New Orleans, LA (October 6, 2016) – Statewide small business, non-profit, education and governmental leaders are urging Congressman Steve Scalise, the Majority Whip in the U.S. House of Representatives, to exercise his leadership to fast track legislation that would provide an alternative or fix to the Department of Labor’s revised overtime pay requirements, before they go into effect on December 1, 2016.
Under the current overtime rule, salaried managers and professionals who make more than $23,660 per year and perform certain primary duties can be exempted from overtime requirements. The Administration’s new rule raises the minimum threshold to $47,476, an increase of more than 100 percent. Furthermore, the rule would be indexed for automatic increases every three years.
As the implementation date of the changes near, accountants and lawyers have been holding webinars and other briefings over the past few weeks to warn the public sector, non-profits, and small businesses that these rules do not provide for any exceptions to the proposed changes, which could require employers to reclassify employees, change over tracking systems, and reassess their budgets, operations and services.
“The Labor Department’s rule makes no accommodation for differences between for-profit and non-profit organizations, nor does it make any allowance for regional differences in rates of pay and cost of living,” said Dawn Collins, Solidarity Project Executive Director.
Last week, the U.S. House of Representatives passed a bill that would delay the implementation date of the overtime regulation by six months to June 1, 2017.
Additionally, recently, bipartisan compromise bills have been proposed in Congress— the Overtime Reform and Review Act (S. 3464 and H. 5813) would give employers a chance to absorb the impact of the rule change and eliminate the final rule’s automatic increases to the salary threshold.
“All we want is a closer examination to determine how these proposals impact those who operate hospitals, universities, police and fire departments, public health clinics, schools, government offices, small businesses, and charitable organizations,” said Ms. Collins. “We’re already facing budget challenges at a time when in Louisiana there is an extreme need for our services.”
A wide range of non-profit, government and education departments will be subject to the rule change, such as administration, accounting, information technology, fundraising and events, and management.
“The proposed increase by the Department of Labor is unprecedented, far too extreme and will come too abruptly to handle. There’s no doubt the regulation will hurt non-profits, municipal governments, and primary and secondary education institutions across Louisiana,” said Buck Vandersteen, Executive Director of the Louisiana Forestry Association. “In an already stagnant economy, the consequences will be devastating to our Association as a whole and incredibly demoralizing to those salaried staff members who will now have to punch a time clock.”
In addition to national groups, such as Habitat for Humanity and the National Alliance for Public Charter Schools, the following local organizations and individuals are calling on Congress to address this issue:
State of Louisiana, Attorney General Jeff Landry
Louisiana Association of Business and Industry
Louisiana Forestry Association
University of New Orleans, William Lannes, Professor Emeritus
Community Volunteers Association
Denise Cazaubon, CPA
Chin-lai Hom Design
Nick Varrecchio, Attorney
Gelpi Production Services
CCS Business Services
Shea Law Office
Background on the Fair Labor Standards Act (FLSA)
Currently under the Fair Labor Standards Act, a person must satisfy three criteria to qualify as exempt from the federal overtime pay requirements:
· they must make a salary;
· that salary must be more than $455/week ($23,660 annually); and
· their “primary duties” must be consistent with managerial, professional, or administrative positions as defined by the Department of Labor.
On June 30, 2015, the Department of Labor proposed a rule that would increase the current threshold of $455 per week ($23,660 annually) by 113 percent to $970 per week ($50,440 annually).
After receiving over 270,000 public comments last summer from organizations and business, community, and charitable leaders, President Obama announced that the new threshold would be $913 per week ($47,476 annually), which is a 100 percent increase to the current salary threshold. The implementation deadline is December 1, 2016, unless Congress intervenes.
For more information on this issue, visit www.protectingopportunity.org.
The Partnership to Protect Workplace Opportunity (PPWO) consists of a diverse group of associations, businesses, and other stakeholders representing employers with millions of employees across the country in almost every industry. The Partnership is dedicated to advocating for the interests of its members in the regulatory debate on changes to the Fair Labor Standards Act (FLSA) overtime regulations.