schedule?
Does your employer allow you to work remotely some days? To telecommute from home?
Or perhaps you’ve permission to work at odd hours, or on weekends — just so long as the job gets done.
For millions of Americans, flexible job schedules make juggling work and family-life obligations much easier. Salaried workers may, on occasion, leave work earlier than normal quitting time, when personal errands require, then make up the work later.
Employers allow this because they know that happy employees are more productive. When the latter know their employers not only value their work, but trust them, it’s a win-win for everybody.
For thousands of Nevadans and millions of Americans, such flexible job scheduling appear likely to become history.
The reason is an Obama directive given the U.S. Department of Labor in March 2014. In a White House photo-op, the president signed a memo directing the department to substantially revise federal regulations that enforce the depression-era Fair Labor Standards Act (FLSA).
Those regulations determine which workers must receive overtime pay.
For the last two years the draft regulations have been undergoing the federal comment process. Now on the last leg of their bureaucratic journey, those regs more than double the salary threshold below which the federal government requires overtime pay.
Currently that ceiling is set at an annual salary of $23,660. The new regulations would raise the ceiling to $50,440 this year and automatically increase it every year thereafter.
Former Department of Labor administrator Tammy McCutcheon, who in 2004 oversaw previous revisions to the FLSA overtime rules, says that the Obama administration is ignoring the original Congressional intent behind the threshold, which was to simply screen for employees who were obviously not exempt.
The administration’s clear goal, she told a House subcommittee, is to expand “the number of employees eligible for overtime beyond what Congress envisioned when it created the exemptions” from the overtime rules.
McCutcheon also said that the regulations will have a disproportionately negative impact on states with a lower-than-average cost of living, such as Nevada. The administration’s proposed salary threshold, she notes, is even far above the thresholds established by high-cost-of-living states, such as California ($37,440) and New York ($34,124).
The Department of Labor has embraced an “unprecedented” and “unsupported” change in its rule-making methodology, simply to greatly expand the number of employees subject to the 1938 law, argued McCutchen.
In 1958, the department had based the minimum salary level for exemption on the 10th percentile of average employee wages, she said, and then, in 2004, the Bush administration raised it to the 20th percentile to account for changes made then in the “duties tests.”
If that 2004 methodology were used today, she said, the threshold would only be $30,000 annually. Instead, McCutchen points out, the DOL has chosen to use the 40th percentile.
Consequently, presuming the Obama administration approves the regulation that it itself proposed two years ago, salaried employees making under $50,440 annually will come under the new provisions and must henceforth be paid time-and-a-half for any hours worked beyond eight hours a day.
And that change, for employers, suddenly turns flexible job schedules for these salaried employees into a serious legal risk.
Thanks to the FLSA and ever-alert trial lawyers, overtime-eligible employees nowadays have much less freedom over when and where they work. The reason is that, every year, trial lawyers file thousands of federal lawsuits under the Fair Labor Standards Act.
Thus employers have learned — many through hard experience — that because these lawsuits can easily bankrupt their firms, salaried employees eligible for overtime must be required to either log their hours in and out or punch in and out on a time clock.
Even if employees don’t work overtime, their employers need records that legally prove it. The result is that companies often must forbid overtime-eligible employees from working remotely. As the human resources chief for Pitney Bowes explained to USA Today reporters, the firm denied overtime eligible workers’ requests to work from home because “you just don’t take the risk.”
Of course, while employer adaptation to such rigid government mandates makes lawsuits far less likely, it also deprives overtime-eligible employees of the flexibility to balance their work and family lives. Furthermore, it undermines worker productivity and morale.
Although President Obama has justified his edict by asserting that it will produce higher incomes and more “equality” of compensation, economists nationwide deny that.
“The move may be good politics,” argued Bloomberg’s editorial board — “putting Republicans in an awkward position and making nice with Democrats opposed to [Obama’s] free-trade agenda. But it isn’t going to do workers much good.”
The board notes that, even according to economists who advocate the new regulations, the rules won’t actually do much to raise employee incomes. Since labor costs are critical to keeping firms profitable, says former White House adviser Jared Bernstein, employers will cut wage rates to take expected overtime pay into account.
Moreover, “the change imposes a new compliance burden (including the risk of litigation) on affected employers — a significant cost in its own right,” continues the Bloomberg editorial.
“Work schedules will have to be changed, job responsibilities altered. In addition, cuts in base wages aren’t the only way to avoid a higher payroll. Instead of hiring more people for 40-hour weeks, companies may employ more part-timers, or try to classify workers as contractors rather than employees — leaving them with fewer protections, not more.
“All these adjustments, and the further interventions they’ll call forth, are a waste of resources,” says Bloomberg. “The steady accretion of regulatory burdens on employers has accelerated in recent years and is one of the things holding American enterprise back. Obama should be looking for ways to help businesses succeed, rather than for ways to distract them from that task.”
The period during which the public was able to comment on the proposed federal regulations ended Sept. 4, 2015, with the Labor Department receiving roughly 270,000 comments.
That’s about three times the amount of comments the agency received when it last updated the overtime rules back in 2004, according to HRMorning.com, a website that specializes in informing human-resource managers and executives. About 50,000 comments reportedly came in during the last week alone.
Some 900 of the submitted comments came from members of the Society for Human Resource Management, HRMorning.com reported. And when 413 members of the organization responded to a survey, 67 percent said they expected employees under the new FLSA regulations would end up with decreased autonomy and flexibility.
Seventy percent said they expected the firms they served would offer fewer opportunities than before to work overtime, because of cost concerns.
Originally, notes HRMorning writer Christian Shappel, the Department of Labor had set November 2014 as its tentative deadline for issuing the proposed rules. However, those rules did not emerge for another six months.
Then, the finalized rules were to be issued sometime in early 2016 — which is now past.
“All of these delays have butted the rulemaking process right up against the presidential election,” says Schappel, who adds:
“This begs the question: Would the Obama administration really issue a highly controversial set of finalized rules just prior to the election?”
Steven Miller is managing editor of Nevada Journal and senior vice president at the Nevada Policy Research Institute.