Jon Hyman on overtime for salaried workers

At, attorney/blogger Jon Hyman, often linked in this space, follows up on the Mercatus Center report on the high cost of the Obama administration edict ordering overtime for mid-level salaried workers. He writes:

I’d like to focus on one such unintended consequence — lack of workplace flexibility.

From the report:

If employers are forced to record and measure employee hours, they will shift away from allowing employees to telecommute because the cost of monitoring hours for telecommuting is significantly higher, although not impossible given new technologies. The proposed regulation would create a scenario whereby telecommuters have an incentive to work overtime because they would get paid 1.5 times the regular rate and, knowing this, employers have an incentive to make sure employees do not work overtime. A mechanism will be needed by which the employer is able to track the work hours of employees such that the employer knows when an employee is working overtime. Showing up at work and clocking in is the mechanism by which employers normally track employees’ hours. With telecommuting, it is difficult for an employer to track the number of hours worked. As a result, employers may require telecommuters to start physically showing up for work so that they to track and monitor the number of hours these employees work.

Employees like being exempt. They like the flexibility of not having to track their hours. They like the flexibility that comes with a salary that compensates an employee for all hours worked in week, whether it’s 30 hours this week, or 65 hours next week, or 47 hours the week after. The new regulations will strip 5 million employees of this flexibility and convert them to time trackers. Does this change benefit employees? I bet if you polled the 5 million, you’d find that most would prefer to keep their flexibility instead of trading it in for whatever minimal additional compensation (if any) they expect to recover from a switch to non-exempt.


  • the only people who want these workers to be non-exempt are the Plaintiffs’ bar and FORMER exempt employees. You never see a misclassification claim from a current employee. As for new technologies for tracking work, they don’t translate well to the FLSA so you are unlikely to see employers attempt to track hourly workers remotely. They will have to come to the workplace.

    Funny thing is, this will result in more traffic, more fossil fuel use, more need to spend on daycare, etc. It’s a net loss for society. Never let common sense get in the way of progressive policy though.

  • Once you shift all these workers into the hourly-pay jobs, it becomes easier to define work effort (not output) and benefits, and identify “the workers” as a group. Then you will see a push to unionize them — whether they want it or not.

  • Here is something else: if you watch a real professional at work, whether a mechanic, a lawyer, a newspaper reporter, an administrator, an HR person, anyone who is good at being productive at their job, they always work as fast as they can, while maintaining quality.

    Putting people on an hourly basis will remove that incentive. This is a terrible idea.

    • Mechanics and some journalists are generally paid by the hour. Some lawyers, if they’re in solo practice, are directly paid by the hour, while others certainly have the hours they bill factored into their compensation.

      • Oh for Christ’s sake.

        Do you understand my point?

  • I just love working weekends for zero pay. I hope nothing changes so I can work more hours and give my employer free labor!

    • Exactly! Seriously, where are the bread and roses? Let’s continue to overwork and underpay America’s working class. It’s working so well currently at stimulating the growth of our economy and helping average folk live the American dream.

  • I’m a bit split on this one. On one hand, I generally deplore this kind of meddling. On the other, I know that a lot of places abuse the lack of OT pay regularly to try to get extra hours out of staff. This is generally a bad practice overall, but it doesn’t keep the ignorant and desperate from trying. There is probably a better solution than this and I doubt we really need more employment regulations.

    Side note: I am salaried but would not be directly impacted by this litigation.

  • The entire goal of this legislation is to remove people from low pay salaried positions. Unless you make 50K+ you should be getting overtime, and the industry should be tracking your time, determining when it’s worth while to use you more than 40 hours in a given week.

    This is clearly a net positive for employees and a struggle for employers. Just a side note, I work in HR. It’s not like we are going to layoff all of our supervisors. Most likely they will be classified “Salaried – Non-exempt” and we will focus on cutting out job responsibilities that aren’t important.

    The shift will be toward time management. The new costs are very controllable. Just like in 2004 when everyone called fowl to the changes, we are seeing the same thing happen now. The impact is minimal at best. A well managed business has nothing to fear. A poorly managed business had much to fear even without this new regulation.

    Good luck all.

    • Male bovine excrement.

      I work in IT while I make 100K/year now, I started 19 years ago at 35K. Being non-exempt would have been a pain in the ass. I liked not having to clock in and out, not having to track my time down to the minute.

  • Apart from being opposed to governments dictating terms of private agreements on general principle, I’m torn on the issue itself.

    On the one hand, I understand the “flexibility” argument. It’s one my wife has made many times. I don’t like clocking in and out (as I do now) and I understand the benefit to employers and managers of wage cost predictability, where payroll is more of an overhead expense rather than being like an electric bill that can spike.

    On the other hand, however, I work in media production, and for me, I’ve always seen “exempt” salary positions as a sucker’s play.

    In my view, overtime is a failure mode. It means you blew your estimates of time, schedule and resources. That’s not to say that it doesn’t happen, or that it shouldn’t happen, or that someone should get fired if it does happen. My sort of work is notoriously hard to predict. The point is this is a line that should be understood – if you’re consistently running up overtime bills, something’s not being done right. Failure should hurt, and it should hurt the one who fails.

    Unpaid OT means that check, that signal, is gone. It makes failure “free”, painless for the executive who blithely overpromises on a contract to make the sale – but not the coder or artist who now has less time for her family.

    • “In my view, overtime is a failure mode. It means you blew your estimates of time, schedule and resources.”

      Overtime may be a failure mode in your line of work, that doesn’t mean it’s a failure mode for everyone.

      I did IT work for an electric utility for many years. Many systems have to be kept running 24/7. No system ever built by humans is 100% reliable. Systems fail, and when the fail in the middle of the night, someone has to get out of bed and fix it.

      • That example is still an example of a failure mode. The urgency/unpredictability of the mode doesn’t negate the mode.

        • Well there’s also the fact that scheduled maintenance, updates, and patches to high availability systems are generally expected to be done outside of normal office hours and / or on weekends, and the IT guys still need to be working during normal office hours.

          For some business, overtime isn’t any kind of “mode” its a necessity of doing business.

          Not everyone runs strictly 9-5. But there is not enough happening outside of normal office hours to justify extra employees for extra shifts.

          Of course many IT professionals in the kinds of roles most likely to require overtime actually get higher base salaries based on the expectation of work weeks greater than 40 hours.

          Salary doesn’t have to be set on a 40 hour week basis.

          • No, salary doesn’t have to bet set on a 40 hour basis and there are certainly some times when significantly greater than 40 hours is the only sane option. However, those times are certainly the rare exception. Though as I said earlier, I don’t think legislation is the appropriate fix. Greater job mobility and economic dynamism are the fixes. Through a variety of ways, we have been slowly eating away at those (credentialism, purple squirrel syndrome, minimum wage hikes, experience fetishes, etc).