Obama's overtime rule tried at IBM, and it didn't work

On the surface this seems appealing. Why shouldn’t workers get extra pay for working longer hours? However, economic research shows that is unlikely to happen. Most employers respond to overtime laws by reducing base pay an offsetting amount. Combining new overtime pay and lower salaries, most workers will earn almost exactly what they made before.

This is what happened when IBM reclassified 7,000 salaried and technical-support workers as overtime-eligible in a lawsuit settlement. It also cut their base pay by 15 percent, leaving total earnings unaffected. Even liberal supporters of the rule concede that the “wage offer reflects expected overtime hours” and so there will be “no change at the margin” in pay.

The rule will change how employees work. Overtime-eligible salaried employees must carefully log their hours. Each time they respond to a work e-mail, take a work phone call, or do any other work from home, their employer must track and pay them for it. If they do not, they risk getting sued. Trial lawyers filed 8,800 Fair Labor Standards Act lawsuits in 2015, many of them for employers who did not compensate overtime-eligible employees for work done remotely.