The U.S. Department of Labor is proposing changes to the Fair Labor Standards Act (FSLA) that could negatively impact your business. The change would affect so called white-collar exemptions for overtime pay. Chambers of Commerce, like ours, business associations and many other organizations consider the proposed rule very troubling.
This rule change has been proposed without any examination of the impact it will have on employers or employees. We know that employers simply cannot absorb the increased costs of expanding the pool of overtime-eligible employees without making serious modifications to their business including, but not limited to, reductions in benefits or of the workforce or drastically increasing product prices. It is likely that most of the steps you will have to take will make your business less competitive and certainly less profitable.
The proposed rules will more than double the salary threshold for employees with primary duties that fall under the executive, administrative, profession or “white-collar” exemptions. At present, this exemption begins at $23,660. Under the new rule, the exemption threshold would begin at $50,440 and would automatically be updated annually. When the rule takes effect in 2016, the proposed new salary level will be the equivalent of a 10.29% annual increase since 2004. Obviously, this is not reflective of what has happened in the market.
Regulations have also been proposed that would raise the threshold for highly compensated employees to receive overtime from $100,000 to $122,148.
Here are a few quick facts on the issue.
The proposals are not yet final. Input from stakeholders is critical.
The National Retail Federation estimates the change could cost all employers $9.5 billion in overtime costs annually.
The National Retail Federation estimates that the cost to restaurant and retail industries will be $745 million in new overtime costs annually.
The proposed rules affect all industries, many of which are keys to our state economy.
We encourage you to submit comments on these proposed rule changes. The deadline for comment is September 4, 2015.
You can comment on the Department of Labor website by clicking on the comment button on the right side of the screen.
You can review a factsheet on the proposed rule change here
The Greater Killeen Chamber of Commerce will be submitting comments in opposition to these proposed changes in overtime policy.