The Boise Metro Chamber of Commerce generally focuses its advocacy efforts on Valley-wide concerns and state legislation. However, once in awhile we see a federal issue, regulation or law that captures our interest. As the state’s largest association of businesses, most of which are small businesses, the U.S. Department of Labor’s proposed rule governing overtime pay caught our attention last summer. We believe this proposed rule will have a disproportionately negative impact on small Idaho businesses. Additionally, the Boise Chamber represents more than 200 nonprofit organizations, whom we feel will also be overwhelmed with this ruling.
In a nutshell, the new rule would dramatically change the definitions of “salaried, or exempt employees, and hourly, or non-exempt employees.” Generally, today, if a salaried, management-level employee makes more than $23,660 annually, they can be exempt from overtime rules. The new proposal would more than double this threshold to $47,476 overnight across the nation. That salary in San Francisco or New York City may be small potatoes, but that is not true for Boise, Buhl or Bonners Ferry. Such a federal mandate makes no account for the disparity of salaries and costs of living.
Let’s take an example of what might happen to a small Idaho company or nonprofit should this mandate go through. Perhaps a small business has an HR manager who makes $40,000 a year. He or she is currently salaried and can work off-hours on projects that may be seasonal in nature without invoking overtime pay. To remain a salaried employee after this rule is implemented, he or she would have to be given an immediate $10,000 raise, or be reclassified as an hourly employee who will have to clock in and out. As any HR manager will tell you, such a situation sets up a small company, nonprofit or small municipal government entity for some very tough employment decisions. Small entities like this can’t just turn on a $10,000 revenue spigot. This federal government rule would put small employers in a no-win situation. Do I cut hours, cut staff or tell loyal salaried employees they have to go back to the time clock?
Some experts believe this rule is the result of news stories about fast-food managers in big cities who work long hours for a very modest manager’s pay. If that is a problem that needs fixing, which it seems to be, please go fix it, but don’t fix it at the detriment of small businesses and nonprofits in smaller communities. Sadly, this kind of one-size-fits-all regulation from a federal government agency is not unique. The Boise Chamber filed comments opposing this new rule last year and has recently supported a new bipartisan congressional effort to circumvent this proposed U.S. Department of Labor rule. Please join us in urging Idaho’s congressional delegation to support S. 2707/H.R. 4773, the Protecting Workplace Advancement and Opportunity Act.
Bill Connors is president and CEO of the Boise Metro Chamber of Commerce.