Retail association calls new overtime laws a “career killer”

The nation’s two leading retail associations issued critical statements in response the release of the overtime rule by the U.S. Department of Labor.



Under the new regulation, issued by the Labor Department on Wednesday, most salaried workers earning up to $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. The previous cutoff for overtime pay, set back in 2004, was $23,660.



“These rules are a career killer,” stated David French, senior VP for government relations, NRF. “With the stroke of a pen, the Labor Department is demoting millions of workers. In the retail sector alone, hundreds of thousands of career professionals will lose their status as salaried employees and find themselves reclassified as hourly workers, depriving them of the workplace flexibility and other benefits they so highly-value. And the one-size-fits-all approach means businesses trying to make ends meet in small towns across America are now expected to pay the same salaries as those in New York City.”



NRF cited research it conducted that showed the rules will force employers to limit hours or cut base pay in order to make up for the added payroll costs of overtime expansion, leaving most workers with no increase in take-home pay despite added administrative costs. The association cited a separate survey that found that the majority of retail managers and assistant managers the new regulations are supposed to help oppose the plan.



“These regulations are full of false promises,” French said. “Most of the people impacted by this change will not see any additional pay.”



Jennifer Safavian, executive VP for government affairs, Retail Industry Leaders Association, said that while a review of the current overtime threshold is justifiable, the “dramatic changes” imposed by the DOL are not.



“The rule will certainly hurt those that it purports to help,” she stated. “Specifically, the rule will cause retail employees who are forced to be reclassified from salaried to hourly to lose much of the flexibility and upward mobility they value.”



RILA also noted the same concern as NRF regarding the new law’s failure to take into account regional differences.



“The Department of Labor’s failure to adequately consider regional differences will ensure the most acute effects will be experienced by employees in rural areas and the automatic adjustment will create a perpetual state of disruption as businesses will be forced to reclassify employees each and every three years.”