More than most states, Florida businesses and workers will surely feel the impact of new overtime rules unveiled this past week.
An estimated 331,000 of the 4.2 million U.S. workers affected by this rule change are employed in Florida. That's about one in 12 of all workers nationwide whose paycheck falls under the new rule.
The finalized U.S. Department of Labor rule doubles the eligible salary threshold for overtime from $23,660 per year to $47,476. Businesses will have until December to comply. That means folks making $23,660 annually or less already qualified for time-and-a-half pay when working more than 40 hours a week. Now employees making up to twice that amount in salary also become eligible on Dec. 1 for OT pay.
That, experts say, will hit many of the lifeblood businesses that form the backbone of Florida's economy. That includes tourism, theme parks, hotels and restaurants, retail, convenience stores and a host of mom-and-pop businesses from floral and T-shirt shops to small manufacturers.
Especially businesses and industries where workweeks routinely exceed 40 hours.
To put it mildly, the OT rule is brewing a pot of unintended consequences. Just ask Eduardo Suarez-Solar, an employment lawyer with Tampa's Gunster law firm. He represents small-to-big businesses and already is busy advising area clients on the coming challenge.
"The initial reaction I get from some clients — you can't put that in print," says Suarez-Solar. "It is a shocked reaction."
Those in favor of the expanded OT celebrate the new overtime law as a victory for lower-paid workers, many denied OT pay because they made too much under the old rule, and as a needed step to help preserve America's dwindling middle class.
Those against argue the federal law, by doubling the pay level eligible for overtime by the end of 2016, forces a radical change in a short period of time on businesses and their payroll budgets.
Others like Suarez-Solar suggest the biggest hit to the new OT rule is years away when its effect becomes more apparent on the culture of individual businesses. The loyalty and commitment of a company's workers may suffer as businesses are forced to limit overtime hours or even reduce employee salaries to offset the added expense of more time-and-a-half pay.
Some labor experts point to the new OT rule as part of a bigger trend of recent laws, and current attempts at new laws, demanding significant changes in how businesses operate. In 2013, for example, changes to the Affordable Care Act required any business with more than 50 full-time workers to provide health care coverage or potentially pay a penalty. Rather than the traditional 40-hour workweek definition, the ACA redefined a full-time worker as anyone working 30 or more hours a week.
That rule prompted many businesses to find new ways to avoid the ACA requirements by cutting worker hours to fewer than 30 or hiring part-time rather than full-time help.
Others point to the spreading call across many states to raise the minimum wage to $15, even though that figure is more than double the current federal minimum wage.
The overall effect is trying to do too much, too quickly, Suarez-Solar argues. He uses himself as an example. "I am not the tiniest of men," says the rotund lawyer.
"It took me 50 years to create this masterpiece of a body. If someone told me I had to lose 50 pounds in eight months or be penalized, would that be a healthy approach? No." Doubling of the salary threshold for eligible overtime is much the same.
The Gunster attorney tells his business clients to consider their options.
• They can restrict their newly eligible employees to working no more than 40 hours, thus avoiding the new mandatory overtime pay. "That means some work may not get done or customers may not receive the services they once did," Suarez-Solar says.
• They can adjust the salaries of newly eligible workers, paying less to factor in the extra OT pay that will be required. For example, the lawyer offers this rough recalculation. Someone making $40,000 annually or about $19.23 an hour could see their hourly pay cut to about $15.38, anticipating that OT hours would make up the difference under the new rule.
There is a host of issues lurking in such a scenario. A worker will be unhappy to see his hourly pay cut, knowing he would have to work a specific number of overtime hours just to catch up to the pay he already had been receiving. That also assumes the business will have enough work in the future to require that employee to work those overtime hours. If it does not, the worker ends up, in effect, with a pay cut. And the business suffers from less happy workers.
Many other workers who may be passionate about their jobs and want to worker longer hours — social workers who make house calls or restaurant managers on call to deal with late-night problems, as examples — could be frustrated if they are not even allowed to put in the time they think is necessary.
Yet another option is for businesses to raise a worker's pay above the $47,476 threshold. That way, the worker won't need to worry about overtime, but at the same time would no longer be eligible for additional pay. That may make sense for workers already making close to that amount but less so for workers newly eligible for overtime but with lesser salaries in the $30,000s or low $40,000s.
Groups like the National Employment Law Project favor the new law, arguing overtime rules will restore the intent of the current Fair Labor Standards Act's guarantee of a 40-hour workweek. That protection has declined since the late 1970s. Others say the new overtime rules will close a gap in which some employers readily handed out manager titles and responsibilities — but with no pay increase, or opportunity to earn overtime.
It's a lot to digest before it all kicks in.
"This could be looking uncomfortable for people by the end of the year" when the rule takes effect, says Suarez-Solar. Especially in Florida.
Contact Robert Trigaux at [email protected] Follow @venturetampabay.