Federal overtime rules kick in next week

By Victor Godinez
The Dallas Morning News

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Labor experts are still arguing over whether millions of workers will gain or lose overtime rights, but regardless of who is correct, employers have to be in compliance starting Monday.

Most say they are ready for the new guidelines and aren't planning major changes in overtime-pay policies.

Jim Willmann, director of governmental affairs at the Texas Nurses Association, said about "50 percent of the nursing population" may no longer be eligible for overtime pay, including about 40,000 full-time registered nurses.

But the tight labor market for nurses will make it difficult, if not impossible, for hospitals to eliminate overtime pay.

"The way we compensate the nurses will not change based on the changes," said Deborah Ellison, director of compensation for Texas Health Resources, an operator of 12 hospitals in Texas. "They can be classified as exempt and not paid overtime. But we don't think it works effectively in this market."

The retail industry is another area that many experts predicted would see a major impact from the new regulations, but so far, that doesn't seem to be happening.

"I don't get the impression that people are rewriting their pay policies," said Elizabeth Treanor, government-relations counsel at the National Retail Federation. "I'm actually hearing from a lot of people that they're moving more people from exempt to nonexempt than they originally thought they would be."

Tim Lyons, a spokesman for Plano, Texas-based J.C. Penney, said some department managers in the company's stores are getting a small raise.

The new federal guidelines mandate that workers earning less than $23,660 a year in salary are automatically eligible for overtime. The previous threshold was $8,060.

Some department managers at Penney's earn a salary plus commission, Lyons said, and while their total take-home pay is usually more than $23,660, the new guidelines say only salary can be used to calculate whether an employee is exempt.
 
So the department managers' base salary is being lifted over $23,660.

"It's a win for them," Lyons said.

Analysts say the number of workers affected by the new rules may not be clear for six months to a year.

The Labor Department estimates that as many as 1.3 million workers will gain overtime rights from having the minimum threshold raised to $23,660, or $455 a week.

The department said earlier this year that the higher threshold will cost employers roughly $375 million more a year, and that employers will face a one-time cost of about $739 million to implement the changes.

It also predicted, however, that employers will save $252.2 million each year in litigation and other expenses thanks to clearer overtime guidelines.

Stan Weiner, head of the labor and employment practice in the Dallas office of law firm Jones Day, said he expects the deadline to be anticlimactic.

"My guess is the regulations are causing very few changes," he said. "They may just make some companies feel better about changes they made before. The regulations should not provide a basis for employers to make massive changes one way or another."