New rules for overtime? Issue roils S.C. businesses

Joe Raouf, general manager at Lizard's Thicket Beltline Boulevard restaurant, works the serving line Friday. Raouf has worked for Columbia-based, down home cooking chain for about a decade.
Joe Raouf, general manager at Lizard's Thicket Beltline Boulevard restaurant, works the serving line Friday. Raouf has worked for Columbia-based, down home cooking chain for about a decade.

From South Carolina’s golden egg $17 billion tourism industry to meal servers who feed us and news people who inform us, the president’s proposal to make more workers eligible for overtime pay is creating strong ripples across the state.

Patrick Wright, director of the USC Darla Moore School of Business Center for Executive Succession, said the Southeast will feel the effects disproportionately because the region has lower wages than other parts of the nation.

And workers can face stronger pushback because the Palmetto State is a right-to-work state, which makes getting fired easier than in regions with heftier unions or guilds. South Carolina has no overtime regulations that are stronger than federal law.

“The service industry, particularly hospitality and retail, are the ones you’re going to see the biggest impact on,” the University of South Carolina’s Wright said. “It’s really the assistant managers, who are somewhat in between a purely managerial role versus somewhat of an operational or sales role, that are likely to be significantly below that $50,000-a-year threshold. Whether it’s a fast-food restaurant, a basic restaurant or a retail store, that’s where you’re probably going to see the biggest impact.”

The Obama administration’s regulatory change – proposed last month and to take effect next year – is to raise the pay threshold at which workers would be eligible for overtime pay. The rule change would more than double the salary scale: from $23,660 annually to $50,440 under the Fair Labor Standards Act. The new standard goes into effect unless Congress blocks it.

The change would benefit 4.68 million people, the White House said in announcing the plan. A majority of those affected have college degrees, are women and are older than 35, the U.S. Department of Labor says.

Workers who are paid closer to $24,000 often work more hours than 40 per week, but are not paid overtime because they are listed as managers, assistant managers or some white-collar work positions that exempt them under the current threshold.

Little cheering is heard

Employers in South Carolina, as in many parts of the country, decry federal intervention into their business.

“Government-mandated wage increases force employers to make adjustments for the added costs to conduct business, such as reducing hiring, cutting hours, reducing benefits and/or increasing prices for goods,” Ted Pitts, president of the state Chamber of Commerce, said in a statement.

Bobby Williams is a second-generation restaurant owner. His family has 15 Lizard’s Thickets in the Columbia area. Williams also is president of the city’s Restaurant Association. “I just don’t like the government telling us how we need to operate,” he said. Long hours are part of today’s workplace reality.

“I don’t want the restaurant association to be looked at like we’re trying to get as much labor as cheap as possible – that’s not true anymore,” Williams said. “Everybody works long hours these days. People say restaurant (work) means long hours, but everything is long hours nowadays.”

He said his restaurant workers will not be as heavily affected.

Lizard’s Thicket, open seven days a week, expects its managers to work 50 to 54 hours a week, Williams said. They are paid $50,000 to $60,000 a year. Only new managers make less than the $50,440 threshold of the new overtime law, he said. High-achieving workers would be pushed up to meet the new threshold to hold onto them.

Efforts to interview Columbia-area McDonald’s managers and employees were unsuccessful. Columbia area Walmart stores also did not respond.

Congress slow on the uptake

Frank Knapp, S.C. Small Business Chamber of Commerce president, agrees that hospitality and retail workers are the most likely to be paid low wages.

“They’re the ones who are most likely to pay somebody $25,000 and call them a manager,” he said.

Knapp faults Congress for creating the current pay crunch. “We shouldn’t be in this situation because the whole (overtime pay) thing should have been indexed to inflation back in the 1970s. We wouldn’t be talking about this today.

“So, going forward, hopefully they have learned a lesson,” Knapp said.

John Durst, the state Restaurant and Lodging Association’s president, argues the new rules will cut into hiring and slow tourism.

“The leisure and hospitality segment of our economy is one of the leaders in job creation in our state,” Durst said.

“If implemented, the proposed changes would have a chilling effect on the continued growth of tourism – our state's number one industry.”

New standard too high?

The business of journalism will feel the impact of the the new rule, said Bill Rogers, director of the S.C. Press Association /S.C. Newspaper Network.

“This would have a huge impact on so many businesses, including newspapers,” Rogers said. “Raising the salary limit to $50,000 would mean that a great many reporters, editors and photographers in South Carolina would fall under that limit.

“You can’t always plan on how long a town council meeting runs, or if a ballgame is going into overtime,” he said.

Michael Zinser, a Nashville-based attorney who specializes in labor law and represents about 250 newspapers across the country, said it’s the size of the new threshold that poses problems.

“There are many jobs in a daily newspaper that publishers are probably treating as salary exempt,” Zinser said.

“At The State, for example, in your production department, press room, packaging department, I am sure there are individuals who are salary-exempt supervisors, who are probably making more than $455-a-week, which is the minimum threshold currently, but I bet they are not making the $921 for a week that they are proposing.

“That’s a big, big jump, especially when you’re talking about the small- and medium-size newspapers,” he said.

Circulation department district managers often are treated as exempt from overtime, as are some editors, Zinser said. But the new regulation will affect every department of a newspaper, including advertising and business.

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