Last week, the U.S. Department of Labor (DOL) released its final rule governing overtime pay requirements, significantly extending overtime pay protections under the Fair Labor Standards Act.
Currently, most workers are guaranteed the right to overtime pay for every hour worked beyond the normal 40-hour workweek. However, the act allows exemptions for certain employees, such as qualified white-collar workers, which do not require employers to pay for extra hours worked. Now the new rule will increase the minimum salary level for employees to qualify for the white-collar exemption from $23,660 to $47,476.
In comments submitted to the DOL last September, IDFA said that while it supports the department’s efforts to streamline the regulations, the increase of the salary level and other changes would negatively impact the dairy industry and hurt the employees it intended to help.
“The rule limits flexibility, and the burden of complying will cause many companies to absorb the cost, resulting in possible layoffs, reduced earnings, damaged employee morale and limited career growth opportunities,” said Emily Lyons, IDFA director of regulatory affairs and counsel. “In addition, the increase in the salary level does not reduce unemployment or ensure that employees are fairly compensated.”
In its comments on the proposed rule, IDFA said DOL could avoid some of the negative consequences of the rule by setting the minimum salary level at a lower percentile than proposed and by rejecting the provision that allowed annual automatic updates to the salary and compensation level.
IDFA notes that the final rule’s salary level, despite doubling the previous standard, reflects a lower percentile than what was proposed, and delays the proposed annual automatic updates to every three years. The final rule also includes a provision that allows employers to count nondiscretionary bonuses and incentive payments toward 10 percent of the salary level to determine employee eligibility for overtime pay.
The rule will go into effect December 1, 2016.
For more information, contact Lyons at email@example.com.