Small businesses nationwide are having to reconfigure what they will do as more employees will become eligible for overtime pay starting Dec. 1. The new rule, announced this week by the Obama administration and the Department of Labor, will add 4.2 million workers to the group of workers that must be paid 1.5 times their hourly wage for each hour worked beyond 40 hours a week. Industry leaders have already voiced their objection to the rule, saying it will put a heavy burden on small business owners by forcing them to cut down on cost.
Small business employers have a variety of options, as New York Times reporter Sarah Max writes:
They could change the pay structure for employees making less than the new threshold to an hourly rate. They could raise the pay above the threshold so they won’t need to worry about overtime. They could even cut the base salaries of those who regularly work more than 40 hours, in expectation that overtime pay will make up the difference
In response to the rule, Republican House Speaker Paul Ryan (R-Wis.) spoke vocally against the rule saying it negatively will impact small business owners,
"By mandating overtime pay at a much higher salary threshold, many small businesses and non-profits will simply be unable to afford skilled workers and be forced to eliminate salaried positions, complete with benefits, altogether. For the sake of his own political legacy, President Obama is rushing through regulations -- like the overtime rule -- that will cause people to lose their livelihoods. We are committed to fighting this rule and the many others that would be an absolute disaster for our economy.”