Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Ben Penn
Dec. 7 — A coalition of trade associations representing a wide array of industries urged lawmakers Dec. 7 to tell the Labor Department to “reconsider” its highly anticipated final regulation intended to add millions of workers to overtime pay eligibility.
In a letter obtained by Bloomberg BNA that was sent to all members of Congress, groups such as the U.S. Chamber of Commerce, the National Retail Federation and the National Restaurant Association asked Congress to contact the DOL, the Office of Management and Budget and others in the administration to relay their concerns.
“If the Department goes forward with the changes it proposed, the impact will be unduly burdensome on employers and ultimately result in significant, unintended consequences on employees,” the 164 national, state and local organizations wrote. The coalition, which calls itself the Partnership to Protect Workplace Opportunity, found “particularly troubling” the projected unaffordable expenses the regulation would create in “regions of the country with a lower cost of living.”
The DOL is reviewing nearly 300,000 comments received on the proposed rule. The proposal, issued in June, would update the Fair Labor Standards Act by more than doubling the minimum salary for the overtime exemption to $50,440 per year from $23,660. The DOL projects that the rule would affect 5 million workers in its first year, giving them an additional $1.2 billion to $1.3 billion in wages when they are newly eligible for one and one-half times their normal pay rate for work hours exceeding 40 in a workweek.
According to the department's fall regulatory agenda, the rule is slated to have a July 2016 release (61 CLR 959, 11/26/15), but considering its contentious and consequential nature, it could be delayed until later in the year.
The NRF, one of the more outspoken groups against the rule, said the letter is intended to convince lawmakers to help spark a dialogue between the administration and employers about the regulation.
The rule stemmed from a directive by President Barack Obama for the DOL to modernize and streamline overtime regulations. A final version of the rule is considered a top priority among the president's remaining workplace initiatives. With this in mind, NRF spokeswoman Robin Roberts, when asked to assess the chances of the letter affecting change, told Bloomberg BNA in a Dec. 7 statement: “Our goal is to educate lawmakers about the massive negative impact this rule will have on millions of employers and employees. Armed with that information, we want lawmakers to convey their concerns with the rule to the administration. We hope and expect the administration will listen to these concerns and engage in a discussion with job creators about the rule.”
The PPWO letter cited an Oxford Economics report, commissioned by the NRF, that estimated that 2.2 million retail and restaurant workers would be affected by the salary threshold boost.
In addition to lifting the minimum annual wage for overtime pay exemption, the proposal would index the salary threshold every year at the 40th percentile of earnings for full-time salaried workers, as determined by the DOL's Bureau of Labor Statistics.
Annual increases to bring the minimum even higher than $50,440, would “guarantee that the salary threshold will quickly become so high that very few employers will be able to avail themselves of the statutorily provided exemptions,” the coalition wrote. “Furthermore, it will also mean that increases will go into effect during future economic downturns—exactly the worst time to be increasing such a salary threshold.”
To worker advocates who have supported the overtime regulation from the get go, employer-side outreach such as this letter is no cause for concern, but does signal that they must remain vigilant.
“This does serve as a reminder for all of the” left-leaning organizations “that until the rule is finalized, our job is not done,” Anna Chu, a vice president of policy and research at the think tank Center for American Progress, told Bloomberg BNA Dec. 4, when informed of the impending PPWO letter.
“I'm also, at the same time very confident that the administration prioritizes this rule and will do everything to ensure it's finalized,” Chu added. “And of course we will be diligent in supporting that and making sure it happens.”
CAP was founded by John Podesta, who earlier this year left his post as a senior adviser to President Obama to become chairman of Hillary Clinton's campaign for president. Throughout Obama's presidency, CAP has influenced the administration's policy agenda.
The trade associations' attempt at interference is a response to the overtime rule's enormous popularity as a sorely needed mechanism to raise wages, Chu said. Further, their complaints amount to a “boy crying wolf” at this stage, she said. “Things frankly just get updated as they should. People get [cost-of-living adjustment] benefits,” for instance, “and the world doesn't fall apart.”
A DOL spokesman said Dec. 7 the department declined to comment on the letter.
Other national organizations to sign the letter included the Associated General Contractors, the National Association of Manufacturers, International Franchise Association and the Society for Human Resource Management.
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