Overtime Rule Doubles Salary Threshold, Takes Effect Dec. 1

Filed in Codes and Standards, Labor, Legal by on May 18, 2016 20 Comments

overtimeclockNAHB today blasted the Department of Labor (DOL) after it issued its final overtime rule, stating that the regulation will hurt the workers it is intended to help while also causing major harm to the nation’s small business owners.

In a hard-hitting official statement, NAHB Chairman Ed Brady said:

“The sheer arrogance displayed by the Department of Labor in failing to heed the concerns of the nation’s small business community will result in severe repercussions that will harm workers, small businesses, housing affordability, job growth and the economy.

“By radically doubling the current overtime salary limit of $23,660 to $47,476, this blatant regulatory overreach will essentially hurt many of the workers the rule was meant to help. Small business owners across the land, including the vast majority of home building firms, will be forced to scale back on pay and benefits, as well as cut workers’ hours in order to avoid overtime requirements and remain in business.

“Congress can play a constructive role by moving quickly to pass the Protecting Workplace Advancement and Opportunity Act (House bill H.R. 4773 and Senate bill S. 2707), legislation that would force the agency to withdraw this rule until it has considered the effects it would have on small businesses, consumers, workers and the economy.”

The rule, which will take effect Dec. 1, indexes the salary threshold to inflation every three years, forcing employers to go through this process on an ongoing basis. Moreover, the huge spike in the overtime threshold could force many employers to convert salaried employees to hourly workers in order to remain solvent. These workers could wind up earning less money than they were making previously, and lose the workplace flexibility that comes with being a salaried employee..

This 100% increase to the salary threshold for overtime eligibility will hit the home building industry particularly hard and harm housing affordability. It will reduce job-advancement opportunities and the hours of full-time construction supervisors, leading to construction delays, increased costs and less affordable housing options for consumers. NAHB estimates more than 96,000 construction supervisors would become overtime eligible under this rule.

“Given the huge economic disruption this rule will cause, the Department of Labor needs to start over and produce a sensible plan that will gradually raise the overtime threshold from its current rate and properly take into account the regional variations in wages and cost of living,” said Brady.

Read this web page for more information or to download a factsheet, or contact NAHB’s Suzanne Beall at 800-368-5242 x8407.

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Comments (20)

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  1. Darius says:

    Crony Capitalism at its worst, meanwhile all of the other branches of the Labor Department are redefining independent contractors as employees or redefining corporations joint employers of he subcontractor’s employees. The assault on employers is backed by union influence and misguided bureau-rats trying to create “fairness”.

    Capitalism like the constitution provides for equality under the law with the liberty to pursue your own level of economic freedom and spiritual path (succeed or fail).

    Crony Capitalism attempts to provide economic equality for the masses and liberty for the wealthy. as capitalist societies are replaced by top heavy Crony Capitalism it usually leads to the rise of Socialism.

  2. Ronald Hicks says:

    Make no mistake this is the largest tax increase in the history of the country.
    However not from my company. I have 2 employees, 1 is salary and a fresh college graduate in my attempt to grow my business. He is going to have to find a new job, can’t afford to keep him at $47K. Hourly is not feasible. I will be the first one to admit the old threshold was too low, but to go up to 47K. Nuts!!!!!

  3. Al Zichella says:

    Well said, Chairman Brady. This administration is so blatantly ignorant of finance, business and business practice, it is appalling. They either truly believe they can change behavior by fiat, or do not care what harm they cause. Further, it is totally unnecessary, which makes it even more egregious.

    Are they really so naïve as to believe that their actions will not cause a counter-action?

    This is typical of this administration, who certainly never consider the fallout of their many edicts. They should behave more like doctors, and “first, do no harm”.

    However, harm is what they do best. What do we expect from the administration of a “Community Organizer”? (Which is just a fancy word for an extortionist, snake oil salesman, who exacts money from businesses to ‘correct’ perceived or invented slights, and leaves (enriched somehow) to run for office, leaving the same carnage and poverty in their wake that they pretended to correct).

    People will look back on these past eight years and wonder how the country came out of it. The arrogance on display, and heavy handed rules, such as this have spurned what we see now in the Trump and Sanders Candidacies, a pissed off public who want no more kings, or “ruling class”.

  4. Ram Galindo says:

    Congress must act to revise this misinformed rule. Any new threshold must be adjusted to prevailing local cost of living indexes and implemented gradually over at least a five year period. Consideration of how any change interplays with the “poverty” floor must also play a role in selecting a corrected threshold.

  5. Jess says:

    We have no employees except sometimes in the summer, part time only, because of all of the costs and reporting required. They need to make it easier and less expensive to hire. If I was an employee, however, I would never agree to work salary, especially for $23k. And…especially in the construction trade. That’s a lot of hard physcial labor a lot of times, to do over 40 hours a week for a measley $23k. Office jobs not as bad, but come on, employers need to start respecting their employees. And employees need to become educated on what it takes to be a good employee and what their true cost is.

  6. Dan Turner says:

    Once again….the Feds miss the big picture.
    First “affordable housing for all” and sub-primes dropped all of us into the basement almost a decade ago. With that dump of construction jobs, the 10 and 12 year olds looking for Summer jobs pushing brooms and dustpans never got their first lesson in “I can do this….better.” The lights didn’t click on at the start of a impressionable period to have ideas of what each muscle could do…or how they could improve whatever hands on task came up.

    TODAY…now that’s they’re 20 and 22, if I tell some 20 year old to get a broom to sweep down a slab….it’s almost a sure thing that within 10 minutes I’ll be telling that moron….”A PUSH BROOM!!”

    And the almost sure thing response….”A Whaaaaat?”

    The same thing goes for pointed vs. flat shovels to clean out and square up a footing or pier. Almost always a situation with some kid that can’t read a measuring tape or when I ask for a hammer on a frame job, the day labor will come back with a trim hammer.

    Yet the Feds let these kids graduate high school based on test preparation rather than real life preparation. Job site work is not Open Book…it’s thinking on your feet and using experience; both of which is lacking in the labor force.

    As much as I’d like to rant and rave with the newbie labor….they were simply born at the wrong time and never had the chance to fail at school and find a way to make a living with their hands with tools, materials and perspiration. Money and a job used to inspire better performance from labor and contractors….when letting someone know that they’ve got to redo something that they just completely wrong, I get the “Whatever…” from the back of their head while they walk.

    It’s kinda how I feel when I tell the Feds that they’re the cause of all of our ills and woes in this industry…and if you’re not going to help us out….leave us alone. And they’re response is….”whatever….”

    “Toto….we’re not in 1971 any more….” and it’s a pathetic downward spiral.

  7. Todd says:

    Based on this change, we will need to switch our salaried manager to to an hourly employee, which will cause him to lose eligibility for our healthcare plan. Can our government make it any harder for small businesses to survive?

  8. Milo Klanke says:

    Hard to believe there are that many construction supervisors making less than $22 an hour.

  9. Jim barrett says:

    If this causes any of those against this change it can be recouped when you sell. Harming the people whom put bread on your table is not good for the employee or yourself in the long run. Higher wages will create more loyalty and improve production as the employee will be happier and more productive

  10. Gary says:

    This rule has been in place for decades, but wasn’t indexed to inflation. While it might have been phased in, the new number is just as valid today as the old number was back in the 1970’s. I tend to agree with Jim Barrett above. Is housing more than twice as expensive as it was in 1971? Of course.

    Those railing against Obama might consider that Congress has done precious little other than opposing everything Obama did during his terms, despite his efforts for bipartisanship. Their failure has led to him doing what he could within the executive branch of government. I suspect Congress’ failure to set policy is much why folks are angry with ‘the government’. Some appear to forget Obama inherited a failed economy and a war for false reasons from the Bush years. Has is been easy, well no. Are we better off than we were in 2008?

    Respectfully intended.

  11. Stephen says:

    Jim and Gary,

    I must say, both very naïve responses.

    Jim, no one suggested harming their employees. However, your defense of the decision is exactly what the agencies under the POTUS are disagreeing with, so you accidentally drew the right conclusion. You see, the DOL foolishly believes that all of the effort to impact wages will NOT have an impact on consumer pricing. You stumbled on “you’ll recoup it when you sell,” which is exactly right. We will see a blend of these 3 impacts:
    1) prices on American goods (including housing) will rise
    2) quality will lower to attempt to maintain pricing (your hamburger at McD’s will shrink a little more, etc.), and/or
    3) companies will have to do more with less. lay off employees to keep their overall labor costs similar. This also leads to longer lines at service related industries (we’ve already seen this economic impact with TSA at the airport security lines. Another example of trying to squeeze the American public while proving that you can only squeeze so much out of a turnip. Decisions like this always raise unemployment, which is OK – you and I will just pay for that, too!

    your other comment is extremely naïve – you believe that by raising wages and salary thresholds that those receiving the minimum will work harder? why? It’s never been historically accurate. The Soviet Union fell NOT because of a cold war, or even Glasnost. USSR, and now Greece and Venezuela’s problems began with a (socialist) ideal of common minimums.

    So, once you discover that you can work as HARD as you want, but you’ll make the same as a lazy bum in the next cube over, your motivation to excel is curbed. Imagine a school classroom where every student earns a “B”. what’s the point of striving for an “A”? Overtime, the OUTPUT in this classroom would become “C”, then “D” level. I mean, you’re going to get a “B” no matter what! These are dangerous precedents, because they curb creativity, they curb performance, they curb excellence. Do your homework, pun intended.

    With more executive orders than all previous presidents combined, could you please explain what these bipartisan efforts from our POTUS where? I’m afraid I can’t find any that have been historically documented. The “false war”, if you’ll recall, started after New York and Washington, DC were attacked by our own airplanes that had been hijacked, a “jihad” against our country. This current President would have apologized for upsetting them.

    It would have been appropriate to raise this threshold, it was outdated. Doubling it in one sitting is another example of a desperate attempt to unilaterally impact decisions WITHOUT consulting congress.

  12. Rick says:

    Has anyone ever heard of Free enterprise?

  13. Kara says:

    I am in agreement with Gary above. This rule has been in place for decades and has not been indexed to inflation. This increase will not affect our business, as our salaried employees earn more than $47,476 and our labor employees are paid hourly. We would not be able to retain quality employees in a salaried position if they earned less than $47,476. I am offended by NAHB Chairman Ed Brady rhetoric and he certainly does not represent our position.

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