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Thursday, Dec 8, 2022
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It’s About Workplace Opportunity

President Barack Obama recently announced that the federal threshold for salaried employees to be exempt from overtime protections will increase to $47,476 on Dec. 1. This is more than double the current annual level of $23,660. With less than six months before businesses must be compliant, employers are scrambling to re-assess their employment structure. In 2014, the president directed Labor Secretary Tom Perez to update outdated overtime regulations. As a result, the Department of Labor released a final ruling intended to simplify rules and put more money in the pockets of workers. Unfortunately, raising the overtime threshold at an irresponsible rate hurts those this ruling aims to help. Employers will be forced to cut professional opportunities and reclassify exempt employees as hourly staff. For business owners, it’s about workplace opportunity. As a full-time exempt employee, workers are given increasingly difficult responsibilities to challenge them professionally. These skills are key in developing a strong professional career. Abruptly doubling the overtime threshold will force employers to delegate work to a thinned full-time staff while keeping opportunities from younger, less experienced workers. A salaried wage allows employers the flexibility to train staff on the job without watching the clock. The Department of Labor estimates that 400,000 California employees will have their employment status re-evaluated. Many businesses simply cannot afford to pay recent graduates above the salary threshold or give an hourly employee the opportunity to learn vital skills. These employees face many uncertainties: less personal time off, no flexibility at work and fewer opportunities to advance professionally as employers try to balance increased operational costs. We must encourage our elected officials and government agencies to consider efforts that increase opportunities in the workplace, not force employees to limit their growth. This ruling will hit recent college graduates the hardest. The enthusiasm that a new graduate brings has value. But the learning curve is steep, with many graduates having limited “real world” experience. It takes time to learn how to work efficiently, how to manage time and how to prioritize work. These are skills that the most enthusiastic new graduate needs to learn. Right now, businesses can hire employees without these skills and teach them. By classifying them as salaried employees, employers can take a risk. They will not have to pay their new hire if that person takes twice the amount of time it should take to complete a task. They will not have to pay extra for the employee to “catch up” on background that a more experienced hire would already be familiar with. It is already difficult for new graduates to get on the economic ladder and make that leap from education to the working world. Many graduates have limited experience in the workforce. Interning and working jobs to pay the bills throughout their education is helpful, but it is not full-time, professional-level work. Graduates need flexibility to make their mistakes and learn that prioritizing and managing a workload is a vital skill. This overtime ruling could result in re-classification as an hourly employee with no opportunities for overtime, limiting opportunities while failing to achieve the Department of Labor’s objective of higher wages and simplifying regulations. The final Department of Labor overtime rule will weaken employment opportunities, career progression and business operation. California’s overtime threshold is double the state minimum wage. With the minimum wage rising, I fear that graduates and employers in our state are going to have a much more difficult time. Stuart Waldman is president of the Valley Industry and Commerce Association, a Sherman Oaks-based business advocacy organization that represents L.A. County employers at the local, state and federal levels of government.

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