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Opinion: New overtime rule is one-size-fits-none approach

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Imagine being an entrepreneur starting a new business. You put in long hours trying to bring your idea to fruition. You’re surrounded by a core group of employees willing to work as hard as you do.

Overtime isn’t the issue – what’s important is getting that big idea to market. So when regulators change the rules for businesses in how they handle their most important asset – their people – the entrepreneur may have to put on the brakes.

Such is the case with new overtime rules from the U.S. Department of Labor that will make it even more difficult for those business owners to keep providing the products, services and jobs the economy needs.

On May 18, the DOL published changes to the overtime rule. While there is much to consider in the 500-page regulation, the main change is this: Effective Dec. 1, workers who make less than $47,476 a year ($916 per week) will need to be paid overtime, even if they’re classified as managers or professionals. That number is more than double the current threshold, and it will be adjusted upward every three years.

This is another example of regulatory overreach. DOL officials say 4.2 million workers now will be eligible for overtime pay and that the change is meant to help ensure workers “are paid a fair day’s pay for a hard day’s work.” This includes 85,000 workers in Missouri, according to the DOL.

What the department fails to mention is the impact on businesses. The vast majority of companies operate on extremely tight margins from month to month. To implement such a drastic increase with such a short deadline can only lead to a handful of outcomes, none of which is beneficial to workers:

• Companies will be forced to reduce their employee numbers and shift job duties to remaining employees.

• Jobs will be converted from full-time to part-time positions with fewer benefits.

• A business will find no feasible method to meet the new requirements and be forced to close its doors.

But these changes, while they may be made with the best of intentions, also will have spillover consequences. The new rules will require new training and lost time for administrators, human resources and payroll professionals – similar to what we’ve seen with the ongoing changes related to health care reform.

The environment also gets decidedly darker for potential entrepreneurs. Business startups often rely almost exclusively on a small handful of employees willing to put in long hours to get a new idea off the ground. That situation will be a near impossibility in this new environment.

With a single stroke of a pen and 500 pages of regulation, the DOL has created a one-size-fits-none approach that exponentially increases the burden of doing business nationwide. While this change may be meant to help workers improve their position, it will ultimately affect nearly every business in a detrimental way – and it will end up hurting the very workers it’s supposed to help.

It’s bad business everywhere.

Matt Morrow is president and CEO of the Springfield Area Chamber of Commerce. He can be reached at matt@springfieldchamber.com.

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