Democratic leaders in the Michigan House and Senate last week announced their plans to pursue legislation to expand overtime pay for salaried workers. The Michigan Chamber is strongly opposed to this proposal because it would dramatically expand the number of employees that automatically qualify for overtime pay, causing a large spike in payroll costs for many employers and creating unintended consequences for employees.
The proposed legislation is being pursued by Senate Minority Leader Jim Ananich and House Minority Leader Christine Greig and would increase the salary threshold for guaranteed overtime pay from a salary of $23,660 to $55,000. This is even higher than the U.S. Department of Labor’s proposal, which is expected to be announced and pursued this fall; that proposal would increase the threshold to $35,308.
While the Michigan Chamber and other business groups, like the U.S. Chamber of Commerce, are open to a moderate increase in the overtime salary threshold, we are opposed to this state proposal for two key reasons. First, we believe any increase should be made at the federal level, so Michigan employers are not competitively disadvantaged as it relates to payroll costs. Second, we are concerned that this one-size-fits-all threshold would negatively affect all sectors of Michigan’s economy and disproportionately affect Michigan’s lowest-wage regions and industries, and the smallest businesses.
This large increase could cause employers to: lower hourly rates to keep total pay largely unchanged; cut or reduce discretionary bonuses and benefits to keep total compensation unchanged; reduce employee hours to avoid paying overtime; replace higher-wage mid-management positions with lower-wage employees; and/or reassign some employee’s supervisory responsibilities to senior management.
The Michigan Chamber will be closely monitoring this legislation and will advise members if it becomes a direct threat. Please contact Wendy Block at email@example.com with any questions.