Michigan Labor & Employment Law Blog
The law of unintended consequences by the do-gooders in Washington may seriously harm the very employees they wanted to help by changing an 80-year Federal Labor Law system for overtime hours and compensation.
The old salary threshold rules exempted employees with annual earnings of $23,660; if you earn that much annually, an employer does not have to pay you overtime. Now, the proposed changes jump that amount to $50,440 annually. Additionally, annual automatic increases to the $50,440 number are scheduled to take place in the future.
Businesses have revenue goals. When the government jumps in and substantially increases their costs by making employers liable for paying overtime to previously exempt employees, the future of that company may very well be in jeopardy. As a result, expect employers to cut back wherever they can, including with currently exempt employees so that they receive a smaller salary or a smaller hourly wage to compensate for expected overtime costs in the future. The unintended consequence of this will likely be employees quitting their current jobs or, moonlighting to make up for the newfound shortfall from their current job.
The government has created another potential hurdle for businesses.
