After the White House announced a proposal to change overtime pay laws, many companies are looking into ways to be more cost-effective.
Last month the White House released a proposal to expand the overtime pay laws in the U.S. This proposal would mandate that employees who make under $50,440 a year would be eligible for time-and-a-half pay after 40 hours.
Even though the rules won’t be finalized for months, employers have started to closely track and manage employee hours to fit the new ruling and keep their costs down.
“It’s a big logistical issue to make sure you’re catching all the time,” Ron Peppe, a vice president overseeing legal and human-resources functions at Canam Steel Corp., a unit of Canada’s Canam Group Inc., told The Wall Street Journal.
This year, Canam Steel Corp. hired a full-time employee to manage compliance reports for the new ruling.
At Famous Toastery, a restaurant franchise based in North Carolina, employees are being restricted to make sure the business doesn’t face any runaway labor costs.
“We don’t want people working more than they should,” Robert Maynard, Famous Toastery’s chief executive, told The Wall Street Journal. “If we use [the new rules] to our advantage it won’t hurt us, but you have to work it.”
While many companies are worrying about labor costs, this may be a way for companies to become more efficient.
Thomas Kochan, a professor at the Massachusetts Institute of Technology’s Sloan School of Management, says the new rules could force companies to work more efficiently.
“These kinds of changes historically, while they sound like they’re going to be costly, lead management to look for more efficient ways of doing their business,” Mr. Kochan told The Wall Street Journal. “That helps drive up productivity.”
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