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Don’t ignore the new overtime rules

We’re now a little more than two weeks away from the new federal regulations that will affect more than 4.2 million paychecks. And it’s likely that dealership owners have been procrastinating, focused instead on the Northern winter haulout, fall boat shows and the like consuming their days.

Some might also be thinking Congress, during the lame-duck session, will put these regulations on hold. Still others might hope that a lawsuit filed by a coalition of 21 states will trigger a federal court to take a similar step. But, at this time, there simply is no indication either of these will take place before the shoe drops on Dec. 1.

You’ll recall that the new regulations virtually double from the current $455 a week to $913 a week, the threshold under which salaried workers must be paid overtime. In annual terms, it hikes the pay threshold from $23,660 to $47,476.

But, in typical government fashion, it’s not that simple. For example, there isn’t a blanket increase for all workers whose pay falls below the new threshold. Federal regulations specifically exempt some employees, like office workers, teachers, lawyers, physicians and others. Still, many employees titled managers or supervisors will become eligible for overtime pay or will see employers grant a raise to keep them exempt. It’s logical that dealers could be examining just how they can comply with the new regulations while not pushing up labor costs. But is there still another consideration?

Should it just be about controlling labor costs? As the mind-blowing upset in last week’s presidential election clearly articulates, the so-called American worker, the middle class, hasn’t experienced income growth for far too long and they voted for change. So is it now time for dealers to carefully examine whether every team member is being fairly compensated today?

Arguably, if we look at trends for boat sales during the last 15 years, one might see that the slow decline paralleled the now clearly identified slow growth of personal income. While I can’t find any economic study to back this up, we know that until the early 2000s, boat sales growth paralleled the population and income growth. We were riding on autopilot, enjoying our share of increased recreation spending as population and income grew. That ride ended, however, and our industry’s unit sales began a slow steady decline with the Great Recession causing a falloff on steroids.

Therefore, it seems logical that to even get back to 2008 unit sales levels, never mind the levels of 2000, we must have the so-called middle class enjoying an increase in income again. Generally, it appears there are enough people with enough money to buy the boats we’re producing these days. But if we want to experience real growth ahead, we can’t get there without the middle class.

Only once since the 1970s have the overtime regulations been updated. Thus the big jump in the new rule is reported to cover some of the inflation experienced over the many years. In various respects, our economy during the last decade has languished because businesses in general have not stepped up. And big spending on infrastructure expected by the incoming Trump administration, while needed, won’t get the economy booming alone. Business must play a role in generating rising wages.

So if the new Labor Department regulations cause all businesses to examine wage policies with an eye to boosting the nation’s middle class, it should prove to be good for all of us going forward. Regardless of how one might feel about the new regulations, dealers need to seriously determine how best to deal with them by Dec. 1.


3 comments on “Don’t ignore the new overtime rules

  1. Jeremy Heenan

    The gaps in the plan allow dealers/companies to switch over non-exempt employees to exempt. Great so now salaried personnel can make overtime right? Ha nice try. Any company focused on chasing budget will not allow its salaried personnel to work overtime. This FLSA law does nothing to help put income back in the hands of the middle class. If anything it puts burden on companies to have to react to another law which costs manpower or money and less revenue to be invested back into or shared with the employees. So two questions come out of this regulation: will anyone stand up and write and more importantly pass laws that benefit American workers ever and will your dealership/company act ethically in absence of governmental pressure to?

  2. Bryon Kass/ Custom Design

    Our industry needs to pepper with letters to the incoming Trump administration to dump this rule. I wish could pay myself overtime. If business gets better then maybe we can afford paying overtime. The leftists think they can just mandate things and we will just comply. The sheep are out of the stable now and maybe we can make those decisions for our own situation. No to central planning.

  3. Chris Collins

    I think in general if this rule will affect your employees they are either underpaid or mis-classified. This does not affect workers under 40 hours a week, and most of the workers in a dealer should be hourly so they would get overtime anyways.

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