Dive Brief:
- Among the unexpected outcomes of the Department of Labor's soon-to-be-released, controversial overtime rule, employees will likely have to take on second jobs to make up the difference, according to SHRM, covering surprising new research on the rule's impact.
- A new study from the Mercatus Center at George Mason University in Arlington, Va., predicts that instead of a rise in the number of people employed, the rule will encourage companies to cut working hours to avoid paying overtime, driving employees to take on second jobs.
- While final rule details may be coming earlier than expected, the Labor Dept. Wage and Hour Division's new rule recommends setting the initial new salary threshold for exempt employees at $50,440 annually, a 113% boost over the current $23,660 figure.
Dive Insight:
Study co-author Liya Palagashvili, assistant professor of Economics at the State University of New York—Purchase College, told SHRM that one stated goal of the new rule is to improve exempt employee health by reducing long work long hours without overtime pay. The Labor Dept.'s thinking goes that if an employer has to pay employees overtime, it will have the incentive to not overwork exempt employees. However, SHRM reports that the study concluded there was no evidence of a negative impact on health from working just a little overtime, as is commonly the case in the U.S.
The study also found that as employees take on a second job as a way to generate more income, “no health benefits are gained from working fewer hours at their first job.”
Palagashvili told SHRM Online that the rule could cause employers to hire a person with a more senior title and pay them above the exempt salary threshold to fill a junior employee’s role, with added responsibilities. Palagashvili noted that if it's feasible, some employers may just replace workers with machines, such as adding self-service check-out lines rather than using cashiers.