This week, the Big “I” submitted comments to the Department of Labor (DOL) expressing concern with proposed revisions to federal regulations governing the “white collar” exemptions to the overtime compensation requirements that exist under the Fair Labor Standards Act.  

Federal law requires non-exempt employees to be compensated at a rate of no less than time-and-one-half their regular salary for time worked over 40 hours in a work week. But under current regulations, employees qualify for white-collar exemptions if they make more than $23,660 per year and meet certain other conditions. If implemented as proposed, the DOL rule would more than double the salary required for an employee to qualify for one of these exemptions to a level of approximately $50,440 in 2016—and even higher levels in subsequent years. 

In its comment letter, the Big “I” notes that the proposed increase in the salary thresholds is drastic and significantly outpaces the rate of inflation. In response to these potential regulatory changes, the letter points out that business owners will be forced to cut the base salaries of some workers, reduce or eliminate other benefits, utilize automation and outside vendors to a more significant extent or find other ways to offset the effects of the proposed revisions.

The letter also notes that the problems associated with such a significant salary threshold increase are compounded by the fact that the adjustment will be applied on a one-size-fits-all basis in all regions of the country, ignoring wage, income and cost-of-living disparities between affluent areas and other regions. The Big “I” also challenges the proposal’s unprecedented call for automatic annual increases to the salary threshold in future years. 

Finally, the association’s comments address the adverse effects the rule would have on workers and the public. Many employers, for example, will be forced to reclassify their employees and reduce the number of exempt workers. Those who are affected will also suffer the indignity of a perceived demotion, lose the flexibility and autonomy that accompanies exempt status and face hindered opportunities for advancement and promotion. These changes will also damage and undermine the hard-earned reputations of many businesses and force employers to implement measures that are not in the best interests of the public. The promulgation of these proposed revisions will force many businesses to limit the working hours of valuable and senior-level employees, curtail or eliminate previously available services and forbid staff from responding to customer needs at critical times.

The comment period on the proposed revisions ends tomorrow, and the DOL is expected to quickly promulgate a final rule. Keep an eye on upcoming issues of the News & Views e-newsletter for additional updates and more details as events warrant. 

Jen McPhillips is Big “I” senior director of federal government affairs.