March 13th, 2014

Obama’s mighty pen—or is it his phone?—works its magic on overtime pay

The latest of Obama’s imperial moves:

Business groups and congressional Republicans are blasting regulations President Obama will announce Thursday that could extend overtime pay to as many as 10 million workers who are now ineligible for it…

“This came as a shot out of the blue,” said David French, the National Retail Federation’s senior vice president for government relations. “Just on the surface, this looks like an enormous new administrative burden.”…

Current regulations require employers to pay overtime to salaried workers making less than $455 a week. Obama’s proposal would redefine which employees can be classified as “executive or professional” and thus ineligible for overtime pay…

But the plan could backfire if employers choose to limit the hours of employees or cut their base pay to account for expected overtime.

No one seems to have seen this coming. I would say that the details of what Obama will do are sometimes hard to predict—what will his next target be?—but the broad outlines are very very clear.

Note this important sentence:

McCutchen presided over the last update to overtime regulations, which took well over a year to complete a decade ago, and were the subject of an intense fight in Congress.

“An intense fight in Congress?” That’s for chumps—those without a pen and a phone. For other presidents, the ones who had a hostile press to deal with, or a Congress they respected and/or feared.

Ed Morrissey at Hot Air writes an excellent article that points out the following:

[The proposed change is] not really executive overreach, though. Unlike the minimum wage, which is set by statute and has to be amended by Congress, the definition of overtime exemption is handled by Department of Labor regulation. However, that regulatory process takes quite a long time, and it may be months or even into next year before Labor can act on the directive from Obama. Business groups and Congress will weigh in on the proposal, and no doubt Republicans will demand a CBO analysis of the impact of this change, too.

And … what is the proposal, anyway? No one knows, and the White House isn’t saying…

Can Obama do this on his own? Yes, within the parameters of regulatory changes at Labor, and the White House has already said it will respect that process. Should he? Republicans and the business community will have trouble defending the current definition, but this ignores the real problems of the economy – and may well aggravate them, especially if the redefinition is as sharp as Bernstein wants. It’s recutting a shrinking pie rather than figuring out how to make it larger, and it’s bound to fail in every way except perhaps politically — and even that win will be minor and short-lived.

“Except politically”? But for Obama and most Democrats, there is no other consideration except the political. And minor and short-lived is good enough, because they need whatever they can get. This is the sort of regulatory change that looks good on the surface to a lot of people but probably isn’t in terms of its long-term and unintended consequences. It’s the “good on the surface” part that matters politically, though.

Here’s an old article about that earlier “intense fight” over similar issues. It occurred in 2004:

The House voted 223 to 193 yesterday to block the Bush administration’s sweeping new eligibility rules for overtime pay, giving Democrats a significant victory that they hope will boost the party’s standing among middle-class voters in key battleground states in the fall election.

The article goes on to describe the factions, the battle in Congress, and the issues, which seem to include a similar regulatory change over the definition of who is exempt because “they perform certain supervisory or managerial tasks.” Sure seems similar, and yet the regulatory change was submitted to Congress. It all seems very quaint now, doesn’t it?

Obama’s entire presidency has been one long test. Little by little he has been pushing and pushing to see how much pushback there will be. He has discovered there hasn’t been much that’s been effective.

9 Responses to “Obama’s mighty pen—or is it his phone?—works its magic on overtime pay”

  1. Michael Morgan Says:

    I was very much in favor of the President’s pen and phone statement until I realized the pen was not for writing his resignation letter and the phone was not for calling the moving company.

    To understand the impact regulations have on business, it would have been helpful to have actually worked for one.

  2. Dept of Stuff Says:

    This regulatory change could be very disruptive and expensive–just what the economy needs. I’m a fairly regular commenter here, but am going to post the following anonymously because I could get in trouble for discussing it publicly.

    I work in IT for a smallish organization. We have one person doing payroll. A lot of the job is clerical, a lot is higher-level. You could argue either way about whether it should be “exempt” (from overtime pay, i.e. salaried professional) or “non-exempt” (subject to overtime pay, hourly). But it was exempt. Something over 10 years ago, in a couple of semi-emergency situations, the incumbent in that job was asked to work some overtime. It was a rare thing and only a few hours were involved, iirc under 10 in each instance (I knew, because I was asked to check the system logs). Well, not too long afterwards, she quit, and complained to the Labor Relations Board (not sure that’s the right name, but a federal agency).

    The result was an extensive inspection of our operation, which in itself was hugely time-consuming and expensive (lawyers!). They evaluated every position for whether they thought it should be exempt or not, and prescribed a very detailed set of changes–and monitoring more or less in perpetuity.

    It had all sorts of unforeseen consequences, most of which were not to anybody’s liking. Just one example: hourly employees were forbidden to eat lunch at their desks, lest they do some unpaid work. So one secretary who was working on an MBA at night and had been doing homework at her desk (with her boss’s blessing), using the computer there, was no longer able to do so. Some people were severely insulted when their positions were re-classified as non-exempt (lower status). It created a lot of work for my very understaffed area, because we had to provide tools for recording time more accurately–on and on. We are still feeling the effects.

    And nobody actually made more money: not surprisingly, the management response was not to pay people for overtime, but to forbid them under pain of death from working a minute over their allotted weekly hours.

    I myself work a fair amount of overtime, but I don’t mind–IT people think of it as coming with the territory, and I’m paid decently. But I’m sure the exempt status can be and is abused. Still, it really wasn’t in our case, and the whole thing was an object lesson in what a blunt instrument government regulation is.

  3. Dept of Stuff Says:

    btw by “smallish” I mean roughly 300 employees.

  4. Holmes Says:

    We need serious regulatory reform. FLSA should be repealed anyway. Want OT? Work at an employer that offers it. But they would probably offer higher base wages with out.

  5. Mike Says:

    Question: Since the President is Lawless; since he decrees “Law” as he sees fit, on his own whim….Is there then any ethical or moral obligation for anyone to obey the law?

    Not, “Is there any compelling reason to obey the law?”, but “Is there any ethical or moral obligation to obey the Law?”

    Discuss.

  6. Beverly Says:

    Mike:

    Not legal. Illegitimate laws are not laws, but fictions. And I think that’s actually in the Constitution somewhere.

  7. Tonawanda Says:

    To be redundant, the true hallmark of a Leftist totalitarian: what can I get away with? And it will not stop even when the telescreens are in every room, if there is more to get away with.

    Inside every Leftist is a Caligula burning to get out.

  8. Ymarsakar Says:

    Obey Obama… or else.

    Or else he’ll start a war with Russia and send your kids to it, with an untrained and broken military.

    http://www.thedailybeast.com/articles/2014/03/14/white-house-braces-for-russian-retaliation-over-ukraine.html

  9. Militant Bibliophile Says:

    Wonderful. I’m one of those employees classed as professional who doesn’t get overtime, but like Dept of Stuff, I get paid pretty well and consider it part of the job (plus in my position, it’s a hazard but not terribly common and mostly by choice). While I feel fairly certain my employer will find a rational way of dealing with this, this could conceivably have a very disrupting effect on how my office is run, and I shudder to think how bad it could be for those with employers perpetually running scared of the regulatory State. This will not end well.
    Also, in case it wasn’t obvious, I don’t want this! While OT is a nice thought, the secondary and tertiary effects of having it imposed are enough to more than cancel out any benefit. But then, I’m not a politician, so I actually have the brains and sense to spot that

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