Obama's overtime-pay boomerang

To be exempt from overtime, the Fair Labor Standards Act requires the employee to be a “bona fide executive” whose “primary duty” is “managing” the business, according to a Labor Department fact sheet. Managing the business must be the “principal, main, major or most important duty that the employee performs.” The employee must also supervise “two or more full-time employees” and have authority to “hire or fire” employees. Stocking shelves won’t make you a manager and won’t exempt you from the law’s overtime requirements.

Managers may help their employees stock shelves or perform other “physical work” while performing their “primary duty” as a manager, which is hardly something to disdain. Each manager is entitled to decide whether to perform such tasks, just as small business owners may decide to perform nonmanagerial “physical work” to increase their profits or to show the crew that they too can perform those tasks. That’s what effective owners and managers do.

Perhaps this misunderstanding is what led Mr. Obama to believe that government should compel employers to pay managers hourly overtime. Unfortunately, the move would hurt the very managers he intends to help by turning them into hourly employees, depriving them of the benefits that come from moving into management. Overtime pay has to come from somewhere, most likely from reduced hours, reduced salaries or reduced bonuses. It’s easy to attack businesses when they employ these cost-cutting measures. But, unlike government, businesses must generate profits to grow.