One hundred eight members of Congress sent a letter to Labor Secretary Tom Perez expressing serious concern with the Administration’s efforts to finalize a new rule this year that would more than double the salary threshold to determine who is eligible for overtime pay.
The Department of Labor released a proposed rule last summer that would require businesses to pay overtime wages to employees making $50,440 or less per year, which would be a 113 percent increase over the current threshold. In addition, the minimum salary would automatically increase each year to match the 40th percentile of the average salary earned by full-time employees in the United States.
More than 250,000 organizations have submitted comments on the proposed rule to DOL last year. The “new” rule would adversely affect many employers with limited revenues and could harm affected employees as well. To contain payroll costs from increased overtime obligations, employers would have to either lay off employees or exclude reclassified employees from career growth opportunities outside of core business hours.
In the February 9 letter, the 108 members of Congress led by Reps. Cresent Hardy (R-NV) and Steve Knight (R-CA) urged DOL to reconsider moving forward with the rule as drafted, reiterating that it would have a disproportionate impact on small businesses and nonprofits, particularly in certain geographic areas.
“The belief that this rule change will increase millions of workers’ paychecks is simply shortsighted,” the letter states. “Unfortunately, a change of this magnitude is likely to have unintended consequences regarding how an employer compensates its employees, which would negatively affect workers.”
The letter also raises concern about DOL’s plan to possibly change the duties test, which is a main component used in determining whether an employee is exempt from the Fair Labor Standards Act (FLSA). In its proposed rule last year, DOL asks whether a percentage-of-time rule should be applied to the primary duties test. DOL did not provide a concrete regulatory proposal regarding the duties test, but merely asked for comment on possible changes.
DOL has yet to suggest what changes, if any, might be made to the final rule, but has indicated it may issue a final rule as soon as July 2016.