WASHINGTON—Business and trade groups are weighing in on President Obama's proposal to expand overtime pay coverage for salaried workers and, to put it mildly, they're not happy.
The Tire Industry Association (TIA), along with the National Association of Manufacturers (NAM), the National Retail Federation (NRF) and the National Federation of Independent Business (NFIB), are among groups that have come out against the June 29 proposal to broaden overtime pay coverage for salaried workers.
President Obama said he wants to require overtime pay for salaried workers making up to $50,400 a year—more than doubling the current threshold of $23,660.
TIA said the plan may well end up hurting rather than helping salaried workers in tire dealerships.
The new requirements would go into effect sometime in 2016 and affect just under 5 million workers, the Obama administration said. The threshold would be increased going forward to the 40th percentile of income, according to news reports.
However, the proposal would have negative effects both on small businesses and the salaried employees who work for them, according to TIA Executive Vice President Roy Littlefield.
“There are a lot of managers and assistant managers at tire dealerships,” Mr. Littlefield said. “It's not as if small businesses have closets in the back filled with money. These are tough times for small business.”
If the overtime pay proposal goes into effect, Mr. Littlefield said, tire dealers and other small businesspeople may be forced to cut benefits for salaried workers, or else take everyone off salary and recalculate pay scales and hours.
President Obama said he would call for comments on his overtime pay proposal, but Mr. Littlefield was dubious about the effect such comments would have.
“I think this a case of, 'Don't confuse me with facts,'” Mr. Littlefield said. “I don't think the comments are going to make a difference.”
Joe Trauger, NAM vice president of human resources policy, said the proposed rule would constitute the demotion of those 5 million workers.
“Manufacturers are proud of the modern workplaces and high salaries they offer the workforce, and this proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation,” Mr. Trauger said.
David French, NRF senior vice president for government relations, said few workers would actually see more take-home pay from the government directive.
“The administration seems to be under the distorted impression that they can build the middle class by government mandate,” Mr. French said.
“Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private sector entrepreneurs and job creators.”
Beth Milito, NFIB senior legal counsel, called the proposed rule too expensive for small retailers, especially in parts of the U.S. where the cost of living is low.
“Promoting someone to manager is going to be an expensive proposition for many small businesses, and the result will be less mobility and fewer opportunities for workers at the bottom,” she said.