The U.S. Department of Labor says the new overtime rule issued in May would give some 4.2 million additional workers either more money – or more free time. But business groups and lawyers who represent employers say one thing these workers are likely to see a lot less of is flexibility on the job.
The new rule, which is scheduled to take effect Dec. 1, raises the salary level for employees eligible to receive overtime pay to $47,476 a year from the current $23,660. In doing so, many office workers, managers and entry-level professionals – so-called “knowledge workers” who may be accustomed to working from home a couple days a week or leaving early in exchange for answering email from the couch at night – may find such freedoms curtailed. Employers’ lawyers say it could disproportionately affect millennials or young college graduates known to value being able to come and go as they please as long as the work gets done – and even limit remote access to laptops or work email.
“As an employer, you have to think about how much time did the person really work, or is the employee potentially going to be able to create a claim against us,” said Paul DeCamp, a principal at the law firm Jackson Lewis in Reston, Virginia. “It’s a headache, and because it’s a headache, the employer’s first reaction is going to be ‘no, you can’t work from home. Sorry.’ “
Yet others say the assumption that flexibility will get kicked to the curb is exaggerated. Some workers could actually prefer a sharper line between work and home, and the ability to untether themselves 24/7 from their gadgets. Research from the left-leaning Economic Policy Institute has shown that, on the whole, salaried employees who would be eligible under the new rule already report similar levels of flexibility to lower-paid hourly workers. And with the right system in place for tracking hours, say some workplace experts, there’s no reason flexible policies or telecommuting can’t co-exist with the new regulation.
Indeed, the labor department, in a blog post Wednesday explaining the new rule, said “nothing in the Fair Labor Standards Act – or in the overtime rule – requires the choice between flexible work arrangements or opportunities for career advancement and complying with basic labor standards. There is no requirement that a worker must have a predetermined schedule, and nothing prohibits working whenever, wherever or however the worker and the employer agree.”
How employers ultimately respond is likely to depend greatly on the type of work employees do, the size and culture of the organization, and the level of trust that exists between managers and employees. Some employers may choose to bump workers up above the salary threshold, avoiding the problem entirely. But many employees are likely to “reclassified” as hourly workers, employment lawyers say, and then either see the number of hours they work limited or carefully monitored and closely tracked.
“Because of the population this impacts, employers are either going to fundamentally change the nature of those jobs and take away remote access, or they’re going to have to come up with some kind of policies that address those situations,” said Alex Passantino , a partner at the Washington, D.C., office of the law firm Seyfarth Shaw. “In more cases than not they’re going to lose that flexibility, [though] I don’t think it’s going to happen across the board.”
Early signs suggest plenty of companies are concerned about how to preserve the kind of work-anywhere-anytime culture that employees have increasingly come to expect. A survey by the Society for Human Resources Management, which opposes the final rule, found in a survey that 67 percent of human resources professionals thought the new regulation would decrease workplace flexibility and autonomy.
The threat of legal action is very real, says Tammy McCutchen, a principal with the law firm Littler Mendelson, because one of the most popular types of class actions against employers are from workers claiming they haven’t been paid for all the time they’ve worked. In an effort to avoid such suits, many companies have simply shy away from flexible options because of the logistics required to accurately track workers’ hours.
Their fear springs not just from out-of-sight workers they don’t trust are working enough, she says, but from those who are actually working too much. “Especially for this group of employees, who are used to being [salaried], the worry is they’re not going to report all the hours they put in – until, of course, they one day get fired and file the class action,” McCutchen says.
Still, some workplace experts believe the rule change isn’t an automatic death knell for flexibility among affected employees. Some might actually like the idea of sharper boundaries between work and home. Carol Sladek, who leads work-life consulting for Aon Hewitt, says many young employees have been asking to get paid for the hours they work over and above 40 hours a week–or to not work as much. “They say ‘we want more fluidity between work and life, but we also want more room for life.’ “
Meanwhile, Liz Morris, deputy director of the Center for WorkLife Law and an adjunct law professor at the University of California, says flexible policies and compliance with overtime can co-exist. “The concern that this is going to be some kind of huge blow to workplace flexibility is overblown. It’s a red herring,” she said. Rather, as she outlined in a February Harvard Business Review op-ed, she believes it will require “setting clear rules about expectations around when employees can work overtime, how do they seek approval for working overtime, and rules about how to record hours worked. In reality those are things employers should already be doing.”
Others believe that when it comes to remote work and flexibility, the genie is simply out of the bottle, and can’t be put back in. “My impression is that telecommuting is so important these days that this will create a challenge–but also an opportunity to innovate,” said Andrew Volin, a partner at Sherman & Howard based in Denver. That could lead to new software or policies that help track employees’ work rather than blanket bans from answering email off-hours or working off-site. Today, Volin says, ” I think people are so interconnected and wired [that it] will be difficult to tamp that down.”