NSBA Seeks Input on Overtime RulesJuly 14, 2015
On July 6, 2015, the Obama Administration proposed new overtime rules which will massively increase the salary threshold below which all employees must be paid overtime, from the current $23,660 to $50,400 a whopping 113% increase. Additionally, and perhaps even more concerning, the proposal seeks comment on the so-called “duties test”, opening the door to changes to be adopted in a final rule.
NSBA is currently working to mobilize its membership in two key ways:
- Your Input – NSBA needs to hear from you by August 21 about how this rule will impact your small business in order to help inform the organization’s comments as well as develop a more detailed outline to help you submit your own comments. Please click here today to tell us what this rule means for your business.
- High-Level Issue Briefing – On August 13 at 11:00 a.m. EST, NSBA will hold teleconference featuring NSBA President and CEO Todd McCracken and labor expert and attorney Michael Eastman, who currently serves as VP for Public Policy at the Equal Employment Advisory Council. On the call we will discuss how these proposed regulations are likely to impact your firm. Click here to register.
As background, the U.S. Department of Labor (DOL) Wage and Hour Division formally issued their sweeping new overtime rule which would increase in the number of employees that must be paid overtime for hours worked in excess of 40 hours per week. The new rule will increase the salary threshold below which all employees must be paid overtime—regardless of duties or managerial position—to $50,400, up from the current $23,660, a whopping 113% increase.
Currently, employees defined as managerial, administrative, or professional are exempt from overtime rules, so long as their earnings total at least $23,660 per year. The proposed rule imposes significant new record-keeping burdens on these employees and their employers, often simply to determine that no additional overtime actually needs to be paid. Under the proposal, the salary level for the overtime exemption would be tied to the 40th percentile of workers’ salaries (the amount at which a salary is higher than 40% of full-time salaries), rather than indexed for inflation.
The proposed rule does not contain a specific proposal for changing the “duties” test (which defines whether an employee is considered exempt, even if their salary exceeds threshold). However, it does ask for public comment on the duties test, clearly opening the door to further changes yet providing no clear idea what kind of changes DOL is likely to pursue.
Although DOL has established Sept. 4 as the deadline for comments, given significant push-back from many stakeholders, it is possible they will extend that deadline beyond its current 60-days. That said, DOL officials have made clear their goal of publishing a final rule before the completion of the President’s term.