New Overtime Regulations Could Hurt Workers: NCPA

Source: NCPA

Dallas, TX (12/4/2015) – The Obama Administration’s changes to the federal overtime regulations could hurt workers’ upward mobility and limit workplace flexibility and employment options for those trying to climb the income ladder, according to a new report by National Center for Policy Analysis Research Associate Jacob Kohlhepp.

“The Obama Administration’s overtime changes will force millions to be reclassified as nonexempt hourly employees from salaried employees,” says Kohlhepp. “This means a loss of flexibility and possibly even a lower chance of promotion. Ultimately, it could mean a net decrease in employee satisfaction.”

To estimate the impacts of being reclassified from hourly to salaried workers, Kohlhepp examined the impact of the overtime changes, including raising the exempt salary level and instituting a less restrictive duties test, made by the Bush Administration in 2004 on three professions: pre-school/kindergarten teachers, chefs, and first-line supervisors of food prep workers.

  • Did total weekly earnings change? While pre-school/kindergarten teachers and first-line supervisors saw major increases in earnings, chefs saw a modest decrease. On average, hourly workers nationwide saw modest increases in weekly income.
  • Impact on employer-provided pensions. The percentage of employer-provided pension coverage rose across all three professions, despite a decrease in employer-provided pensions among employees in general.
  • Mixed results regarding health insurance coverage. While the percentage of chefs covered by employer-provided health insurance fell, the percentage of teachers and food prep workers rose.

Overall, these three occupations lost mandated overtime pay, but gained employer-provided benefits, according to the report.

“The Obama Administration overtime changes are different than the Bush 2004 changes,” says Kohlhepp. “But despite the differences, the lessons of the Bush changes could foreshadow bad consequences for the 2015 reforms.”