By Rick Murray, Chief Executive Officer, Arizona Small Business Association
Once again the federal government is trying to tell you how much to pay your employees. The Department of Labor (DOL) has proposed rules on overtime pay that, if enacted, will have a chilling effect on job growth and economic development in Arizona and across the country.
In additional to the massive threshold increase from the current $23,660 to $50,400, below which employees must be paid overtime, the DOL gave only 60 days for stakeholders to study the far-reaching impacts the rule will have. ASBA has been lobbying our delegation in Washington to help extend the comment process. But with the summer recess Congress takes, coupled with a mere 60-day comment period and a dismissive refusal to extend the comment period by the DOL, indicates a clear intent to stymie small-business input into the process.
Among the key issues raised: the cost of compliance for small businesses will be much greater than the DOL estimate; changes to the duties test are likely to miss the fact that there is no bright line between "exempt" and "non-exempt" in the typical small business workplace; the creation of new hourly reporting and tracking requirements are likely to be a disproportionate burden on smaller firms; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be "downgraded" from exempt managers to non-exempt workers.
Small businesses are often not equipped to monitor the activities of their employees in order to regulate their time. Companies with fewer than 20 employees rarely have a dedicated HR department, so the creation of new hourly reporting and tracking requirements are likely to be a much greater burden on these companies that do not currently face them. The result will be confusion and excess cost for individual business owners. Tracking the offsite use of company cell phones and computers will be especially difficult for these smallest companies, who are likely to limit the issuance of such devices.
For these reasons, we have been urging our representatives in Washington to ask the Department of Labor to reconsider significant portions of the proposed rule, and recognize the significant new burdens and complications that such a regulation would create for small employers and their employees.