President Obama has introduced new overtime regulations as a way to raise wages. In reality, the new regulations, which give many salaried employees overtime benefits, will hurt workers more than they will help.
Heritage labor expert James Sherk explains three ways the regulations will hurt employees:
- Base salaries will fall. Employers will compensate for paying overtime hours by reducing the base pay by an amount equal to the new overtime eligibility. Average hourly pay — including overtime — will remain unchanged.
- Employees will lose flexible working hours. Overtime regulations mean workers have to track their hours. Instead of taking off work early and making up for it later, employees will have to work within a specific time frame.
- Employers will forbid overtime-eligible employees from working remotely. Working from home will be discouraged because it is a legal risk for employers, who now have to precisely calculate each employee’s overtime liability.
The new overtime regulations may be good for President Obama’s approval ratings, but not for the five million professional employees who are losing flexibility at work without getting paid any more.
How do you think the new regulations will affect your family?