This morning, the Big “I” submitted congressional testimony expressing concerns with the Obama Administration’s proposed regulation to raise the salary threshold at which eligible (executive, administrative or professional) workers qualify for overtime pay.

The official statement was to a U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations hearing entitled, “The Consequences of DOL’s One-Size-Fits-All Overtime Rule for Small Businesses and their Employees.”

Under current Department of Labor (DOL) regulations, employers are required to pay all eligible employees time and a half for any hours they work in excess of 40 hours per week if they make $23,660 or less per year. The proposed rule would more than double that salary threshold to cover all overtime-eligible workers who make $50,440 or less per year.

The Big “I” testimony acknowledges that the salary thresholds have not been changed since 2004 and agrees that a modification of some form is warranted. However, the DOL’s proposal would dramatically, substantially and arbitrarily increase the salary required for a person to qualify for exempt status as an executive or professional employee. Additionally, this proposal ignores regional differences and, especially, the disparity in the cost of living throughout the country. The testimony challenges the proposal’s unprecedented call for automatic annual increases to the salary threshold in future years, noting that small businesses already face significant economic and regulatory challenges and will bear a heavier burden to work around the frequency and complexity of the changes in the overtime rule.

The Big “I” testimony also addresses 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 lose the flexibility and autonomy that comes with 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 interest of the public.

The association also highlights insurance-specific concerns, describing how the insurance market is already highly regulated and prices and fees cannot be altered in attempts to recover any new payroll costs from insurance buyers. Additionally, when an insurance loss occurs, insureds naturally seek the assistance of their insurance providers for guidance and assistance with the claims process. They expect their insurance agent and trusted advisors to be available at all hours. Implementation of the proposed rule could directly hinder agents’ ability to provide such support, service and responsiveness. 

In addition to submitting comments to the hearing, the Big “I” has joined a coalition called the Partnership to Protect Workplace Opportunity, which was created to organize the employer community’s response to any proposed changes to the Fair Labor Standards Act regulations. Key coalition efforts include advocacy on Capitol Hill to develop a strategic message to Congress highlighting business concerns with this proposal.

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