New federal overtime regulations are long overdue and will raise wages for millions of workers, the Obama administration says. But construction groups say the final rule, released on May 18, could have unintended consequences.
The Labor Dept. rule, which takes effect on Dec. 1, will require employers to pay overtime to any employee who earns less than $47,500 a year—more than twice the current $23,500 threshold. The regulation will be updated every three years. The administration estimates that the change will extend overtime benefits to 4.2 million more workers and boost wages by $12 billion over 10 years.
The AFL-CIO praised the rule as “a major victory for working people.” But construction industry executives say it could backfire against the employees it claims to help. “Given the fact contractors are being forced by private and public owners to deliver projects on tighter margins than ever before, nobody should labor under the assumption this new mandate will lead to increased compensation for people working in construction,” says Brian Turmail, spokesman for the Associated General Contractors of America. Instead, he says, contractors will be forced to implement plans to ensure that covered employees do not work more than 40 hours a week. Ed Brady, National Association of Home Builders chairman, adds that employers will have no choice but to scale back wages and benefits to stay solvent.