You’re Demoted!

By June 30, 2015Human Resources

Donald Trump turned one of the most feared phrases in the workplace into a punchline. As the star of The Apprentice, Trump famously critiqued contestants in a board room and concluded by telling one of them, “You’re fired.” With the release of a new proposed regulation on overtime, it seems President Obama is rebranding the show’s tagline to “You’re demoted!”

The proposed regulation to be published in the Federal Register tomorrow, more than doubles the minimum income threshold required to consider an employee exempt from overtime. The current salary level is pegged at $23,600 and would increase to $50,400 in 2016. By increasing the threshold so high, President Obama and the Department of Labor demoted at least 5 million Americans in one fell swoop. In fact, the proposed regulation indicates as many as 10 million Americans could be affected by the new rule. While the Administration tries to paint this as a victory for workers, it is effectively throwing workplaces back to the 1930’s and setting back workers who were on the first rung of the management ladder and placing an even higher hurdle ahead of them to get back on track.

There will be lots of numbers flying around in the coming days, but it’s important to remember there is little logic to the numbers the Administration is pushing. If we are to believe their premise that the income threshold should be increased automatically by the Consumer Price Index the threshold would be set at $36,528 rather than the astronomical number they’ve set of $50,400. Of course, that’s if you believe the policy was set correctly in 1975 when it was pegged at $155 per week. Increase that number by the CPI and it would be $702.48, or $36,528 a year today. What the Administration is trying to do is increase the threshold to a salary equivalent it has never been since this policy was first implemented in 1940 and then set it on autopilot.

This is yet another bad idea, but this time it comes at both the expense of employers and employees. It’s not unreasonable for employers and managers around the country to tell affected employees that their demotion was a direct order from the President.

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