Retailers, restaurants to feel impact of overtime pay expansion

Washington, D.C. -- Retailers and restaurant owners can expect their labor costs to rise under a new proposal from the Obama administration.



On Tuesday, the Department of Labor unveiled a proposal whereby salaried workers who earn up to $50,440 a year would be eligible for time-and-a-half overtime wages when they work more than 40 hours per week. That is more than double the current threshold of $23,660, or $455 per week, established in 2004.



The proposal would raise wages for 5 million white-collar American workers, according to the Labor Department’s estimates. According to a report on Business Insider, food service managers, first-line servers of food preparation and first-line supervisors of retail store workers are among the top 10 categories most likely to be affected by the rule.



The proposal does not need congressional approval to be adopted. It will undergo a comment period before the Labor Department determines what to include in a final rule next year.



The National Retail Federation has argued against the pay expansion.



On Tuesday, the group issued a statement criticizing the proposal.



“This proposal isn’t a law but it certainly reflects one – the law of unintended consequences at a time when the economy and those struggling the most can least afford it,” stated David French, senior VP for government relations at the NRF. Our research shows that the managers who would supposedly benefit oppose this plan and that few workers should actually see more take-home pay. There simply isn’t any magic pot of money that lets employers pay more just because the government says so.”