The 60-day comment period closed on September 4, 2015 for the USDOL’s proposed (and for employers, controversial) overtime changes. There were an amazing 250,000 comments submitted and this highlights the chasm between the commenters and the fear felt by employers who dread that their businesses will be hurt (or buried) by the proposed changes. Other commenters maintain the changes will facilitate more equal and proper payment for many workers.
Support for expanding overtime eligibility comes from nonprofits, individual workers, some human resources professionals and some organizations, although some nonprofits join universities, businesses and trade associations in highlighting the potential problems associated with raising the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemption to $50,440 per year.
The DOL is also proposing automatically updating that salary threshold in order to stop it from becoming outdated as time passes between rulemakings. In the rule’s first year, an estimated 4.6 million exempt workers who make at least $455 weekly but fall short of the 40th earnings percentile would become entitled to minimum wage and overtime protections, unless their salaries were substantially raised.
Among detractors, one of the most commonly articulated concerns was that the proposed changes do not account for the diverse economies across the country. One commenter recommended consideration of market differences in determining the minimum salary threshold, as the labor market rates in the Midwest are very different from the coasts, due to the cost of living differences.
Others asserted that the changes would require employers to make drastic changes to their staffing, including perhaps reducing the number of employees, changing employee status to part time, eliminating positions, changing duties and positions to hourly classifications.
Some commenters urged that the salary threshold should include bonuses and commissions when determining whether an individual meets the salary threshold. There should also be an effective date of at least one year out, so that employers may prepare for these changes following publication of the final rule.
Some commenters took issue with the proposal to establish a bright line, i.e. 50% for the performance of exempt work in order to qualify for the exemption. One commenter opined that “performing hands-on work at the manager’s own discretion to ensure that operations are successfully run in no way compromises the fact the manager’s most important responsibility is performing exempt work.” An opposing commenter contended that the proposed rule would stop companies from dodging their overtime obligations by misclassifying workers as managers or executives and that “HR departments will have no major difficulty in implementing the change.”
The Takeaway
The end result of these initiatives will probably be a compromise on the salary. What is of more concern to me is if the agency imposes a minimum numerical threshold for the performance of exempt work. How will that be measured or quantified? I don’t know and I wonder if the agency knows or if it will establish parameters or guidelines for doing so.
Time will tell…