Group believes overtime-pay rules will harm small business and employees

Salaried employees could be moved to hourly

New overtime rules announced by the Obama administration this week sound like a good deal. Not, apparently, true for small business, however. 

It’s just the opposite, says Bill Smith, president of the Wisconsin chapter of the National Federation of Independent Business.

Smith says businesses may turn salaried workers back into hourly workers, effectively demoting them in order to save labor costs.  

“(Another) strategy, of course might be to reduce them to part-time employees or keep them under the 40-hour threshold,” Smith said.

Smith is predicting a lose-lose outcome for the new rules.

He believes small businesses will find ways to pay employees less to limit labor costs under the new rules. And, businesses will also see a hit to the bottom line because of a lack of flexibility.

“If employers are required to put these employees on an hourly rate, (they) lose that flexibility in regard to the work schedule of those workers,” Smith said.

Boosting eligibility for salaried employees, added Smith, only increases costs for business.

“From a small business perspective, sales are pretty limited,” Smith said. “This is the sort of thing that could really take the bottom out of their bottom line, which is a pretty small percentage to start out with.”

The new overtime rules double the annual wage under which salaried employees would have to be paid overtime if they work more than 40 hours in a week.  

Citizen Action of Wisconsin used wage and hour data to predict the average low-salaried employee in La Crosse, and that could mean another $8,800 when the rules go into effect.

The overtime rules go into effect in December, impacting those salaried, non-exempt workers who make less than about $47,000 a year.