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How Employees View New Overtime Laws and Minimum Wage Changes

With new overtime laws going into effect and minimum wage changes happening all over the country, employers may assume they’re the only ones sweating the details; that employees and job candidates are over the moon about the changes which, after all, are meant to remarkably improve compensation.

But not all employees are pleased.

As a recent Wall Street Journal article points out, “So-called wage compression poses a financial and management challenge for employers, who say wage increases have rankled some staff (that less experienced co-workers now earn the same wages they spent months or years striving to achieve). At Gap and Wal-Mart, which recently increased wages, store managers have had to address employee questions about fairness and pay.”

The article further explains the effects of higher minimum wage when it comes to co-workers, who are keenly sensitive about how their pay relates to that of others. Princeton University economist Alan Krueger explains that “considerations of fairness play a ‘profound role’ in how many employers set pay.”

When it comes to new federal employee overtime laws, the reactions from employees can be just as mixed. The minimum threshold salary is being raised to $47,476 per year (doubling the previous minimum of $23,660), which will make many exempt employees suddenly non-exempt.

Texas Attorney Bob Kligore with San Antonio’s Fisher Phillips says the change for white collar workers means either employers will need to give raises when possible (for those near the top of the threshold), simply pay the overtime (although he cautions employers will need to pay for all time worked, even if the employee put in extra hours without authorization), or adjust hours and hire additional staff.

As we pointed out last month, asking longtime salaried workers to suddenly start punching a time card throughout the day and clock out at the end of the day can be demoralizing. Without proper change management, some affected employees may also feel like their salary and benefits could be slashed unexpectedly or they’ll be forced into doing their jobs faster or with reduced attention to quality.

Often times, change is something organizations chose for themselves. Other times, change is thrust upon them—as is the case with these new overtime laws and minimum wage changes. Mitigating the negative effects of those changes with employees, however, can be a similar process. Ironically, the wisdom behind good change management hasn’t changed itself in decades. In 1969, the Harvard Business Review published this:

“What employees resist is usually not technical change but social change—the change in their human relationships that generally accompanies technical change. Resistance is usually created because of certain blind spots and attitudes which staff specialists have as a result of their preoccupation with the technical aspects of new ideas.”

To dig deeper, Caroline Valentine of ValentineHR offers these helpful tips when it comes to helping employees through the overtime changes.

Have you seen resistance among your own employees? What questions do you have when it comes to keeping both new and current employees happy? Let us know! We’d love to discuss it with you.


Image Copyright: justmeyo / 123RF Stock Photo