Gary Burtless: Some Firms Will Find Ways to Evade Proposed Obama Overtime Pay Rules

President Obama has directed the Labor Department to review and update regulations under the 1938 Fair Labor Standards Act (FSLA)—which establishes the national minimum wage and guarantees that nonexempt workers will get paid 1.5 times their regular hourly wage for hours worked beyond 40 per week—in order to increase the number of workers eligible for overtime pay.

Amid criticism from many in the business community and welcome from low-wage workers, Senior Fellow Gary Burtless told Fox Business News that “the problem will be if supervisors or candidates are getting overtime pay, and employers know that too, there will be tougher negotiations over standards of pay.” He continued:

Someone who is a manager of a fast food restaurant might not be that well paid, and because they are currently supervisors they don’t get paid for working more than 40 hours a week. If they start getting paid time and a half, the company can arrange to have that pay lessened.

The main thing the administration is trying to do is put its thumb on the scale for workers who have a weak bargaining position and are not paid well. People look at the Fair Labor Standards Act and say they believe workers should receive time and a half for working more than 40 hours a week, period. This changes things for employers who want to do what the law requires, but the firms that want to evade responsibilities will find pathways to do it.