Employers Don’t Want New Overtime Rule to Repeat 2016 Mistakes

Layoffs, reduced employee benefits and diminished customer
services are just some of the reasons why many employers opposed the 2016
proposed revisions to the overtime rule. The DOL (Department of Labor) said it
will release a new overtime plan in March 2019. 

The exempt salary threshold—the minimum amount an employee
must earn to be exempt from the Fair Labor Standards Act’s (FLSA’s) overtime
requirement—is currently $23,660. The Society for Human Resource Management
(SHRM) supports an increase to the exempt salary threshold, but not too
much or too fast.

Employers’ Reaction to Blocked Rule Explained

To adjust to the 2016 rule’s more than doubling of the
salary threshold, employers would have to do several things, for instance:

  • 6.4
        percent of employers would have to cut positions.
  • 21
        percent would have to limit alternative working arrangements, such as
        customized work hours.
  • 12.4
        percent would have to reduce annual bonuses.

These measures would be taken because employers might feel
compelled to raise salaries so employees could remain exempt, raising overall
labor costs. Or if employers reclassified exempt workers as nonexempt, they
might be forced to pay more overtime or hire more workers. Employees dislike
having their status switched from exempt to nonexempt, because they tend to
feel it’s a demotion.

The National Association of Counties (NACo) isn’t opposed to
an increase in the salary threshold but doesn’t support doubling the salary
threshold and opposed any changes to the duties test or to automatic
annual increases to the salary threshold. 

Some Urge DOL to Defend 2016 Rule

The key to preventing morale problems by reclassifying
employees from exempt to nonexempt is to explain to reclassified workers that
the classification is a legal one and employees still have the same promotion potential.

Deborah Chalfie, a senior legislative representative with
AARP, said the 2016 rule was “well-reasoned and well-documented.” If
the DOL adopts a lower salary threshold than the 2016 rule, it should reinstate
the “long duties test”. This test had a lower salary threshold but a
more stringent duties test. “To be exempt, an employer could devote no
more than 20 percent of hours worked in the workweek to nonexempt work. The
short test had a higher salary threshold level but a less stringent duties
test, which was more akin to the current duties test," the firm
states on its website.

Those opposing the test state that it requires a certain
amount of time be spent on exempt duties, or not be spent on nonexempt duties
to be exempt from overtime requirements.

At Converge HR Solutions,  we can assist your company in understanding
all legal processes and policies. We provide premier HR solutions that are cost
effective and relevant to your company. If you would like to learn more about
our products and services please visit our website www.convergehrsolutions.com or contact us directly by
email at info@convergehrsolutions.com we can also be reach by
phone at 610-296-8550.

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