Volume 50, Issue 11 - November 2015


Changes in Overtime Pay: Should You Be Worried?

The U.S. Department of Labor’s proposed overtime rule, which would raise the threshold under which most salaried workers are guaranteed overtime pay from $23,660 a year to $50,440 a year in 2016, grabbed the attention of the construction and manufacturing industries this past summer.

The public comment period in the rulemaking process closed in September, and the U.S. working world is awaiting the next step in the process.

If the rule is enacted, it could turn many salaried workers who are currently considered “professional, executive or managerial” and who make less than $50,440 into hourly employees — and thus eligible for overtime pay.

The Associated General Contractors of America (AGC) has voted its opposition. AGC submitted comments to the U.S. Department of Labor’s Wage and Hour Division (WHD) regarding the proposed changes.

While the AGC points out that the White House has stated that the proposal “would guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year” and result in higher wages for such workers, a survey of AGC members indicates otherwise. According to AGC, when asked how companies would comply with a new threshold at the proposed level, 74 percent of construction contractors responded that they would likely reclassify some or all of the impacted exempt workers to a non-exempt hourly status at their current salaries. The survey results also show that:

• More than 60 percent of respondents expect the proposed rule to result in the institution of policies and practices to ensure that affected employees do not work over 40 hours a week;

• 40 percent expect affected employees to lose some fringe benefits;

• 33 percent expect some positions to be eliminated; and

• 23 percent expect to exchange some full-time positions for more part-time positions.
These were expressed via joint comments submitted by the Partnership to Protect Workplace Opportunity coalition, a group of associations, businesses and other stakeholders representing employers in almost every industry. The coalition’s letter asks WHD to:

• Lower the proposed minimum salary threshold to account for regional economic and market differences; lessen the impact on an employee’s ability to work in a part-time exempt capacity; and lessen the impact on employee compensation, flexibility and morale;

• Allow bonuses and commissions to count toward the minimum salary threshold;

• Phase any salary increase in over time;

• Leave the minimum required salary threshold for application of the Highly Compensated Employee exemption at $100,000;

• Abandon the proposal to automatically increase the salary threshold;

• Keep the current duties test in place for now;

• Not adopt California law or any other percentage of time requirement for the duties test;

• Not re-implement the short- and long-duties test model;

• Not make revisions to the concurrent duties roles; and

• Re-evaluate the economic analysis of the proposed rule.

The Obama administration argues that the salary threshold requirements for overtime pay haven’t kept up with the rate of inflation.

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