The Corner

Judge’s Decision to Halt New Overtime Rules Isn’t Just a Victory for Business—It’s Good News for Workers

The press is covering a federal judge’s decision to halt the implementation of the Department of Labor’s new overtime regulation as a victory for Republicans and business groups and a blow to workers. But many workers should also celebrate this news.

Analysts tend to present this new regulation as all upside for workers who would become newly eligible for overtime when they work in excess of a 40-hour week. But, as labor policy expert Tammy McCutchen explained in testimony before the U.S. Senate, this also takes away their guaranteed income:

…while exempt employees do not receive overtime for working over 40 hours in a week, they also are not paid less if they work less than 40 hours in a week. If an exempt employee works as little as one hour in the week, and then takes the rest of the week off because of a family emergency, that employee will still be paid her entire weekly salary. A non-exempt employee need be paid only for the one hour she actually worked. A non-exempt employee who takes an afternoon off to attend a parent-teacher conference will not be paid for that time, but an exempt employee will be paid her full guaranteed salary.

So while some workers may earn more because of overtime, others may end up making less as a result of the new rules. Moreover, many workers simply don’t want to have to track their time and inform their bosses exactly when they are leaving early and when they are working late. Moving to an hourly position entails a loss of prestige for some workers, who prefer to feel as though their contributions to the company are bigger than just their time logged.

One survey by the National Restaurant Association found that 85 percent of restaurant and retail managers believe changing employees from salaried to hourly workers will have a negative effect. Nearly half believe that the change would hurt morale, making people feel they were in a job rather than a career. And these respondents aren’t just speaking for their employees. After all, many of the managers in restaurants and retail shops may also be newly eligible for overtime, and 86 percent reported that their perceptions of their own positions would deteriorate if they were moved to an hourly status.

This costly new regulation would have been a blow to flexibility for workers and created a costly administrative burden for businesses. It’s welcome news that its implementation has been delayed.