US overtime rules may affect retailers

By

Obi Anyanwu

Published
May 19, 2015

The National Retail Federation report by Oxford Economics, Rethinking Overtime, predicts that the Obama Administration’s plan to revise the federal overtime regulations could impact retailers in rural states.

 The report explains that the revision by the Administration will likely “hollow out “ low and mid-level management positions in the restaurant and retail industries and shift toward more hourly, part-time employees. The proposal could potentially cost retailers millions of dollars in added costs.
 
According to the new rules that were submitted to the Office of Management and Budget for review, the current standard guarantees overtime to workers earning up to $455 a week, and if the threshold was raised to reflect 2013 numbers it could be raised to either $610, $808, or $984 per week. This will increase the number of workers exempt from overtime pay and result in added employer costs, a decrease in benefits, and compensation in addition to more part-time and hourly workers.

The increase in threshold would affect retailers in rural states, especially in Louisiana, Kentucky, Oregon, Oklahoma and Iowa, which have a lower labor cost and fewer stores.
 
The NRF surveyed restaurant and retail managers and found that a majority opposed the proposed revisions with 81 percent saying customer service would be negatively affected and 75 percent saying the changes would hinder effectiveness of employee training and the ability to lead by example.