Wednesday, January 17, 2018
Business

Obama's push to expand overtime could mean big changes for Florida

Florida's vast workforce of low-wage service workers and middle managers could see their paychecks swell because of President Barack Obama's directive this week to expand who can benefit from overtime pay.

Employers can deny time-and-a-half pay to salaried workers logging more than 40 hours a week if they earn more than $455 a week, or as little as $24,000 a year, and are labeled administrative, executive or professional employees.

But the president is expected Thursday to call for a significant boost of that salary limit, allowing millions more fast-food shift supervisors, retail assistant managers and other service workers to qualify for extra pay.

Florida labor lawyers said that overtime change could have a larger impact on businesses here than even a rising minimum wage, because so many employers rely on the "white-collar exemption" to squeeze more work from the same pay.

"A lot of employers depend on people making $30,000 a year, lean on them a lot, expect a lot of hours from them, and don't pay them overtime," said Steve Wenzel, a founder of Tampa employment law firm Wenzel Fenton Cabassa. "It'll put smiles on the faces of a bunch of workers, and that's never a bad thing."

Though White House officials had yet to say how much the salary threshold would be lifted, about 10 million Americans would benefit if overtime was extended to workers earning less than $50,000 a year, according to the Economic Policy Institute, a liberal think tank.

Supporters of the overtime boost argued it could spur hiring among businesses seeking to cut down on overtime, helping lower unemployment. It could also thin the ranks of salaried breadwinners who, in working 60-plus-hour weeks, end up taking home less than minimum wage.

But representatives of the Sunshine State's tourism-heavy service industry argued the changes could push local employers to scale back salaried workers to hourly pay, where they would make less money, or slash their workforce altogether.

"It's going to cause some real consternation (from) smaller or medium-size firms who just don't have the money," said Bill deMeza, a partner with Tampa-based law firm Holland & Knight. "A smaller shop covered by that law is going to think, 'Do we really need someone at that price?' "

The projected overtime boost is the president's latest salvo at nationwide income inequality, which he has called "the defining challenge of our time." Corporate profits have surged to the highest point since World War II, but workers' pay as a share of the American economy fell in 2012 to an all-time low.

Unlike his current push to raise the federal minimum wage from $7.25 to $10.10 an hour, a change that would require Congress' approval, Obama could directly revise overtime rules through the Fair Labor Standards Act, passed by Congress in 1938.

President George W. Bush did the same thing in 2004, bumping the overtime salary cap to $455, which, given inflation, would now equal about $550 a week. The threshold was first set in 1975 at $250 a week, which in today dollars would come closer to $970 a week.

California and New York set higher thresholds of $640 and $600 per week, both of which will grow by 2016. But because Florida relies on federal limits, and because many business leaders could opt instead to cut payrolls or consolidate middle management, Greg Hearing, managing partner of Tampa labor law firm Thompson, Sizemore, Gonzalez & Hearing, said this "will have an exponentially bigger effect in Florida than elsewhere."

Backers argued the overtime change would reward hard-working employees, boost the economy and offer protections for underpaid employees in right-to-work states like Florida, where unions wield less influence.

Lawsuits from workers arguing they were mislabeled as managers and denied overtime are one of the most prevalent disputes in Florida's federal courts, lawyers said. Attorney deMeza said cases from employees seeking back pay have been an "epidemic" here for years.

Many lawsuits involve workers who said they spent most of their 40-plus hours digging ditches, selling shoes or flipping burgers while dedicating very little time toward the type of management work, like overseeing other workers, that would block them from extra pay.

In 2012, 25 percent of the 8,000 federal lawsuits alleging minimum-wage or overtime-pay violations were filed in Florida, data from the U.S. Government Accountability Office show.

Greater Tampa Chamber of Commerce president Bob Rohrlack said businesses here remain unclear as to the long-term effects of expanded overtime.

"The economy still hasn't taken off the way we want it to," he said. "Businesses will be hesitant (to take risks) until they know what their playing field is."

But some labor lawyers argued that businesses will bump up prices to cover for higher payrolls or, especially at smaller restaurants or retail shops, see their revenues further slim.

Bob Riegel, an employment-law practice leader for Fowler White Boggs, said, "You're going to hear small businesses raising Cain about this, because they're going to carry the brunt of it."

Times staff writer Jeff Harrington contributed to this report.

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