Millions of American workers are about to see significant increases to their weekly pay checks. The Department of Labor has issued its final rule regarding overtime pay regulations, which doubles the salary threshold of workers who are entitled to overtime pay.
Previous overtime regulations stated that workers who made up to $23,660 per year ($455 a week) were entitled to overtime pay for working more than 40 hours in a week. The new regulations cast a wider net to include anyone earning up to $47,476 a year ($913 per week.) Workers will receive overtime pay at a rate of one and a half times their regular rate. However, in determining a staffer’s pay rate, employers can use nondiscretionary bonuses, incentive pay or commissions to account for up to 10 percent of the minimum salary level, provided those payments are made at least quarterly.
According to a statement from the White House, this new regulation will extend overtime pay protections to more than 4 million workers who have not been eligible before, and it will boost wages for workers by $12 billion over the next 10 years.
Recognizing that the regulations will cover fewer workers as overall wages increase over time, the Department of Labor will automatically update the salary threshold every three years beginning Jan. 1, 2020.
The Obama administration believes that these updates were needed to keep American workers adequately compensated for a day’s hard work and to help compensate for stagnant wages over the past few decades. The salary threshold modifications have not been updated since 2004, and prior to that no changes had been made since the 1970s.
To comply with the new regulations, which take effect Dec. 1, 2016, employers will need to either pay their employees overtime for working more than 40 hours/week, raise workers’ salaries above the new threshold or limit workers’ hours to 40 hours/week.
As with all issues relating to government regulations, opinions about the new overtime rules vary throughout the industry.
“It’s awful,” said Joseph Cimino, president of Dolphin Pool Supply in Ronkonkoma, N.Y.
He typically employs a mixture of seasonal hourly employees and salaried year-round staffers, but will no longer offer salaried positions. “I can’t possibly afford a year-round employee making what they expect us to pay,” he said.
He now thinks that he will have to hire more hourly employees to compensate for the overtime that’s required during the busy season. This means not only introducing new faces onto the store floor, but getting them up to speed fast. “You can’t just hire somebody off the street,” Cimino said. “It takes a good three pool seasons to really become a good pool guy.”
Similar sentiments were echoed in the pool service segment. “Overall, we’re not a huge supporter of the new potential legislation,” said Michael Wagner, president of Pool Scouts, in Virginia Beach, Va. “We would love to see it not implemented or overturned by the next administration.”
He believes the new ruling will cause companies to find ways to manage costs across all aspects of their businesses, which will likely include a shift away from salaried to part-time workers and hiring more hourly employees. He also thinks smaller businesses will have a tough time complying by the Dec. 1 deadline because they may not have systems in place to estimate their hourly labor costs moving forward.
However, not everyone in the pool industry feels this way. “I don’t think the industry overall should see a problem with [the new regulations],” said Jim Spiess, co-owner of River Pools Powered by Thursday Pools Manufacturing in Warsaw, Va. “…. If [the employees are] making us money, then the best thing to do is to pay them well so they stay with you.”