Week 8 Discussion
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This week's lesson discussed the Fair Labor Standards Act (FLSA) and its mandates for such matters as minimum wage, overtime, etc. The threshold
under which salaried employees must be paid overtime was set in 1975 at $23,700 USD, and was unchanged until May 2016 when President Barack Obama attempted to raise
the threshold by executive order to
$47,476 USD (the 1975 figure adjusted for 41 years of inflation).
According to President Obama, the new salaried employee overtime rule would have provoked employers to do one of three things: 1) pay overtime wages
to their salaried employees who make less than the new threshold, 2) give raises to salaried employees who are currently paid less than the threshold
so that they remain ineligible for overtime, or 3) hire more employees to cover the overtime workload and constrain salaried employees paid less than the new threshold to a 40-hour work week. In November 2016 this order was blocked by federal court injunction, and has not been pursued under the Trump administration. However, consider and comment on the following questions:
1. Of the three options that Obama's executive order was intended to provoke, which do you think businesses would have been
most likely to choose and why? Are there any
other
options? If so, what are they and what are the legal challenges involved? It is argued that this executive order would have benefited the macro-level economy regardless of the choices that employers made. Do you agree? Why or why not?
According to the reading this week, paid time includes all time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed workplace and all time the employee is suffered or permitted to work. I think that the employers are not in favor of Obama’s executive order for Overtime rule. According to Nagele-Piazza, the new rule is expected to prompt employers to reclassify more than a million currently exempt workers to nonexempt status and raise pay
for others above the new threshold. If the rule is established, the employers should understand their budgets and how paying employees for their overtime work affects the bottom line. They should then consider setting aside a fund for overtime pay, reducing hours to avoid overtime pay or increasing base salary to avoid a shortage of available money for overtime pay at any given time. For the employees, there is a concern that employers will split full-time jobs into part-time jobs in order to avoid having to pay higher salaries or overtime and create jobs that may not require benefits such as health care or childcare. If I have my own business, I will give raise to salaried employees who are currently paid less than the threshold so that they remain ineligible for overtime. Besides, I also should weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying employees as nonexempt and paying overtime. Although the changes to the overtime rule are all about salary, the upcoming adjustments provide a good opportunity for employers to look at the job duties for their lowest exempt pay bands and make sure they qualify.
Nagele-Piazza, L. (2020, February 28). New Overtime Rule raises salary cutoff to $35,568
. SHRM. Retrieved October 27, 2022, from https://www.shrm.org/resourcesandtools/legal-
and-compliance/employment-law/pages/labor-department-issues-final-federal-overtime-
rule.aspx Hello Alison,
Thank you for your post this final week. I really enjoy reading on your point of view. However, I do not agree with you. It looks like you are the employers’ sides. I do understand how you came to this conclusion. There are many businesses that are not able to financially raise salary by double due to a few overtime hours being worked. If I have my own business, I will give raise to salaried employees who are currently paid less than the threshold so that they remain ineligible for overtime. The reason I do this is because I want to let employees know that I care about them, and they will care about my business. They would work hard and do productively. Hello Marlene,
Thank you for your post this final week. I really enjoy reading your post of view. I do agree with you that it depends on the organization’s budget to choose what would be the best option for the employers. In my opinion, most businesses would have chosen to give raises to salaried workers whose current pay is less than the threshold so they wouldn't have to
pay them overtime; and I will do this way if I have my own business either. The main reason for this is that this would have been the least expensive option for companies to think about. Businesses wouldn't have to pay overtime pay to salaried workers if they had just given those workers pay raises to bring their salaries up to the threshold level.
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