A federal proposal could boost the incomes of some lower-wage salaried employees in New Jersey.
President Barack Obama on Wednesday said he wants to increase the minimum weekly pay of salaried employees.
Federal law requires employers to pay time-and-a-half for hours worked over 40 in a week. But certain workers, such as those classified as executive, administrative, professional or technology, are exempt and may be paid a straight salary.
Employers are obligated to pay these workers at least $455 per week, a figure that has not changed in 10 years, when former President George W. Bush last increased the rate.
The U.S. Labor Department did not indicate what kind of increase the president was considering. New Jersey relies on the federal standard. California and New York have higher thresholds of $640 and $600 per week, respectively.
The president also wants to raise the national minimum wage for hourly workers from $7.25 to $10.10 per hour. New Jersey voters in November agreed to raise New Jersey’s state minimum wage by $1 to $8.25 per hour. That change went into effect in January.
Business groups expressed reservations about the proposed increase given recent changes that have placed more demands on businesses, particularly relating to the Affordable Care Act, the Obama Administration’s health care reform.
“There are always good intentions to help workers. But what is the impact of that on the business?” asked Stefanie Riehl, spokeswoman for the New Jersey Business and Industry Association, a trade group.
“With the minimum wage, we haven’t seen the effect yet on seasonal businesses,” she said.
Her group spends a lot of time helping businesses comply with state and federal labor laws, she said. The rules dictating what job titles qualify as salaried versus hourly can be complicated.
“If you have improperly classified someone, you have to fix it,” she said. “Most employers are trying to do the right thing. There’s a difference between knowing violations and employers not being as familiar with the regulations as they should.”
Obama is expected to detail the proposed changes today. The White House is authorized to take this action independently of Congress under the Fair Labor Standards Act, which Congress passed in 1938. The proposed changes will be subject to public comment before the Labor Department can implement them.
Cape Resorts, based in Cape May, employs 400 to 1,500 people seasonally at its six hotels and restaurants in Cape May and Atlantic City.
Co-founder Curtis Bashaw, of Cape May, said his business has accommodated the seasonal nature of the South Jersey tourism economy by creating flexible schedules for his managers and supervisors.
But this business strategy only works because of its flexibility, he said.
“Once again our president is taking a one-size-fits-all approach to a very nuanced situation,” Bashaw said. “What might work for a huge company like Wal-Mart or Lowe’s doesn’t necessarily work for a small business owner in a seasonal marketplace.”
For example, some of his salaried staff work a shorter week in the off season and a longer work week in the summer, he said.
His business group oversees properties such as Congress Hall in Cape May and the Chelsea in Atlantic City.
Bashaw said he is concerned the new salary threshold will be unreasonably high. Some speculation has it nearly doubling from its present rate of $455 per week, Bashaw said.
“It’s hard to see where the numbers will settle down. But it feels like you have people who have never actually employed people and had to make payroll making decisions as if they know what small business is about. It’s very concerning and dispiriting, frankly,” he said. “I worry that it would actually be a damper on employment rather than a spur to start new enterprises and try to create jobs.”
And he is concerned his business will not have time to address the changes before the season gets under way.
“We have calibrated arrangements with supervisors and key employees to live with the seasonality of our business,” he said.
This federal push to protect low-wage earners does not give enough credit to businesses that create jobs, he said.
“Part of the rhetoric implies everyone running a business by nature is greedy or unfair. It’s kind of a bad message from our leader to try to make us all feel like we should be embarrassed by what we do,” he said.
Salaried workers making the minimum federal rate earn the full-time equivalent of about $11.38 per hour. Work demands that require longer weekly hours can push this hourly rate well below the minimum wage, said Jon Whiten, deputy director of New Jersey Policy Perspective, a nonprofit public-policy group based in Trenton.
“The overwhelming approval of the minimum-wage increase by voters tells you something about Obama’s proposal and why it’s important to New Jersey,” Whiten said. “People understand you can’t get by in a high-cost state at anything close to the minimum wage.”
Whiten said South Jersey’s seasonal tourism economy complicates the issue somewhat.
“There is a particular sensitivity to seasonal businesses. There are times in the year when you’re not making as much money. It’s a legitimate concern,” he said. “But most businesses are able to balance it out and figure out how to comply with labor laws and do well by their employees and still turn a profit. I think it shouldn’t be a big stumbling block.”
The Associated Press contributed to this report.
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