• by Richard Whitman , Columnist, April 3, 2016

A proposal from the U.S. Department of Labor calls for the floor above which agencies do not have to pay overtime be raised to $50,440. In other words, anyone making less than $50,440 would be eligible for overtime pay, something agencies rarely have to contend with for full-time employees. The increase is roughly double that of the current threshold.

The changes were proposed last month and could take effect as soon as July if approved. Of course, agencies and the 4As are fighting vigorously against this change as the change would, according to Pivotal Research Analyst Brian Wieser, place a 3 to 4 percent dent in ad agency holding company operating income.

Of the proposed changes, 4A's Senior VP for Government Relations Peter Kosmala told The Wall Street Journal: “We’re supportive of this notion of trying to create greater wage equality and greater workplace treatment, but we want to do it in a more constructive way. There’s going to be demonstrable changes in terms of money and also in terms of office morale and how organizations work. It will be highly destructive across the board.”

Currently 25% of advertising salaries fall below $50,400, according to the 4As, with the average starting salary hovering around $35,000. Reacting to the Department of Labor proposal, the 4As has proposed capping the salary under which overtime can kick in at $35,490 thereby pretty much insuring most agencies will never have to pay overtime. And the 4As would like these changes to be slowly phased in instead of the government's version, which calls for the changes to occur within 60 to 90 days of the rule's finalization.

The change, in essence, would reclassify many as hourly employees rather than full-time employees, something that may have a negative impact on employee morale as Kosmala indicated.

Proper compensation is always a good thing -- particularly in the ad agency world, where obscenely long hours are the norm. Granted, it will be a tough pill for agency management to swallow given the unending pressure clients have placed on agencies to drive costs down and deliver more for less but fair is fair, right? 

On the other hand, turning one-quarter of all agency employees into, essentially, hourly employees could further harm any remaining allure working in an ad agency once had. Of course, this being a government proposal, it will affect anyone in any industry which may negate harmful effects unique to the ad agency world.