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Giving More Workers Overtime Could Have Downsides, Employers Say

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New federal rules would make millions more workers eligible for overtime.

The Labor Department is considering changing rules that define who qualifies for overtime pay and who does not, and businesses say it would have far-reaching consequences that may not be good for workers.

Currently, the rules say you have to make less than $23,660 a year to be eligible for overtime, but the Labor Department's proposal would more than double that required salary level to $50,440. That would mean an estimated 6 million more people would be eligible for overtime pay.

Worker advocates say the current rules open up millions of workers to abuse. Many earn relatively low salaries but are asked to work many extra hours without pay because they're exempt from overtime rules, says Vicki Shabo, vice president of the National Partnership for Women and Families. She says some research shows women, who would make up about 3.2 million of those workers, would especially benefit.

"Either people will get an increase in their wages and will be paid for the overtime hours that they're working, or they won't be forced to work overtime hours without pay anymore, and they'll be able to spend more time taking care of their other responsibilities in life," Shabo says.

But employers do not believe it would be a windfall for workers. They say they will be forced to cut costs in other ways if the proposed rules take effect as written — and that workers may not like those changes.

The Michigan Health and Hospital Association employs 107 people, more than half of whom are currently salaried, and some of whom put in extra hours, especially during emergencies.

"It only takes one bus accident, or one fire or something like the Ebola crisis," says Nancy McKeague, chief of human resources.

She says her nonprofit can't afford overtime, but it also can't forgo having people work as needed.

"The last thing you want to do in the health care setting is to look at your watch and say, 'You got your eight [hours], you're out,' " she says.

McKeague says more work will fall to managers. The rules will also require her to review tasks associated with every job to see whether the position qualifies for overtime. Plus, she'll have to spend more administrative time on things like clocking employees in and out.

Cecilia Boudreaux is human resources director for the Regina Coeli Child Development Center, a Head Start program in Robert, La. Under the new rules, Boudreaux says, 26 of her 35 salaried employees would qualify for overtime pay, in the event of a building emergency or if a parent is late for pickup. But increasing salaries would cost at least $74,000 extra a year — meaning she'd have to cut costs elsewhere.

"Our grants stipulate how many children we have to have per classroom, so even to increase it we'd have to get permission," she says.

Boudreaux says she'd have to furlough employees. Or convert some salaried positions to hourly, then cut the hourly rate, which she dreads doing.

"Who would want to come to work the following day, saying that 'We have to move you to hourly, and oh, by the way you're not gonna make as much as you would make normally. You have to work this minimum number of hours if you want to still make the same amount,' " she says.

Tony Murray, HR director for Diamond B Construction, also based in Louisiana, says many workers would consider going from salaried to hourly a demotion.

"When I was younger, all I [wanted] to do was get to a salaried position just simply because you knew what was going to be coming in each week and you did have the flexibility," he says, including the ability to go to soccer tournaments or work late to make up for doctor's appointments. Murray says under the new rules, those converted back to hourly status wouldn't be able to do that.

"Millennials take into account more than anything workplace flexibility," he says. "And of course who do you think is in that entry-level management ... millennials more than anything."

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