Federal Judge Blocks Labor Department Overtime Pay Order

The rule would have forced many businesses change how they pay employees. NPR's Scott Simon talks with Paul Pahoresky, a CPA in Cleveland.

SCOTT SIMON, HOST:

New overtime rules that would increase the pay for over 4 million American workers were supposed to take effect next week. Businesses have been preparing to meet those regulations. But this week, a federal judge blocked that Labor Department order.

Paul Pahoresky is a certified public accountant and a partner with JLP CPAs in Cleveland. He joins us now from the studios of member station WCPN. Thanks so much for being with us.

PAUL PAHORESKY: Thank you very much for having me.

SIMON: Have you made changes to your business in anticipation of the new rules?

PAHORESKY: We certainly have. Specifically for our firm, we took everybody that was salary that made less than the 47,500 per year - the new figure - and we put them on a straight hourly rate, which, for some, was a substantial pay increase because some of the employees were averaging working 45 to 50 hours a week. And now with this, they are going to be compensated with the time and a half for any hours over 40.

SIMON: What are some of the challenges for businesses in addition to your own, as you see it?

PAHORESKY: Well, first off, it's one thing to put the law in place. But then how do you actually track hours? And when is a person working? If I send an email to one of my employees in the evening or just give them a call to talk about something, now they have to clock in and clock out.

Or if they go to, you know, a trade show, when are they technically working? - versus, when are they not working? There's lots of challenges faced by practically every business out there to some degree.

SIMON: Now that a judge has halted these rules, do you change yours? What are you going to do?

PAHORESKY: Well, first off, it's a temporary halt. Plus, I'd like to point out that the law was not approved by Congress. It was enacted through an executive order by President Obama. And we have been under the belief that there will probably be some type of changes with a new administration since it was not congressionally approved.

As far as what we would change for our specific business, it's very difficult, once you have implemented these types of changes, to go back. I mean, how do I tell an employee who's effectively gotten a 10 or 15 or 20-percent pay increase over the course of the year that, no, we're going to go back to what it was. And, by the way, you're not going to make as much as you did last year.

So we don't find that to be a realistic possibility. But it is a situation where just knowing what the rules are and having a way to plan for them is really what I am looking for for both my own business and to be able to advise my clients.

SIMON: What do you say to your clients now? May I ask?

PAHORESKY: I mean, we're telling them, you need to now have time sheets for employees. You need to not just write eight hours each day. You need to record the time that they came in, the time that they went to lunch, the time they came back from lunch.

And we have told them some options. You know, if your employee is close to making the 47,500, you can give them a pay increase. You can do what our firm has done and put everybody on an hourly rate. If they are working 60 hours a week regularly on salary, their hourly rate just has to be above the federal minimum wage.

SIMON: Are we living in a time when the old eight-hour work day - punch in, punch out - just doesn't make sense?

PAHORESKY: Certainly, with employees telecommuting and a digital age where people are working on flex schedules, I think the law becomes much more problematic to administer.

SIMON: Paul Pahoresky is a partner at JPL CPAs in Cleveland. Thanks so much for being with us.

PAHORESKY: You're welcome. Have a great day.

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