Along with other employers, Big "I" members will have just under 100 days to comply with a final overtime rule announced Sept. 24 by the U.S. Department of Labor (DOL). The regulations implement the overtime mandate included in the Fair Labor Standards Act (FLSA) and will make an estimated 1.3 million additional U.S. workers eligible for overtime pay.
The final rule is a significant improvement from the overtime rule proposed during the Obama administration but still may present compliance challenges for independent agencies and state associations. Effective Jan. 1, 2020, the rule sets the minimum salary threshold for overtime eligibility for “white collar” workers at $35,568. The FLSA's exemption threshold for “highly compensated employees” will be set at $107,432, lower than in DOL's initial draft but still higher than the previous threshold of $100,000.
The Big “I” appreciates that the final rule did not set any automatic updates and that employers will at least be able to count non-discretionary bonuses, incentives and commissions—up to 10% of an employee's salary—toward the threshold.
In 2016, the Big “I” was the only insurance trade association to join a lawsuit with the Chamber of Commerce, the National Federation of Independent Business and other business groups to successfully prevent the DOL from moving forward on the previous rule which had doubled the exemption threshold from $23,660 to $47,476 for “white collar” exemptions and raised the exemption threshold from $100,000 to $134,004 for “highly compensated employees.”
The 2016 rule also set automatic updates to the exemption thresholds every three years. The Big “I” was concerned the rule would diminish employee flexibility, increase administrative burdens and costs on small businesses and negatively impact insurance consumers through reduced customer service.
Heather Eilers-Bowser is Big “I” counsel, federal government affairs.