How New Overtime Pay Rules Will Impact Small Business Owners And Their Employees

Small business owners across the country are anxiously awaiting new rules on overtime pay for their employees. According to a Fox Business article, the Department of Labor is expected to completely overhaul overtime pay regulations in the U.S. at some point later this week.

Right now, business owners are only required to pay overtime to employees who work more than 40 hours in a work week and earn less than $23,660 annually. But the new rules would make employees making as much as $50,440 eligible for overtime pay. President Obama says this expansion will benefit as many as five million workers in its first year alone. Critics of the plan, on the other hand, say it will hurt small businesses.

Juanita Duggan, president and CEO of the National Federation of Independent Business (NFIB), appeared on Fox Business saying, “People who were previously upwardly mobile within small businesses are now going to become hourly wage earners, and they won’t be on the management track. I think it’s going to be really bad for workers.”

Even though optimism surrounding small businesses improved in April, new overtime rules could potentially curb that momentum. The NFIB’s small business optimism gauge rose to 11 percent last month from nine percent in March. However, in a note, analysts at Barclays said the trend for small business optimism has been on a lower trajectory since the start of 2015.

Duggan is concerned that these new overtime regulations, combined with current efforts to raise the minimum wage, will ultimately harm small businesses and their owners.

“They don’t have armies of lobbyists, lawyers and compliance officers to help them with this kind of compliance… they’re very pessimistic. Our optimism index is now at very low levels. We’re looking at levels that were during the 1990s recession,” said Duggan.

Click here to read the original Fox Business article.