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States unsure of cost of new overtime rules

From the St. Louis Post Dispatch

While public universities, private businesses and other states fret about the added costs of complying with a new federal overtime rule, Missouri and Illinois officials say they don’t know how much it might cost taxpayers when it goes into effect in December.

This month, President Barack Obama’s administration issued a final rule that doubles the salary threshold — to $47,476 per year from $23,660 — under which salaried workers are guaranteed overtime pay.

Some 4.2 million additional workers across the nation would qualify to earn time-and-a-half for work beyond 40 hours a week. In Missouri, the Department of Labor puts the number at about 85,000 workers.

But state government officials surveyed this week said they do not know how much the rule change might affect the state’s $27 billion spending plan if workers in various state offices and agencies qualify.

“We are still in the process of reviewing the overtime rule and can’t speculate to its impact right now,” said Ryan Burns, spokeswoman for Gov. Jay Nixon’s Office of Administration.

Other state agencies had similar responses.

“Our office is currently reviewing the new federal rules on overtime in preparation for the December effective date,” said Stephanie Fleming, spokeswoman for Missouri Secretary of State Jason Kander.

In Illinois, where the Democratic-led Legislature and Republican Gov. Bruce Rauner are still haggling over a budget deal, it doesn’t appear the change is being considered as part of a final spending blueprint.

“The administration is examining the fiscal impacts of the rule and cannot comment further at this time,” said Rauner spokesman Andrew Flach.

The lack of knowledge in Missouri and Illinois comes as other states are scrambling to see how the change affects them.

In Wisconsin, which has a smaller state government payroll than Missouri, legislative analysts estimated about 1,790 full-time and 133 part-time state workers would be affected by the rule change.

In order to avoid paying overtime for the 1,900-plus workers, their salaries would need to be increased by about $11.8 million annually, noted the April 19 report from Wisconsin’s Legislative Fiscal Bureau.



The Wisconsin report includes some significant caveats.

For example, the analysis notes that many of the employees may not work overtime hours. And, the state could avoid the cost of raising salaries by holding down overtime hours. The amount also is likely to be less because it was based on estimates that the threshold would be in the $50,000 range, said analyst Bob Lang.

In Missouri, a Post-Dispatch analysis of state payroll records shows an estimated 37,900 state workers earn less than $47,000.

The state already is paying out millions of dollars in overtime because its lower-than-average pay scale has made it hard to recruit workers.

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