Members of non-profit and higher education sectors testify to House committee that new salary threshold for overtime pay could prove too burdensome
Barack Obamas new overtime rules would significantly affect non-profits and higher education institutions, representatives from the industries told Congress on Thursday.
The new overtime rules, introduced by the Obama administration last month, raise the threshold for the salary workers could earn and still be eligible for overtime pay from $23,660 to $47,776 a year.
The new rules are expected to go into effect on 16 December. The regulations were last updated 12 years ago, and if they had kept up with inflation, the threshold would have been closer to $57,000 by now.
The US Department of Labor expects that the new rule could affect as many as 4.2 million workers.
While the rules have been lauded by workers rights organizations and advocacy groups, small businesses, non-profits and even universities have raised concerns about its potential costs.
Because of this rule, many Americans will soon realize they have fewer job prospects, less flexibility in the workplace, and fewer opportunities to climb the economic ladder, Tim Walberg, a Republican congressman from Michigan, said at the beginning of the House education and workforce committees hearing into the rules on Thursday. John Kline, a Republican congressman from Minnesota, described the rule as being full of regulatory landmines.
Tina Sharby, human resources officer at Easter Seals, a non-profit organization that provides services to people with disabilities, told the hearing that the new overtime rule would mean they would have to strictly enforce a 40-hour working week on their employees to avoid overtime costs and stay on budget.
This would not only limit their flexibility, Sharby said, but could also potentially limit the availability of the services offered by the non-profit some of which are used by veterans in need.
Michael Rounds, associate vice-provost for human resources management at the University of Kansas, told the hearing that any additional costs the school incurred from the new overtime rule could be passed on to the students. While some lawmakers noted that similar concerns had been raised by other higher education institutions in their districts, others pointed out that this was symptom of a larger issue: cuts to state funding.
The witnesses from the non-profit and education sectors, as well as some lawmakers, noted that those who chose to work in such fields often did so for reasons other than money.
The people I have spoken to find it demoralizing to be asked to put in extra hours for no pay, said Alma Adams, a Democratic congresswoman from North Carolina who taught art history at Bennett College for 40 years.
Prior to the meeting, more than 200 professors at colleges and universities across the US rounded up by the Economic Policy Institute (EPI) and National Employment Project signed a letter in support of the new overtime rules.
The impact on higher education and the non-profit sector could be much smaller than it appears, according to Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities.
Only about 3.4% of the education labor force receives salaries between the current and the new threshold, Bernstein told Congress on Tuesday. Once those who do not work more than 40 hours a week are discounted, that number shrinks to just 0.5%, and for non-profits 0.8%.
The new overtime rule should cost both the non-profit and education sectors less than a tenth of one percent of their payroll, said Bernstein. He said that a number of educators also fit into the exemptions laid out by the labor department.
Bernstein noted that currently employees earning salaries under the new threshold get paid nothing for any hours they work beyond 40 a week, which benefits their employers.
Workers are not being fairly compensated and thats helped to boost profit margins. Thats not a bad thing profit margins are good but profit margins should afford you to be able to pay middle-class wages to workers who are working over 40 hours a week, he said.
The hearing got quite heated when Earl Leroy Buddy Carter, a Georgia congressman, asked Bernstein if he himself had ever run a small business.
Dr Bernstein, have you ever signed the front of a paycheck? You sign the back of the paycheck, you dont sign the front of the paycheck, he said in reference to where employers and employees sign checks, moving right along even as Bernstein tried to interject. There is a big difference. I doubt that anyone who has had an impact on these rules signs the front of the paycheck, they sign the back of the paycheck.
Prior to Tuesdays hearing, the US labor secretary, Tom Perez, appeared alongside Bernstein and several Democratic lawmakers and referred to Republicans as calamity howlers, reiterating the administrations stance on the issue.
We refuse to believe that low wages and vast inequality are unavoidable costs of modern capitalism, Perez said. For far too many people, its meant exactly that. So many people, despite working harder and harder, can barely get by, let alone get ahead, because they havent had a meaningful raise in years.
Perez added that the overtime rule was based on a very simple proposition: middle-class jobs should pay a middle-class wage.
Read more: https://www.theguardian.com/money/2016/jun/09/new-overtime-rules-republicans-economy-universities-nonprofits