Peoria, IL – Today, Rep. Darin LaHood hosted a community roundtable bringing together small businesses, franchises, non-profits, and universities to discuss the real impact that the U.S. Department of Labor’s proposed Overtime Rule would have on employers and employees in Central and West Central Illinois. The meeting purpose was two-fold: allow local business leaders to voice their concerns to Rep. LaHood, and facilitate the business community gathering in one place to discuss how they are bracing for the devastating impact of the overtime rule.
“Over thirty community leaders sat down with me to discuss in detail how this new overtime rule would impact their businesses, their non-profits, and their universities. It is clear from our roundtable discussion today that this one-size-fits-all rule will encourage employers to hire less people, promote less people, and provide benefits to less people,” stated Rep. Darin LaHood.
Under current law, employees who are salaried, make at least $23,660 annually, and perform primarily managerial, professional, or administrative duties are generally exempt from federal overtime pay requirements. These individual are often holding a first time management position which includes added benefits. The Department of Labor (DOL)’s rule would more than double the current salary threshold, requiring employers to pay time-and-a-half for every hour over 40 hours weekly for all employees who make up to $50,440 per year. This jump from $23,660 to $50,440 is a 113% increase.
“Although touted as beneficial to Americans workers, the takeaway from our roundtable today is that this rule will have the opposite effect. Employees will lose flexibility, benefits, and the opportunity to take on more responsibility that salaried positions offer, as many small employers will not be able to promote as many individuals and may even be forced to demote previously promoted employees. Employers will face increased operating costs and as a result consumers will face higher prices for goods and services,” Rep. LaHood continued. “The magnitude of this proposed rule and the Department’s failure to take into consideration the perspective of small businesses, or the geographical diversity of American job markets, shows that this process has not been balanced.”
Councilman Sid Paul Ruckriegel, a community leader and owner of SIDAL, Inc. and Paulan Properties, who operates multiple quick-service restaurant brands, discussed how this rule will hurt his business and employees: “If this rule is implemented, it is a one-size across a diverse country, and that could result in devastating effects on our fragile economy here in Peoria. We are facing a fast timeline of implementation, and businesses have not had the time to adjust accordingly. It will have a residual impact on the businesses that can grow, or that can even survive at this point. That’s why I’m thankful that Congressman LaHood has signed onto this bill, it encourages the Department of Labor to take a step back and evaluate the real impacts this mandate would have on small communities like ours.”
Ray Lello, who owns and operates Midwest Construction Rentals in Bloomington, also provided his perspective on the impact of this rule: “I want to thank Congressman LaHood for cosponsoring this bill. It is a breath of fresh air to have someone in Washington looking after small businessmen. This overtime rule is Washington shoving something down our throat that just won’t fit. I can’t afford to implement this rule without laying off people.”
Lesley Matuszak, CEO of the Boys and Girls Clubs of Greater Peoria, shared about how this rule will harm non-profit employers: “This overtime rule is especially troubling for non-profits who face unique challenges. At the Boys and Girls Club, donor dollars that would go to feeding hungry children would instead go to overhead costs to comply with this rule. Children would go hungry. Our budgets are set by generous donors or even state legislatures—we cannot simply raise prices on customers to compensate for higher operating costs. While the Illinois State Legislature still has not passed a budget, non-profits that contract with the state of Illinois to provide health and welfare programs remain in limbo. This rule poses a threat, and I am thankful for Rep. LaHood’s foresight and leadership today in shining a spotlight on this problem.”
“I have cosponsored legislation to prevent this rule from being finalized and require the DOL to fully consider the economic impact on employers and employees across all industries in any future rule. I have also written to the Secretary of Labor outlining its potential devastating impact. Growing the economy and creating private sector jobs is my priority in Congress, and I will ardently oppose this rule, and any other, that hurts—not helps—hardworking folks here in Central Illinois,” said Rep. LaHood.
Estimated to cost $8.4 billion per year, this rule impacts over five million employees across America who are currently salaried, but who will now need to have their weekly work hours counted and documented.
Rep. LaHood cosponsored H.R. 4773, the Protecting Workplace Advancement and Opportunity Act, to block this rule and require better analysis to demonstrate the real impact of expanding mandatory overtime. He has also joined one-hundred and eight of his colleagues in signing onto a letter to Secretary of Labor Tom Perez, laying out concerns with the rule and strongly urging the Secretary to reconsider implementing this rule.
The Department of Labor sent a draft final rule to the White House's Office of Management and Budget for review in March. The final publication of the rule could occur within weeks or months, and the rule could go into effect as soon as this summer or later this year.
