The U.S. Department of Labor has sent the proposed federal overtime rule to the Office of Management and Budget (OMB) for review – the last step taken before a rule is final. But employers still have an opportunity to weigh in on the rule to OMB and Congress.
The Labor Department has proposed new overtime rules that would increase the salary threshold for exemption from federal overtime requirements by more than 113 percent, from the current $455 per week, or $23,660 annually, to approximately $970 per week , or $50,440 per year in 2016. The new rule also proposes an automatic annual increase to the salary threshold every year thereafter. Many employers, especially small businesses, say they will be forced demote salaried employees to hourly positions and offer fewer hours, less flexibility and fewer benefits for their employees.
Employers can tell the administration and Congress how this new rule will impact them, their employees and the communities they serve.
Sens. Tim Scott, R-S.C., and Lamar Alexander, R-Tenn., and Reps. Tim Walberg, R-Mich., and John Kline, R-Minn., have introduced legislation (S. 2707/H.R. 4773) that will halt the Department of Labor’s proposed overtime rule until further study and analysis about the impact of the proposed rule are completed.
“This is not just a retail industry issue; the rule will touch most employees. This is our chance to have Congress hit the ‘pause’ button,” said Terry Shea, co-owner and vice president of Wrapsody in Hoover and Auburn.
Shea, a member of the Alabama Retail Association board of directors, told Congress back in October that a U.S. Labor Department proposal to expand overtime wasn’t well thought out and won’t work well for Alabama businesses or their employees.
“We pay a very competitive salary and offer a generous benefits package for our type of retail business, which is why we have such an awesome team. However, the overtime rule ignores the fact that the cost of living in Hoover, Alabama, is very different than in New York City,” Shea said in her testimony on behalf of the National Retail Federation. “Such a dramatic, one-size-fits-all increase will have real consequences for my business and my employees.”
In an interview with the Alabama Retail Association before she left for Washington, Shea said, “This new threshold is not good for businesses in Alabama or outside of an urban area. It is not a good fix.”
In Alabama, the proposed rule could bring 48.6 percent of full-time salaried workers under overtime rules (State-by-state numbers.) If the proposed rule becomes permanent, Shea said she will be forced to convert her salaried employees to hourly workers. Off-site retreats, trips to wholesale gift markets and other development and team building also could be off the table under this proposal, she said.
“I’m not saying there doesn’t’ need to be an increase,” she said. “There doesn’t need to be this drastic of an increase.”
“A lot more needs to be done” in terms of research and getting feedback from small businesses before any change is made in the overtime threshold, Shea said.
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