This expansion should be beneficial to parents everywhere.
When I first heard how President Obama wanted to modify America’s antiquated overtime laws, I was overjoyed. I work hard at my job to provide for my family, and it would be a blessing to get fair compensation for all the overtime I put in. But then I realized, rather than focusing just on the money, I needed to know how these new laws would impact me personally.
I found that when the Fair Labor Standards Act (FLSA) was first introduced in 1938, it established a national minimum wage, the 40-hour workweek, and overtime policies. For many workers, this meant that they got paid the minimum wage for their first 40 hours of work in a week, then overtime pay would kick in. These policies applied to most workers, but left some white collar jobs (like mine) exempt. The idea was that due to their high pay, benefits, and job security, white collar workers had advantages that made up for the lack of mandated overtime.
The FLSA has undergone numerous changes over the years, but shockingly, the qualifying salary threshold hasn’t been updated since 2004. Despite this, I (and many other workers) am expected to work until my job is done, whether I get compensated for overtime or not. I found that when I did the math and factored in the unpaid overtime into my total pay, I was essentially making a dollar less per hour. Over the year, that really adds up.
What I found outrageous is that in 2004, the white collar exemption salary level was $455 per week—$23,660 per year. Essentially, workers earning below the poverty line still earned too much to be eligible for overtime, despite it being a common practice to put in more than 40 hours a week.
Acknowledging this disparity, President Obama issued a request to Secretary of Labor Thomas Perez to update and modernize the overtime portions of the FLSA. This overhaul, due to take effect in December 2016, will have a huge impact on an estimated 4.2 million Americans. Their wages are expected to rise by $12 billion over the next 10 years. These new rules will especially impact mothers and fathers who split their time between work and parenting.
According to the Huffington Post, about 56% of the workers impacted by these new provisions will be women. For many working moms, the first question is “am I even qualified under the new revisions?” Qualification depends on income and employee classification. An employee is classified as “exempt” from receiving overtime pay if their salary is over the threshold defined by the FLSA, or if their job duties fall under the “executive,” “professional,” or “administrative” categories.
So, if my job paid me more than $47,476, or less but I hold an administrative position, then I wouldn’t qualify. Thankfully, I’m classified as exempt and I earn less than $47,476, so I’m covered under the new law. That being said, I’m worried about what I can expect from my employer. The updated wage and hour laws will require changes in employee benefits in order to be compliant with the new FLSA rules.
Ideally, we can expect to either have a salary raise to meet the overtime exemption level, be paid fairly for the overtime we already do, or face changes in scheduling. A pay raise or fair compensation would be nice, because I’ll have more money to spend on my family, bills, and vacations.
Alternatively, employers may work things out so we’ll be working little to no overtime.
This is also a great option because though we’ll get paid the same, it means a guaranteed 40-hour work week.
Unfortunately, the catch is that employers don’t have to do any of these things. In one less than stellar situation, my employer could subject my logged hours to much higher scrutiny. My coworkers could lose their flexible scheduling. In this case, they would work a straight 40-hour work week, rather than something like 35 hours one week, and 40 to 50 the next. The changes will limit the amount of overtime we can accrue.
In a different scenario, I could have my base pay cut to compensate for overtime that I already do. This fix would comply with the law, since I’ll still be earning time-and-a-half, but my total earnings won’t change at all. So I won’t likely see any extra money for necessities, unless I put in even more overtime, which of course would leave me with even less family time.
The best case scenario would be my wages staying the same and my boss hiring more staff. In theory, this will reduce the amount of overtime everyone has to put in. Again, I won’t see much of an overall increase in income, but I’ll have more free time to spend outside of work.
In the worst case scenario, I could be laid off in the name of cutting costs. So while my bosses won’t be able to afford to keep me on, they might be able to comply with fewer people on the payroll.
Across the board, executives crunched the numbers, and the results don’t look good. Depending on the size of the company, we can expect the costs of bringing employees into compliance to be in the millions. Even small companies can anticipate between $150,000 and $200,000 in costs.
This leaves them with the conundrum of what is the best way for them to comply while minimizing harm to finances and employees. Work may be sifted up or down the chain of command, or passed off entirely to freelancers, contractors, or machines. Some might initiate layoffs or pass the costs on to the customers.
In the end, I’ve come to the conclusion that if done correctly, this expansion should be beneficial to parents everywhere. Ideally, people like me will have our wages raised, or be paid fairly for overtime work. I could also see additional support staff, which would ease my workload. On the other hand, there is a risk of losing my position simply in the name of cost-cutting. No matter what options my employer chooses, I know that I should expect at least a shakeup at my workplace come December.