NRF: Overtime Changes Could Trigger Layoffs

WASHINGTON, D.C. — New federal overtime rules won't go into effect for another five months, but retailers are already anticipating labor issues. 

The National Retail Federation (NRF) told the House Small Business Committee that new federal overtime regulations will lead to hiring freezes and layoffs for full-time workers if enacted as planned Dec. 1.

"Proponents of this rule have touted the changes as a welcomed job creator. These claims are riddled with partial truths," said NRF Senior Vice President for Government Relations David French. "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.

"The creation of part-time jobs due to hiring freezes or layoffs of full-time employees is hardly something to celebrate," he added.

French's comments came in a letter to members of the committee, which held a hearing on June 23 on the overtime regulations released by the Department of Labor (DOL) in May. A key component is an increase to the salary threshold under which employees qualify for overtime pay. The final rule more than doubles that salary threshold from $23,660 to $47,476, as CSNews Online previously reported.

The NRF has argued that any job creation will come only if companies hire part-time employees who could work at "straight time" for a few hours a week rather than paying time-and-a-half to full-time workers when they exceed 40 hours a week.

The retail group urged committee members to support the Protecting Workplace Advancement and Opportunity Act, which would pause implementation of the new regulations and require the labor department to complete a comprehensive analysis of the impact the changes would have on small businesses and lower-wage regions of the country. 

In addition, the bill would block the regulations' requirement that the dollar threshold for overtime eligibility be automatically increased every three years.

"These are studies that DOL should have undertaken before issuing its final rule and on which the public deserves an opportunity to comment," French said.

According to the NRF, research shows that the overtime regulations will force employers to limit hours or cut base pay in order to make up for the added payroll costs, leaving most workers with no increase in take-home pay despite added administrative costs. 

A separate survey found that the majority of retail managers and assistant managers the regulations are supposed to help oppose the plan, it added.

Some lawmakers are also working to block the federal overtime changes. As CSNews Online previously reported, Sen. Lamar Alexander (R-Tenn.), chairman of the Senate labor committee, and Sen. Ron Johnson (R-Wis.), chairman of the Homeland Security and Governmental Affairs committee, introduced legislation under the Congressional Review Act to block implementation of the administration's overtime rule, which the lawmakers refer to as the "time card rule."

The NRF represents discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries.