The rules have changed and for retailers, it’s going to involve a lot of math and a lot of hours. The Department of Labor has issued a Final Rule for Overtime Eligibility and its got some employers scrambling to figure out the new numbers.
Here’s what we know:
- DOL estimates show that about 1.3 million American workers will find themselves no longer exempt from the requirements of the Fair Labor Standards that mandate time and a half for any time over 40 hours in a week.
- The current threshold for exemption is $23,660 per year. Any salaried employee making over that amount does not have to be paid overtime
- The new rule, effective in 2020, will raise the threshold to $35,568 per year
- It’s not going to be cheap. There will be regulatory familiarization costs, adjustment costs, and managerial costs. Total annualized direct employer costs over the first 10 years are estimated to be $173.3 million.
From the Wall Street Journal: "The economy is strong and the labor market tight so it’s the right time to make sure workers get overtime pay. Annual wage growth has been at or above 3% every month for 13 straight months, but the fastest wage growth has been for workers in the bottom quarter of incomes. The August jobs report shows that production and nonsupervisory employees saw the largest one-month increase in pay ever recorded."
So how does this impact brands?
With retailers having to train newly non-exempt employees about their rights as well as putting new HR and payroll policies in place, they will be stretched pretty thin - both resource AND budget-thin. Retailers simply will not be able to dedicate much time to specific brands, likely having to cut back on store associate hours, which could leave brands without much sales floor representation. Recent cut-backs at Target are an attempt to provide more associates on the floor, but have in turn resulted in unsafe stockroom conditions.
If you are concerned about your visibility in retailers and how effective store associates are in answering questions and promoting your brand, let's chat about how ThirdChannel can help you in the short and long-run mitigate challenges that will most certainly grow in 2020.