Small businesses across the country are breathing a sigh of relief on news that the Trump administration is walking back former President Barack Obama’s proposed overtime expansion.
Small businesses were dreading the Obama-era order that would have doubled overtime eligibility to cover people making as much as $47,000 a year. It was scheduled to go into effect Dec. 1 last year, but a federal judge ordered an indefinite stay.
Terry McClallen with Integrity Data, an HR system company in Lincoln, Illinois, said most small businesses were still unprepared for all of the regulations on salary, time-keeping, and paperwork that the overtime rule brought with it.
“People who never had to keep a time card, and companies that never really had to deal with time cards, were going to have to not only deal with time cards but deal with calculating overtime rates,” McClallen said.
The U.S. Department of Labor said as many as 193,000 people in Illinois would have been impacted by the rule.
McClallen said the overtime rule forced many small businesses to move some workers from salary to hourly. It would have been a move that cost some workers money and even jobs as employers sought to make up for the new costs.
“If you’re talking about service industries that are running on a very, very narrow profit margin, and all of a sudden you have to start paying overtime, those are things those businesses just aren’t able to absorb,” McClallen said.
The Trump administration said it intends to walk back many of the federal mandates included in the old overtime rule.