Overtime Rules: Hurry up and Wait

September 9, 2015

AA017956On Thursday, Sept. 3, 2015, NSBA submitted comments warning against the Department of Labor’s (DOL) proposed rules on overtime pay. In addition to the massive threshold increase—from the current $23,660 to $50,400—below which employees must be paid overtime, NSBA also criticized the DOL’s process for not allowing an appropriate timeframe for stakeholders to properly study and survey the far-reaching impacts the rule will have.

The DOL formally proposed the new rule on July 6, 2015, giving stakeholders just 60 days to comment both on the specific 113 percent increase in salary threshold as well as a vague mention to possible changes to the so-called “duties test.”

Addressing the issue of the possible duties test changes, NSBA President and CEO Todd McCracken stated in the official comment letter that, “…the Department raises the possibility of changes to the ‘duties test’ but offers no specific proposals to which businesses can respond. Therefore, any such change would be wildly unfair to the millions of small businesses that will be impacted.”

Since the release of this rule, NSBA has urged its members to weigh-in, and many did just that. Unfortunately, the summer release coupled with a mere 60-day comment period and a dismissive refusal to extend the comment period by the DOL indicates a clear intent to stymie small-business input into the process.

Among the key issues raised in NSBA’s comments: the cost of compliance for small businesses will be much greater than the DOL estimate; changes to the duties test are likely to miss the fact that there is no bright line between “exempt” and “non-exempt” in the typical small business workplace; the creation of new hourly reporting and tracking requirements are likely to be a disproportionate burden on smaller firms; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be  “downgraded” from exempt managers to non-exempt workers.

After receiving nearly 250,000 comments on the proposal, DOL will pour over those comments and has said they expect to publish a final rule in the first half of 2016.

Please click here to download NSBA’s comment letter.