Paying salary exempt employees allows entrepreneurs to pay for the exact number of hours required to get a job done at a competitive rate. Proposed changes to overtime regulations would require that entrepreneurs change the salary structure of their business by raising salary exempt requirements to a minimum from $23,660 to $47,467. That’s a 100% increase! That just about doubles the number of employees that qualify for overtime payments within the U.S. economy, and presents entrepreneurs with significant issues.

It would take an exorbitant number of part-time workers to fill the number of positions made available by this change in salary base. Over 2 million jobs would be converted from salary to hourly employees, and the number of employees that qualify for overtime payments would jump from about 6 million to over 11 million. Furthermore, the downgrading of positions that are now salary to hourly positions could have negative impacts on staff morale. Low morale can cause significantly larger issues for a business, especially small entrepreneur-ran businesses, like staff turnover. Increasing base pay and staff turnover equate to higher operational costs to the entrepreneur, which can be devastating to a small business owner.

The proposed policies would lead to entrepreneurs restricting the number of hours that an employee could work in order to avoid paying a really large increase in overtime payments to employees. Increased overtime payments equate to increase operational costs, and to levels that are impossible for entrepreneurs to bear for long. Increased staffing expenses eat into entrepreneur’s operating costs and force them to increase prices on goods and services to offset the cost. Increase prices lead to entrepreneurs losing their competitive edge and losing business. By placing the burden of meeting a forced increase in base pay, entrepreneurs could be forced to close their doors which is bad for the economy.

afeUSA contacted officials at state-level labor offices such as the Industrial Commission of Arizona, The State of California Labor and Workforce Development Agency, The Florida Labor Department, and the Colorado Department of Labor to discuss the impacts of increasing the base salary for exempt employees in an effort to confront the United States Department of Labor with a unified voice. By making your voice heard from coast to coast and at both the State and Federal levels we ensure that your needs are known as these policies are being formed and not when it may be too late to act.