Fabricators weigh in on the new overtime rules

Have you read Stephen Barlas’ blog post on thefabricator.com about the new overtime rules that take effect Dec. 1? More than 20,000 subscribers to the “Fabricating Update” e-newsletter had the opportunity to do so this week and to share their thoughts about the new rules.

As Barlas noted in his post, “Small manufacturers especially will have to revamp some of their pay packages to blunt the impact of the new Labor Department overtime rules. The rules, which have been contemplated for a few years, essentially increase the number of lower-paid worker who will be eligible for overtime, generally catapulting midlevel managers into the overtime universe.” You can read some specifics about the rules here.

We asked “Fabricating Update” readers what they think of the measures.

A Good Thing

Vmclassic1 said, “About time. The way it should be. Stop letting companies rip the lower wage workers off all the time.”

Jed W. said, “The new overtime rules are good, not only for employees, but industry. Sadly, many of the images of manufacturing jobs are true, and the number of people that the new rules benefit shows that industries were taking advantage of workers. This goes beyond the small start-up or random week of working overtime to get the big job out the door.”

Ron H. said, “I've been a salaried employee since 1982. Some companies have demonstrated a good balance of the work over 40 hours per week is necessary.

“But most, and especially those that operate like the Jack Welch cultures of today's manufacturing companies, want you back in at 7 a.m., even if you stayed until 10 p.m. the night before. And certainly if you were on an airplane coming from a three-day business trip and on a delayed evening flight.

“Working for small company can be the same. As I am dealing with now. They push to pay the lowest possible wage, resulting in sometimes hiring lower skill (thus slower output) to then push-push for ‘free labor’.

“I recently saw a job ad, and the posting stated a minimum of 50 hours per week for $40,000. Who would want that? No X or Y generation worker will do it for long. But the old guys and gals are supposed to just accept it.”

Hold on a Minute

Joe Y., president and owner of a manufacturing business said, “I believe this new law will hurt business. In the past, we have been able to deal with extended work hours by salaried personnel with time-off or other systems. Now, we are ‘boxed in’ by more government rules that will cost more.”

And about the government’s objective in establishing the new rules? At least one reader questions the motive behind them.

The president of an organization that manufactures merchandising equipment said, “We all must understand this: The regulation is not about improving worker’ and mid-level income. It's about increasing the efforts of a failed government to sustain itself through regulation and increased cost to businesses, both small and large.

“To understand how the financial system in the U.S. is operated explains clearly and completely, the hows and whys of such regulations, no matter whether they affect worker's income or any industry or individual’s style of life or business.

“The government goal here is to increase taxes by increasing income. The claim that life will 'improve' is a false case. The purchasers of end products and services will seek alternative sources and essentially kill any chance of keeping jobs in the U.S.

“I'm willing to bet a beer and a buck that many who will be affected by this madness will now, strongly consider outsourcing their work to... China, India, Bangaladesh, Mexico, or Africa...on and on, ad nauseum.”

The Cost

The Barlas post included a quote from the a National Association of Manufacturers vice president, who said, “This regulation creates barriers to opportunity, severely limiting flexibility and dramatically increasing red tape, especially for small manufacturers who cannot afford the burdens of a 99 percent salary increase for management employees who are exempt from overtime pay.”

Several “Fabricating Update” readers questioned the percentage. One did the math. David P., director, business development and sustainability for an aluminum supplier, said, “In order for someone to double their pay over the normal 40-hour week, getting time and a half for overtime, they would need to work 26.5 hours overtime in a week, or 66.5 hours/week.

“If you require your employees to work 26.5 hours/week overtime without any compensation for the excessive extra hours, your business model needs some work. “A more realistic increased burden on small business that has exempts working 45 to 50 hours/week regularly is about 30 percent.”

For many businesses, 30 percent is still a healthy number.

Stay tuned to see what develops between now and Dec. 1 in terms of companies lobbying to reverse the decision.