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Wednesday, November 2, 2016

New Overtime Rule Threatens the “Side Hustle”

"We can’t let employees work from home because we can’t track their hours."

The Department of Labor’s new overtime rule is now only a month away from implementation, but few young people are prepared for how this change will affect our lives. While the Obama Administration continues making the claim that this rule will help many struggling young Americans, the reality is far more complex and could have serious consequences for the millennial generation.

Millennials have become targets for continual, and often unwarranted, condescension. One frequent complaint is that this generation is ruining the traditional workplace experience. Whether we are blamed for being too lazy or – as of late – chastised for working too hard, there have been numerous articles highlighting how millennials are completely changing the landscape of the professional world.

Salary Then vs. Salary 2017

Traditionally, young adults are expected to graduate from college and settle down in a stable nine-to-five job with a salary and benefits.

A perk of a salaried position is the flexibility that many workplaces offer. Since salaried employees do not typically track their hours to the same degree that hourly employees must, there is more freedom to choose when work gets done. When you don’t have to punch a timecard, you may have more flexibility throughout your workday within reasonable bounds.

Want to work from home to oversee a house repair or need to quickly pick up the kids from school and take them to daycare? Salaried employees can work with their supervisors to alter their work schedules as long as they get their work done. That may include working irregular hours or making up time over the weekend.

This flexibility has fostered an environment where young people have been able to take on more responsibilities in their personal lives while respecting their work arrangements. It’s possible to pursue other ventures like writing a blog, participating in the sharing economy, hosting a podcast, starting a business, or simply taking up a hobby. However, that flexibility will likely disappear soon when new overtime rules kick in.

Beginning December 1st, anyone receiving a salary under $47,476 will receive overtime pay, which is an increase from the current salary threshold of $23,660. These individuals will be expected to carefully track their hours and, as a result, will likely lose the flexibility that typical salaried work schedules they afford. For any business, keeping overhead costs low is important, and wages contribute significantly to overhead expenses. Human resource representatives will be forced to enact strict “hour-tracking” policies in order to make sure salaried employees under the new threshold are not working more than 40 hours a week.

Joseph Metzger, a Human Resource representative at the Leadership Institute, a nonprofit group which hires and trains many millennials, fears the likelihood that many institutions will soon be forced to place restrictions on when work can be performed by salaried employees below the new overtime pay threshold.

Addressing his concerns, Metzger said, “That means that we can’t let employees work from home because we can’t track their hours. Employees who leave early to pick up their kids must lose paid hours. An employee who works a late night must take time off that same week even if he would rather have time off the next week. Worst of all, every employee must start punching a clock while every minute of his day is scrutinized.”

In short, young people affected by these new rules will likely lose workplace flexibility.

Ideally, overtime pay should be an issue discussed and negotiated by the employer and the employee. When the government involves itself in the workforce, overregulation occurs and it is the employee who suffers the most.

This first appeared at Generation Opportunity.

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.