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National Retail Federation asks U.S. House to put OT regulation 'on pause'

The House Small Business Committee this week got an earful from the National Retail Federation on the Federal overtime regulations set to become effective Dec. 1. The NRF said the regulation will not only freeze hiring but will also lead to lay-offs and demotions.

June 24, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

The House Small Business Committee this week got an earful from the National Retail Federation on the Federal overtime regulations set to become effective Dec. 1. It claimed that the regulation will not only freeze hiring but will also lead to lay-offs and demotions. 

"Supporters of the rule who celebrate studies predicting a potential increase in part-time jobs fail to acknowledge to the public that any increase in part-time jobs comes at the expense of full-time employees' hours and earnings," wrote National Retail Federation Senior Vice President for Government Relations David French in a letter to the committee. "The creation of part-time jobs due to hiring freezes or layoffs of full-time employees is hardly something to celebrate."

His words follow the federation's previous statements echoing retailers' beliefs that the new regulations will end up costing full-time jobs. Opponents of the measure have said that retailers will be forced to hire part-time employees to work at straight time for a few hours weekly, instead of paying a higher overtime wage  to their full-time workers who exceed 40 hours a week. 

The National Retail Federation urged the members of the house committee to support an act the federation proposed to pause implementation of the new regulations, which will double the salary threshold entitling workers to overtime pay to $47,476 on Dec. 1, 2016. 

A 2014 Gallup poll found that most full-time employees wrere putting in about 47 hours each week, though only 7 percent were paid for any additional hours beyond a 40-hour work week. That's quite a change from the world many baby boomers grew up in when 63 percent of workers, according to the study, were paid for hours they worked over the standard 40 every week.  

The U.S. Department of Labor estimated that the new rule, which actually adjusts the threshold salary every three years, will make about 4.2 million more workers eligible for overtime. 

The restaurant industry and retailers as a whole predict huge changes in the current labor market to accommodate the provisions of the new regulations in December, which basically give employers three options for compliance: 
•    Pay affected employees time-and-a-half for each hour worked weekly beyond 40.
•    Reduce affected employees' hours.
•    Raise affected employees' salaries to meet or exceed the new $47,476 threshold.

Retailers believe that the changed will result in large bottom-line increases for employers, particularly those who have numerous workers, who have regularly been putting in more than the federally mandated 40-hour work week without additional compensation. 

The National Retail Federation is requesting that implementation of the act be postponed until the U.S. Department of Labor completes an analysis of the potential impact of the regulation. The federation is also pushing legislators to remove a provision in the regulation that requires an automatic increase in the salary threshold for overtime eligibility every three years.

"These are studies that (the Department of Labor) should have undertaken before issuing its final rule and on which the public deserves an opportunity to comment," French said, according to a news release from the National Retail Federation this week.
The organization, which represents the nation's retail businesses, also said in its news release that its research indicates the new regulations will not only fail to give workers more take-home pay, but also increase administrative costs for employers who the federation said will have to limit employees' hours or cut their base pay to compensate for added payroll costs. 

The National Retail Federation is the world's largest retail trade association. Retail businesses are the largest private sector employers in the U.S., involving about 42 million Americans, according to a news release from the federation. 

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.