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How Does Your Auto Repair Shop Handle Overtime Pay?

overtime pay

overtime payOn August 31st, U.S. District Judge Amos Mazzant, a federal judge in Texas, struck down the ruling on overtime pay that President Obama’s Department of Labor put into place. Business groups hailed this decision as rolling back regulation that would have resulted in job losses and a negative impact on the economy.

Presently, the Labor Department only requires businesses to automatically grant time-and-a-half pay to their salaried workers who work more than 40 hours per week and earn less than $23,600 per year. This rule has been in effect since 2004. Under Obama, the Labor Department sought to offer the same overtime to all workers who make $47,000 per year or less. This change would have affected 4.2 million workers. Dozens of business organizations and 21 states sued to challenge this ruling, stating that it would have been an enormous burden on businesses and local governments and would force employers to cut jobs to meet the resulting higher payroll costs.

Workers rights advocates are unhappy with the decision, of course. Christine Owens, Executive Director of the National Employment Law Project stated that it took “hard-earned, long-overdue overtime pay protections from millions of America’s workers forced to put in extra hours on the job – away from their families – with no extra pay at all.”

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Previously when we’ve discussed the shortage of techs in the automotive repair industry, many have said that wages are too low and that is a key reason why auto shops fail to attract better techs and keep them. We haven’t talked about which workers in the industry are eligible for overtime under the current rule or how having to pay overtime might force auto shop owners to make cuts to staff or other budgeted items.

The Fair Labor Standards Act establishes a general minimum hourly wage. Except for children, the FLSA does not impose a limit on the number of hours an employee may work but does seek to impose overtime pay for employees who work more than the typical work week of 40 hours. There are categories of employees that are exempt, however. These workers are not entitled to overtime pay. Under the FLSA, they include white collar employees, including executive, administrative, professional, outside sales and computer employees. In some states, including New Jersey, there is an exemption for skilled mechanics as well.

Under the current federal administration it is unlikely that we will see the Obama overtime rule reinstated, but Trump’s Labor Secretary Alexander Acosta has already begun collecting data to prepare for writing a new overtime rule. During his confirmation hearing in April, Acosta stated that he is interested in raising the salary threshold for overtime pay—just not as high as the Obama administration ordered. Given that fact, how would a new federal rule for increased overtime affect your auto repair shop?