It's official. The U.S. Department of Labor has settled on $47,476 as the minimum annual salary for an employee to be exempt from overtime. That amounts to $913 per week or about $23 per hour. Any worker making less than this amount — whether in New York City or Boerne, Texas — must be paid time-and-a-half for hours worked over 40 per week.
The previous threshold, established in 2004, was $23,660, or about half the amount of the new minimum.
The new rules will extend overtime protections to millions of Americans — as few as 4.2 million (by DOL estimates) or as many as 12.5 million (Economic Policy Institute).
The DOL hails the new rule as simple. It doesn't matter where you live or what your job title. The previous rule exempted “high-level” workers from overtime. With the new rule, the job description doesn't matter. The cost of living doesn't matter. The size of the business is irrelevant. Doesn't matter if you're new to the company either.
Every worker wins. Or do they?
The revised overtime rule will “compromise the potential of our best and brightest innovators, crippling the very startups that are central to America's job growth and global competitiveness,” says Gary Shapiro, CEO of the Consumer Technology Association and a champion of unfettered innovation. “Forcing entrepreneurs to pay either $47,476 minimum salaries or pay overtime will raise the financial barriers to create a startup and dramatically slow the speed to get a product or service to market.”
Calling the new federal regulation “an attack on American entrepreneurship, drafted by Washington bureaucrats who have never worked at a startup,” Shapiro fears an end to “teams of young minds pulling all nighters to create something new.”
The National Retail Federation calls the new rules a “career killer.” David French, senior VP for the group, states:
With the stroke of a pen, the Labor Department is demoting millions of workers. In the retail sector alone, hundreds of thousands of career professionals will lose their status as salaried employees and find themselves reclassified as hourly workers, depriving them of the workplace flexibility and other benefits they so highly-value. And the one-size-fits-all approach means businesses trying to make ends meet in small towns across America are now expected to pay the same salaries as those in New York City. …
The NRF points to research that indcates the new rules will “force employers to limit hours or cut base pay in order to make up for the added payroll costs of overtime expansion, leaving most workers with no increase in take-home pay despite added administrative costs.”
A separate survey found that most retail managers and assistant managers oppose the new regulations, despite the notoriously long hours they work:
- 75 percent of respondents said the changes would diminish the effectiveness of training and hinder managers’ ability to lead by example.
- Roughly two-thirds predicted employee morale would decrease.
- Roughly eight in ten (81%) respondents said that customers would be negatively affected if managers were excluded from performing non-managerial tasks.
On the other hand, labor unions applauded the decision. The AFL-CIO predicts a boon to working familes and the economy overall because:
- The middle class needs a raise.
- Restoring overtime is necessary to ensure that working people get paid for all the hours we work.
- Restoring overtime will give millions of families a pay raise.
- Restoring overtime will create jobs and increase the hours for people who work part-time.
- Restoring overtime will help the economy grow.
- Overtime protections have eroded since 1975.
- Restoring overtime will give people more time away from work.
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How Will CE Pros Fare?
Executives and general mangers in the home-technology integration business probably will not be affected by the new labor laws. According to the 2015 CE Pro Wage and Salary Survey, even the smallest companies tend to pay more than $50,000 annually for these positions.
Other positions, however, will certainly be affected — positively or negatively, depending on whether the company decides to 1) lay off employees, 2) raise salaries, 3) pay time-and-a-half for overtime or 4) disallow overtime for those who wish to work more hours.
Custom electronics sales managers across the board make more than $60,000 per year, even in the lowest-paying Northwest Central regions. Sales reps, however, generally earn less than $47,000 in the Central regions, although salaries exceed the DOL's new thresholds on the West and East Coast. Most reps fall under the threshhold in companies with gross revenues less than $5 million.
Company technicians, adminstrators and customer service reps easily fall under the new threshold.
How do CE Pros feel about the new rules? We'll let you know. Please complete the very brief survey above or click here. Integrators only, please.