The retail industry expressed disappointment with new overtime rules issued by the Department of Labor (DOL) in May. According to DOL, the new regulations raise the salary threshold for overtime eligibility to $913 a week ($47,476 per year), up from $455 a week; automatically updates the salary threshold every three years based on wage growth over time; strengthens overtime protections for salaried workers already entitled to overtime; and provides greater clarity for workers and employers. However, retail industry representatives disagree with the Obama Administration’s ‘one-size-fits-all’ approach to the rule. Retailers believe the new rules will have significant operational consequences for how our industry structures businesses and pays associates. These changes will negatively affect many store associates directly, particularly those just entering into management roles. Doubling the salary threshold will have dramatic consequences for independent retailer in particular, given the narrow profit margin in a very competitive climate.
While retailers understand an increase to the salary threshold was warranted, we still have significant concerns with a number of changes included in the final rule. Serious scheduling and financial impacts could drive up costs and product availability. Many retailers will need at least 12 months to implement the rule correctly and avoid costly mistakes that could lead to employee confusion and operational disruptions. Therefore, DOL’s six-month implementation window will be an issue along with it beginning during the very critical Holiday shopping season.