Reports are surfacing that the Department of Labor (DOL) plans to postpone the implementation of the new proposed overtime rules.
I have discussed these rules in two articles: Big Change is Coming: The Impact and Risk New Overtime Rules Present Employers and Proposed Overtime Rules: Calculating Real Costs and Risks to Your Organization .
As a reminder, the proposed rule would change the minimum threshold amount for an employer to pay overtime from $23,660 to $50,440. Employees making less than $50,440 would be eligible for overtime even if they have been previously exempt from it.
For example, an office manager who makes $45,000 a year would receive time and half for every hour over 40 worked during a week after the proposed rule goes into effect; even if the manager opens and closes a location; hires and fires other employees; and has check signing authority. It also means that same manager would have to "clock in" so his employer can track his time, although he is still considered "management."
The change would not just affect managers, but other exempt employees, including employees who fall under the professional and administrative exemptions.
The proposed changes are sweeping. It is estimated that the changes would affect 4.6 million employees. Because of that, the DOL received 270,000 comments during the commentary period that ended on September 4th. More than 50,000 comments were received in the last week alone. http://www.businessmanagementdaily.com/45085/dol-official-overtime-rules-coming-in-late-2016 - _
Only the DOL knows what groups commented the most (and the DOL isn't commenting), but most likely it was employer groups because they stand to be the most affected.
Originally the rules were slated for issuance in early 2016. However, during the American Bar Association's Labor and Employment conference in Philadelphia this month, the Solicitor of Labor Patricia Smith stated the proposed rule would likely not be issued until late 2016. No reason was given why for the date change.
So, why would the DOL change the date?
One possible reason is the number of comments. This may have the DOL (and the Administration) rethinking the proposed rules. One source speculates that the Administration is rethinking the proposed $50,440 threshold and may possibly lower the threshold to something like $40,000.
Employers would applaud if that is the reason for the delay, but other possible reasons for delay should worry employers.
One thought is that the DOL is considering redefining the duties portion of the current exemptions.
Another thought is that the Administration may need the extra time in order to narrow the exemptions (thereby making even more employees eligible for overtime) and/or establish a mechanism to increase the threshold automatically that would increase wages every year.
Employers would not like these three changes, especially those employers struggling to keep their doors open.
Another line of thought is the date was moved because of the upcoming 2016 election.
The Administration promotes that the rule change would give employees a needed raise. The change is estimated to impact 4.6 million people – meaning a lot of people will receive a raise or possible raise right before an election.
On the other side of the spectrum, the proposed change may create a negative political reaction, especially with underemployment at 14.5 percent. http://www.gallup.com/poll/127538/workforce-weekly.aspx.
Increasing economic pressure on employers when good jobs are already scarce may cast doubt on the move. So it may be that the plan is to wait until after the election to unveil an unpopular regulation.
The reality is no one knows, and the DOL is not talking…just hinting. What employers need to know is that a major change looks like it is now delayed, but it is coming eventually.
What is your opinion? Please let us know and answer our poll that is part of this article.
Via: Hartford Help