Big ‘I’ Meets with Administration about Overtime Rules

This week, Big “I” staff met with officials from the Department of Labor (DOL) and the Office of Management and Budget (OMB) regarding a proposed rule that could potentially impact 1 million “white-collar” workers in the insurance industry. Also this week, the Big “I” sent two letters to Congress supporting legislation to address concerns with the DOL’s proposal.

Generally under the Fair Labor Standards Act, employers must pay employees overtime for any hours they work beyond a 40-hour work week. Numerous exceptions exist to this rule, including the “white-collar exemption,” which exempts employees from overtime if they meet a simple duties test and earn more than $23,660 annually.

The DOL is proposing to raise this threshold by 113% to $50,440. This means hourly workers and those who earn salaries less than $50,440 could receive overtime pay, while those who earn above that amount and work in “white-collar” jobs generally could not.

The DOL proposal also suggests increasing the $50,440 minimum salary threshold on an annual basis. The current proposal would give employers only a 60-day notice to adjust to the annual increases. The Obama Administration is in the process of finalizing the rule, which is anticipated to be released before the end of July.

During the meeting with the DOL and the OMB, the Big “I” conveyed that the threshold—last updated in 2004—may need additional updates, but expressed concern that the rule’s magnitude will negatively impact Big “I” members and their clients. If the regulation is finalized as proposed, it will likely reduce employee flexibility and require careful tracking of employee hours, as well as annual compliance audits. Furthermore, to comply with and mitigate costs from the rule, Big “I” member agencies would have to reclassify impacted employees and institute a combination of salary raises, overtime pay, outsourcing, benefits cuts and forbidden work.

Some members of Congress have also raised concerns about the proposed rule. Sens. Tim Scott (R-South Carolina) and Lamar Alexander (R-Tennessee), and Reps. Tim Walberg (R-Michigan) and John Kline (R-Minnesota) introduced S. 2707 and H.R. 4773, the “Protecting Workplace Advancement and Opportunity Act,” in March. The legislation would halt the current rulemaking process and forbid the DOL from re-proposing the rule unless it meets certain conditions, including protections for small businesses.

Big “I” members lobbied on these bills last week during the association’s annual legislative conference. This week, in coordination with the Partnership to Protect Workplace Opportunity, the Big “I” sent two letters to the Hill supporting both measures.

Jennifer Webb is Big “I” federal government affairs counsel.