Rotolo’s Pizzeria may soon have to hire fewer people, reduce manpower and move toward more computer-automated systems, but not because owner Mitch Rotolo wants to.
“I’m not making that decision—they are,” Rotolo tells Business Report in a feature from the current issue, referring to the federal government and its new overtime pay rule, which will raise the threshold below which salaried employees are eligible for overtime compensation.
Beginning Dec. 1, salaried workers making less than $47,476 a year will be entitled to overtime pay for work beyond 40 hours a week, under the Obama administration’s new regulations. The update more than doubles the previous $23,660 threshold and extends overtime to more than 4 million Americans. The intention is to up the wages of low-salaried workers who were previously exempt from overtime, or to give them more free time.
In light of stagnant wages and outdated overtime rules, Louisiana AFL-CIO President Louis Reine sees the update as a win for workers. He believes the ruling will rightfully compensate people who work long hours for little pay.
“It’s been a long time since it’s been updated,” Reine says. “Wages have been stagnant as the cost of living continues to go up. I think this will help working men and women.”
But many Louisiana business leaders, especially those running small operations, argue that expanding access to overtime pay could ultimately hurt businesses and employees—the very people the regulation aims to help. Companies that can’t afford to pay overtime or raise salaries may have to make tough decisions impacting their employees and their bottom line.
“Mall shops, pizzerias, ice cream shops will close—or raise prices,” Rotolo says. “It’s going to kill the economy, kill business and employees. It just doesn’t make sense to me.”
The new overtime rules have not only created concern among business owners like Rotolo, but also plenty of confusion. Since the announcement of the new rule in late May, many employers are turning to their attorneys for help.
Brian Carnie, a Kean Miller law firm partner in Shreveport, says he has had more than 20 clients call him in recent weeks, asking what they’re supposed to do. Most companies can’t afford to bump employees up to the new salary threshold, so they have to treat them as hourly now and want to know what the pay rate should be.
Once those reassessments are made, Carnie says, the bigger challenge comes: How do employers communicate the change to their employees?
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