Walmart Opts for Entry-Level Raises in Response to Overtime Rule

Walmart Opts for Entry-Level Raises in Response to Overtime Rule

The new overtime rule set to go into effect in the US on December 1 will double the threshold at which salaried employees become exempt from overtime pay from $23,660 to $47,476 a year. The new rule puts employers in a bit of a predicament when it comes to deciding what to do with the roughly 4.2 million employees who will no longer be exempt: Require them to reduce their hours, raise their pay above the new cutoff, or get ready to pay them overtime? According to Reuters, Walmart, the country’s largest private employer, has opted to raise salaries for its entry-level managers before the new rule goes into effect:

Wal-Mart raised salaries from $45,000 to $48,500 annually for employees including store management, spokesman Randy Hargrove said on Tuesday. The retailer did not break out the number of employees who received the raise. …

“We think the starting rate of $48,500 a year … would make a lot of business sense for our company,” Hargrove said. … The managerial raises went into effect in September when Wal-Mart paid more than $201 million in second-quarter bonuses to hourly store staff as 99 percent of its stores met targets for cleanliness, faster checkout and better service.

While these raises are assuredly meant to avoid the hassle of restricting hours or calculating overtime for these employees, it’s also in keeping with the big-box chain’s recent commitment to raising compensation: In February, Walmart raised wages for 1.2 million of its hourly employees and adopted a more generous PTO policy. The company has since touted these investments as a reason for its strong performance this year.