By Peter Calcara, Vice President - Government Relations
The U.S. Department of Labor (DOL) has proposed major changes to the white-collar exemptions to federal overtime pay requirements. In 2014, President Barack Obama directed the DOL to examine the “white-collar exemption” currently in place for executives, administrative, and professional employees in the Fair Labor Standards Act, or FLSA.
Currently, a person must satisfy three criteria to qualify as exempt: they must make a salary; that salary must be more than $455 per week ($23,660 or less annually); and their “primary duties” must be consistent with managerial, professional, or administrative positions as defined by DOL.
The proposal, if allowed to go into effect, could have significant ramifications to PICPA members, their firms, and the clients they represent. That’s why last December the PICPA signed onto a letter with the Partnership to Protect Workplace Opportunity (PPWO).
In the DOL proposal, which was initially published July 6, 2015, there would be an increase in the minimum salary threshold to $970 per week ($50,440 annually), a jump of more than 100 percent. DOL also proposes increasing this minimum on an annual basis by pegging it to the 40th percentile or by indexing it to inflation for urban goods and services (CPI-U, an aggressive measure of inflation). DOL proposes publishing these annual increases to the minimum salary only 60 days before they become effective, providing employers and employees with too little notice.
The magnitude of an increase to the salary threshold and almost any changes to the duties test will hurt small businesses, schools, municipalities, nonprofits, and other employers, as well as workers and the economy as a whole. Many employees would lose the flexibility they currently enjoy, and employers would be faced with potentially significant increases in labor and administrative costs. In a stagnant economy, these consequences could be devastating.
The PICPA is working with the PPWO to urge Congress to support S. 2707 and H.R. 4773, the Protecting Workplace Advancement and Opportunity Act. This legislation would nullify DOL’s proposal, prohibit automatic increases of the salary threshold, and require the DOL to complete analysis of the proposal’s changes to the overtime regulation to better identify its significant effects on employees, businesses large and small, nonprofits, and state and local governments.
Last month a group of about 70 members of Congress sent a letter to Reps. Tom Cole and Rosa DeLauro, chair and ranking member respectively, of the U.S. House Subcommittee on Labor, Health and Human Services, Education and Related Agencies, urging them to consider including language that would prohibit the DOL from using appropriated funds to implement or enforce its proposed changes to federal overtime rules. Pennsylvania was represented on the letter by Reps. Mike Kelly (R), Lou Barletta (R), and Glenn Thompson (R).
But that’s not enough. Members of Congress need to hear directly from PICPA members about how this proposed change will impact you and your operations. It’s not too late, but time is running out.
The final proposal was published March 14, 2016. Following a public comment period, the final rulemaking will be published in the Federal Register and go into effect within 60 days of publication.
The time to act is now! How can you help? The PPWO website offers a lot of helpful and easy ways for you to contact your member of Congress about this important legislation.
Together we can fight this unfair and ill-advised proposal.