Rock Hill business leaders react to Obama's proposed overtime rules

President Barack Obama’s desire to change the rules over overtime pay was not a surprise for some Rock Hill businessmen.

The issue has been on the “radar” for many businesses through trade associations or legal firms that track potential federal legislative and rule changes. While most agree the standards, dating from 1975, need to be updated, they would prefer the threshold be less.

The proposed doubling of the standard to $50,444 was more than most expected: an increase to about $40,000.

The proposed doubling was “gross overkill,” said Lee Gardner, president and CEO of Family Trust Federal Credit Union.

The credit union audited all its job descriptions last year to see which met the management standards of the Fair Labor Standards Act, Gardner said.

In some cases, jobs classified as exempt were reclassified, Gardner said, including his administrative assistant. “We couldn’t justify that position as exempt. We put it back on the clock,” Gardner said.

Gardner said Family Trust likely did not “meet the letter of the law a year ago” when it came to exempt employees. He said the proposed changes could affect the banking industry.

David Williams, president of Williams & Fudge, an accounts receivable management firm, said his firm also did an employee audit and that only a few employees could be affected if the overtime threshold changes.

Williams said the president’s focus on the middle class and fair compensation was on target and “could help more people back to work.” But in general, Williams said, he opposes too much government regulation.

Lou Pantuosco, a labor economist at Winthrop University, and Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce, said the threshold needed to be updated and that it was unclear how many actually would benefit from the change.

The Department of Labor estimates 4.6 million employees would be affected. Others, such as the Economic Policy Institute, put the estimate at as many as 15 million.

Pantuosco and Ted Pitts, president and chief executive officer of the South Carolina Chamber of Commerce, said the proposed regulations will increase costs for business.

“Government-mandated wage increases force employers to make adjustments for added costs to conduct business, such as reducing hiring, cutting hours, reducing benefits and/or increasing prices for goods,” Pitts said.

Proponents of the change say employers will either pay the overtime or keep employees to 40 hours and hire more.

Chris Gantt-Sorenson, an employment attorney with the Greenville office of Haynesworth Sinkler Boyd, said one of the biggest effects of the proposed rule is on companies that have properly classified employees as exempt but pay them less than the proposed threshold of $50,444. The options are to reclassify them as hourly or increase their salary to maintain the exemption.

Gantt-Sorenson said that even the most sophisticated employers often improperly classify workers as exempt. She said the problem likely will be more acute in companies without a human resources department.

This story was originally published June 30, 2015 at 7:28 PM with the headline "Rock Hill business leaders react to Obama's proposed overtime rules."