Impact of Obama’s Overtime Pay Proposal


franchise legislature article @ Sintel SystemsOn Monday, President Obama’s proposed a bill increasing the overtime salary threshold. Approximately five million workers would be affected by the increase.

The new plan, which Obama announced in a HuffingtonPost blog, will almost double the current threshold from $23,660 to $50,440.

Thousands of restaurant employers and workers would be unfavorably affected. Higher cost of labor production would cut the amount of hours employees would be able to work.

Nearly a year ago, President Obama requested the U.S. Department of Labor begin revisions on overtime regulations.

“We’ve failed to update regulations for years,” wrote the president. Legislation has not been touched for more than a decade and restaurant operators fear change.

Costs of Obama’s overtime pay proposal would be about nine billion dollars yearly and open overtime pay to another two million employees.

Consequently, companies will simply lower hourly rates. To avoid paying overtime workers more part time employees will be hired to cover hours cut. Pay would come straight out of the pockets of lower level employees.

Companies would also begin cutting any benefits employees receive. Low level managerial or back office jobs would be cut or replaced with automated systems.

Being the industry restaurant rests on the idea of climbing to higher positions, it would make it harder for employees entering to advance.

As for the restaurant and retail industry, overtime pay comes with many factors shaking their labor work force. Companies who employees work 30 hours or more will be required to provide health benefits for workers. Wage hikes in many cities will also add pressure to employers.

If finalized and passed the new plan will go into effect in 2016 but it is currently being subjected to a 60-day public comment period.

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