Jason Habinsky in Inside Counsel: White-Collar Overtime Proposal Creates Challenges for Many Businesses

07/09/2015

Now is the time for companies to respond to the proposal from the U.S. Department of Labor on the overtime paid to white-collar workers. The annual salary-level threshold may be raised to $50,440, according to the federal proposal. It is now at $23,660 a year.

In making the case for the changes, the Labor Department says that the current level means, “a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay.” Also, President Obama has predicted the changes could mean millions of workers will qualify for overtime pay.

When it comes to impact on companies in the United States, another attorney, Jason Habinsky of Haynes and Boone, predicts the final rule will mean it is “most likely a greater number of employees will now be eligible for overtime.” That also means this could cost companies a lot of money, Habinsky said.

“In-house counsel and lawyers who work for companies will have to work now to determine how it will affect companies,” he added. By working with human resources staff, attorneys will determine how many employees are eligible for changes in overtime pay.

“For some companies this could be a game changer … as far as costs go,” Habinsky said. It may lead to some companies reducing the number of employees (layoffs are possible); it could change hiring practices; or companies may need to change policies on hours worked by employees, he adds.

“It’s going to change the landscape for all employers,” Habinsky said. “It will have a trickle-down effect throughout the organization…. It could have a counter-productive effect.”

Excerpted from Inside Counsel. To read the full article, click here.

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