“We need to be conscious of adding regulations that could burden business owners. The more we try to regulate the free market, the less competitive we become,” Wiley said. “Businesses will find another answer to keeping them profitable.”

Economic Policy Institute Vice President and DOL expert Ross Eisenbrey is predicting the proposal would create hundreds of thousands of jobs, should businesses opt to hire part-time workers to take over any excess hours their current full-time employees were working.

The DOL said one of the original intentions of implementing overtime pay is for that purpose—to see that employers hire more employees rather than requiring existing employees to work more hours. The other intention is to prevent employees from being overworked and, therefore, avoid negative health effects on workers.

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“If [employers] think that paying time and a half for overtime is too expensive, the answer is don’t do it. Don’t work people long hours,” Eisenbrey said. “It’s bad for their families; it’s bad for their productivity; it’s bad for their health. It’s a bad idea.”

Wiley said there has to be a balance between regulations and profitability.

“Not all regulations are bad, but we have to be careful—especially coming out of the Great Recession of 2008—which has had a slow growth recovery, instead of robust, like historical recessions,” Wiley said.

Effect on county budget

Fort Bend County Human Resources Generalist Lewis Entricht estimates the passage of the proposal could stretch the county’s budget by up to $480,618. The county has 2,489 employees—533 of whom are exempt and whose salaries total more than $38.1 million.

Entricht said the estimated $480,000 would be used to cover 82 exempt employees that fall under the proposed, annual base salary of less than $50,440.

Human Resources Director Kent M. Edwards said the county also has other options, including reclassifying the 82 exempt employees as nonexempt and paying them overtime; hiring additional employees to lessen overtime overall; reorganizing duties to lessen overtime; or tightening up overtime.

Finance and Investments Director Pamela Gubbels, who has been with the county for 18 years, said she believes Commissioners Court will choose an alternative that will not increase taxes.

“The Commissioners Court has always been opposed to increasing the county tax rate unless there are no other options. With that, the budget office works hard to achieve the most efficient budget as possible. That usually means limiting the number of new positions and new programs,” Gubbels said.

Effect on businesses

Those familiar with the proposed rule say it has the potential to help employees and hurt businesses. The DOL estimates that 4.6 million employees currently exempt from overtime pay would receive overtime protection under the proposed rule, which the department argues would help those workers receive fair compensation for their work.

Texas Workforce Commission Communications Director Lisa Givens said the TWC has not done any analysis on the number of employers or employees that could be affected.

“It is still very early in the rulemaking process, and we are following developments,” Givens said. “TWC typically looks at this area of the Fair Labor Standards Act during wage-claim investigations. TWC has issued 43 preliminary wage-claim determination orders, regarding overtime pay, this fiscal year.”

Givens said the proposed rule would increase the minimum salary level for a salaried exempt employee from $455 per week to $970 per week.

On the national scale, the National Retail Federation estimates the overtime changes would cost restaurants and retailers between $5 billion and $9 billion per year. The U.S. Chamber of Commerce predicts businesses—especially small and midsize businesses—would struggle to absorb the increased labor and litigation costs.

The proposal would also eliminate flexibility time, which some businesses use to compensate for overtime. The DOL interviewed employer stakeholders before announcing the proposed rules. In the report, some stakeholders said many employees value the time flexibility that comes with a salaried position.

The final decision

The DOL opened a comment period on the proposed rule from July 6-Sept. 4, 2014. During that time, the department received more than 270,000 comments. The DOL must review all of those comments before making a final decision.

The proposed rule does not have to go before Congress because Congress has given the DOL authority to regulate policies related to labor. The president and the U.S. Office of Information and Regulatory Affairs may review the final rule before it is published.

“Newton’s laws of physics teach us that for every action there is an equal and opposite reaction,” Wiley said. “While regulation, politics and the FLSA are certainly not physics, to assume that the world is static and that business will not react to the measures with innovation, force reduction or outsourcing options continues to be a blind spot for those so intent on asserting their control over commerce.”

Fair Labor Standards Act

In 2014, President Barack Obama signed a presidential memorandum directing the DOL to update its regulations that define which white-collar workers are protected under the FLSA’s overtime rules. The FLSA, which was passed in 1938, establishes overtime and minimum-wage standards. In response to the memorandum, the DOL sought to modernize and simplify its regulations and ultimately proposed changing the salary threshold in 2015.

“The basic rule under the FLSA is that everybody is entitled to overtime,” Eisenbrey said. “The policy is that people shouldn’t work more than 40 hours a week. If they work over 40 hours a week, they should be paid extra, and that discourages employers from working people long hours because they do have to pay extra.”

The DOL has changed its salary threshold seven times since implementing overtime protections, with the last time being in 2004, when the salary level was changed to $23,660 per year. Before then, the salary levels had not been updated since 1975.

A DOL argument for updating the salary level is that the current threshold falls below the poverty level for a family of four, which is $24,250 per year today. However, the current salary threshold is also nearly $12,000 more than the poverty level for one person.

The DOL is expected to make a final decision on the rule by July. If the proposed changes are passed, a 60-day implementation period would follow before the changes would go into effect.

“As a general statement, I think we are overregulated in this country,” Wiley said. “As our jobs and industry continue to be challenged by emerging markets across the world, an increasing regulatory regime only harms our competitiveness and ability to succeed as a business, state and nation.”