ASAE expects the final DOL overtime rule to be released May 18, 2016. Check back to see the latest on this issue.

 

Below please find information on the association community response to President Obama’s new overtime rule.

ASAE DISCUSSES OVERTIME RULE WITH ADMINISTRATION

April 28, 2016

ASAE met April 26 with officials from the Office of Management and Budget (OMB) and Department of Labor (DOL) to discuss the Administration’s forthcoming rule on overtime pay.

The DOL’s overtime rule – barring any changes before it’s finalized this year – would require businesses to pay overtime wages to employees making $50,440 or less per year, which would be a 113 percent increase over the current threshold and would make an additional 5 million workers newly eligible for overtime pay. In March, the Department of Labor sent the rule to OMB for a final review and Administration officials say the final rule could come as early as next month.

ASAE President and CEO John H. Graham IV, FASAE, CAE, and a delegation of other nonprofit leaders shared their mutual concern that the new rule would adversely affect many nonprofit organizations and other employers with limited revenues, and could harm many affected employees as well. ASAE has contended in public comments to the Labor Department that the $50,440 salary threshold amounts to a “one-size-fits-all” solution and that the minimum salary level for exempt employees should instead be keyed to government data on regional cost-of-living differences.

The Administration’s plan to drastically expand overtime eligibility has emerged as a top concern for small businesses, colleges and universities and tax-exempt organizations – many of which are struggling to see how they will afford a surge in payroll costs and still maintain their bottom line. As ASAE has pointed out, the proposal also has implications for employees, who could be denied opportunities to participate in any work-related activities at which their attendance is not essential, thus restricting their professional growth.

Joining Graham in the meeting was Neal Denton, senior vice president and chief government affairs officer at the YMCA of the USA, and Ed Elmendorf, senior vice president for government relations and policy analysis at the American Association of State Colleges and Universities. Both said their members across the country would not be able to absorb the cost of expanding overtime eligibility without cutting staff, reducing hours and potentially scaling back services.

The meeting with OMB was deemed a “listening session” to help the Administration understand employer concerns before releasing a final rule. It’s not clear what changes, if any, will be made to the draft rule DOL released last year.

 

DOL CLOSER TO FINALIZING OVERTIME RULE:

March 17, 2016

The Department of Labor sent its highly-anticipated overtime rule to the White House’s Office of Information and Regulatory Affairs (OIRA) this week, moving a step closer to expanding overtime eligibility for millions of workers.

The details of the final rule won’t be known until it is publicly released, but the proposed rule issued last summer would require businesses to pay overtime wages to employees making $50,440 or less per year, which would be a 113 percent increase over the current threshold.

More than 250,000 organizations, including ASAE, submitted comments on the overtime rule to DOL last year. ASAE believes strongly that the new rule would adversely affect many nonprofit organizations and other employers with limited revenues and could harm many affected employees as well. ASAE said in its comments to DOL that the $50,440 salary threshold amounts to a “one-size-fits-all” measuring stick and that the minimum salary level for exempt employees should instead be keyed to government data on regional cost-of-living differences.

Labor Secretary Thomas Perez testified before a Senate Appropriations subcommittee hearing today on the agency’s FY17 budget request, and received some pointed questions about the expansion of the overtime rule from GOP appropriators, including the subcommittee chairman, Sen. Roy Blunt (R-MO).

“As the country continues to recover from the recession, it is time for the Administration to admit that government regulations and overreach do not create job growth,” Blunt said in his opening statement at today’s hearing. “I continue to have serious concerns about the Department’s aggressive regulatory agenda and methods used to short-circuit the fair and open regulatory process.”

DOL AIMING TO FINALIZE OVERTIME RULE IN MID-2016:
ASAE Inroads
December 10, 2015

ASAE is still closely monitoring the Department of Labor’s 2016 regulatory agenda to see when the agency might release its final overtime rule. The Office of Management and Budget (OMB) has estimated that a final rule could come out as soon as July 2016.

The DOL released a proposed rule this summer that would more than double the salary threshold for overtime eligibility to $50,440 per year (up from $23,660). In addition, the minimum salary would automatically increase each year to match the 40th percentile of the average salary earned by full-time employees in the United States.

More than 250,000 organizations, including ASAE, submitted comments on the proposed rule to DOL this past summer. ASAE believes the new rule would adversely affect many nonprofit organizations and other employers with limited revenues and could harm many affected employees as well. To contain payroll costs from increased overtime obligations, employers would have to either lay off employees or exclude reclassified employees from telework and career growth opportunities outside of core business hours.

ASAE also noted in its comments that the $50,440 salary threshold amounts to a “one-size-fits-all” measuring stick and that the minimum salary level for exempt employees should instead be keyed to government data on regional cost-of-living differences.

DOL is still reviewing comments and has yet to suggest what changes, if any, might be made to the final rule. ASAE will keep the association community informed about any new developments or changes to the DOL’s timeline for releasing a final rule.

SBA Criticizes Proposed Overtime Rule

SHRM
September 22, 2015

Proposal could make nearly 5 million workers newly eligible for overtime
Pew Research Center
August 24, 2015

ASAE Grassroots Message
Jim Clarke, CAE
August 18, 2015

After numerous discussions with association professionals at the ASAE Annual Meeting on the Department of Labor’s proposed overtime rules we wanted to remind the community that the deadline for comments is quickly approaching. The proposed regulations would raise the salary threshold at which eligible workers qualify for overtime pay. ASAE’s comments can be found here. We strongly encourage any associations that may be impacted to review our comments to use them as a model or focus on a specific area of concern to your organization. Comments can be submitted electronically here on or before Sept. 4, 2015.

ASAE has heard from association leaders around the country who are concerned that some of their exempt employees will now be eligible for overtime under the new salary threshold of $50,440 or will have to be switched to hourly pay. Many association employees currently qualify as exempt from overtime eligibility because their annual salary is greater than $23,660 and because their primary duties fall under the executive, administrative and professional (EAP) exemption included in the original Fair Labor Standards Act of 1938. While the rule won’t likely be finalized for months, the change is forcing companies to consider keeping closer tabs on hours worked by overtime-eligible employees, including how to handle work done out-of-office, such as responding to emails in the evening or working at a conference over a weekend.

ASAE’s comments can be summarized into five main areas of concern:

• ASAE believes the Department of Labor’s proposal of a minimum annual salary level for exempt employees of $50,440, with automatic annual renewals, sets a one-size-fits-all measuring stick for middle-class incomes. The minimum salary level for exemption should instead be keyed to government data on regional cost-of-living differences.
• The minimum salary level should be set lower than the proposed level of the 40th percentile of average full-time employee salaries, either across-the-board or for the nonprofit sector. Under the current over-inclusive proposal, too many senior-level exempt employees would be reclassified as overtime-eligible because of their salary level, particularly in nonprofit organizations.
• The proposal would adversely affect nonprofit organizations and other employers with limited revenues and would harm many affected employees. To contain payroll costs from increased overtime obligations, these employers would have to either lay off employees or exclude reclassified employees from telework and career growth opportunities outside of core business hours. Under both scenarios, the remaining exempt employees would bear the brunt of increased workloads.
• ASAE also believes that no changes to the duties test regulations should be made without providing notice of the specific proposed changes and another opportunity for public comment.
• If the Department of Labor considers changes to the duties test, it should (i) add clarity to classification determinations by incorporating new examples of exempt occupations, including examples specifically addressing common job roles in membership organizations, and (ii) avoid adopting a rigid minimum time percentage test for assessing the “primary duty” of a position.

Again, ASAE strongly urges you to review the rules and background information at the Power of A website and submit comments to the DOL if you believe they will impact your organization. If you have any questions please contact the Public Policy Department at publicpolicydept@asaecenter.org.

ASAE Opposes “One-Size-Fits-All” Overtime Rule
August 10, 2015
Chris Vest, CAE

ASAE DOL Overtime Rule Comments
Submitted August 8, 2015

ASAE Policy Update:

On August 8 ASAE submitted comments to the Department of Labor Notice of Proposed Rulemaking on the Obama administration’s pending regulations to raise the salary threshold at which eligible workers qualify for overtime pay. ASAE’s comments can be found here. We strongly encourage any associations that may be impacted to review our comments to use them as a model or focus on a specific area of concern to your organization. Comments can be submitted electronically here on or before Sept. 4, 2015.

ASAE has heard from association leaders around the country who are concerned that some of their exempt employees will now be eligible for overtime under the new salary threshold or will have to be switched to hourly pay. Many association employees currently qualify as exempt from overtime eligibility because their annual salary is greater than $23,660 and because their primary duties fall under the executive, administrative and professional (EAP) exemption included in the original Fair Labor Standards Act of 1938. While the rule won’t likely be finalized for months, the change is forcing companies to consider keeping closer tabs on hours worked by overtime-eligible employees, including how to handle work done out-of-office, such as responding to emails in the evening or working at a conference over a weekend.

ASAE’s comments can be summarized into five main areas of concern:

•    ASAE believes the Department of Labor’s proposal of a minimum annual salary level for exempt employees of $50,440, with automatic annual renewals, sets a one-size-fits-all measuring stick for middle-class incomes.  The minimum salary level for exemption should instead be keyed to government data on regional cost-of-living differences.
•    The minimum salary level should be set lower than the proposed level of the 40th percentile of average full-time employee salaries, either across-the-board or for the nonprofit sector.  Under the current over-inclusive proposal, too many senior-level exempt employees would be reclassified as overtime-eligible because of their salary level, particularly in nonprofit organizations.
•    The proposal would adversely affect nonprofit organizations and other employers with limited revenues and would harm many affected employees.  To contain payroll costs from increased overtime obligations, these employers would have to either lay off employees or exclude reclassified employees from telework and career growth opportunities outside of core business hours.  Under both scenarios, the remaining exempt employees would bear the brunt of increased workloads.
•    ASAE also believes that no changes to the duties test regulations should be made without providing notice of the specific proposed changes and another opportunity for public comment.
•    If the Department of Labor considers changes to the duties test, it should (i) add clarity to classification determinations by incorporating new examples of exempt occupations, including examples specifically addressing common job roles in membership organizations, and (ii) avoid adopting a rigid minimum time percentage test for assessing the “primary duty” of a position.

Again, ASAE strongly urges you to review the rules and background information at the Power of A website here and submit comments to the DOL if you believe they will impact your organization. If you have any questions please contact the Public Policy Department at publicpolicydept@asaecenter.org.

If ‘Banker’s Hours’ Are Passé, How Will DOL’s Overtime Rules Apply?
SHRM
July 27, 2015

SHRM
July 24, 2015

Overtime Rules Send Bosses Scrambling
Wall Street Journal (Login Required)
July 21, 2015

Obama’s new overtime rules: How they’d work and who they’d affect
LA Times
June 30, 2015

ASAE Still Seeking Input on Overtime Rules
Inroads
July 17, 2015

ASAE is still gathering feedback from members who are concerned about the Obama administration’s pending regulations to expand the number of workers who qualify for overtime pay.

Based on this feedback, ASAE will be drafting comments to the Department of Labor (DOL) in advance of a Sept. 4 deadline, and will share those comments with other associations that want to weigh in on this important labor issue.

Under current DOL regulations – last updated in 2004 – 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 making $50,440 or less per year. The central question for many associations is what, if any, changes the DOL intends to make to the duties test that is part of the executive, administrative and professional (EAP) exemption included in the original Fair Labor Standards Act of 1938. Since its inception, the white collar exemption has historically exempted many salaried association employees from overtime eligibility because their job duties primarily involve executive, administrative or professional duties as defined by the DOL regulations.

While the DOL’s recent Notice of Proposed Rulemaking focuses primarily on updating the salary threshold for overtime-eligible workers, the Department is seeking comments on whether the current duties test is working as intended or needs to be modified. As an example, the Department asks whether employees should be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption. As many salaried association employees perform all sorts of duties in the course of their work, it’s possible that a change to this regulatory language could turn many exempt positions into overtime-eligible positions.

If you have specific concerns with this proposed rule, please share them with the ASAE Public Policy team at publicpolicydept@asaecenter.org. For more information about the rules, please visit ASAE’s Power of A site.

The Labor Department’s Notice of Proposed Rulemaking was published in the July 6 Federal Register. Interested parties can submit their own written comments on the rule at www.regulations.gov on or before Sept. 4, 2015.

SHRM- HR Week
July 9, 2015

‘Death Spiral’ for Exempt Employees Predicted
The use of white-collar exemptions will become increasingly difficult with each passing year if the Department of Labor’s proposed cutoff at the 40th percentile of earnings for full-time salaried workers is in the final overtime rule. “The result when it comes to using a percentage threshold is a death spiral for exempt status,” said attorney Paul DeCamp, former administrator with the department’s Wage and Hour Division. The 40th percentile is estimated to be $970 a week or $50,440 annually for 2016.

DOL Questions About Duties Tests Should Concern Employers
Although the Department of Labor (DOL) is not now proposing specific regulatory changes to the duties tests of the overtime rule, that doesn’t mean it won’t at some point down the road. “DOL remains very interested in making [the duties tests] harder to meet, and employers should not assume that there will be another opportunity to comment upon changes in those tests,” attorney John Thompson told SHRM Online.

Amid New Overtime Rules, More Employers Might Set Email Curfew
As the Obama administration looks to expand the number of employees eligible for overtime pay, more companies may curtail the use of email after hours to cut labor costs. (NPR)

ASAE to Submit Comments on New Overtime Rule
Inroads
July 9, 2015

ASAE is preparing comments on President Obama’s proposal to raise the threshold at which workers qualify for overtime pay. The proposed rule would more than double the salary threshold under which workers qualify for overtime pay whenever they work more than 40 hours per week. That threshold, now $23,660, would rise to $50,440, resulting in raises for about 5 million workers, according to Administration estimates.

Hourly workers would generally continue to receive overtime pay as they do under current rules, but President Obama asked the Labor Department to update regulations for salaried workers to guarantee them overtime pay if they earn less than the new salary threshold. The department is considering whether revisions to the so-called “duties test” are necessary to reflect the purpose of the “white collar” exemption that applies to executive, administrative and professional employees.

ASAE is interested in hearing any specific examples of how its members’ associations might be impacted by changes to the current rule. If you have specific concerns with this proposed rule, please share them with the ASAE Public Policy team at publicpolicydept@asaenet.org.

The Labor Department’s Notice of Proposed Rulemaking was published in the July 6 Federal Register. Interested parties can submit their own written comments on the rule at www.regulations.gov on or before Sept. 4, 2015.

Associations Digesting New Overtime Rule
Inroads
July 1, 2015

Many associations are sifting through President Obama’s new overtime rule, released earlier this week, to gauge its impact and implications for employers.

The proposed rule would more than double the salary threshold under which workers qualify for overtime pay whenever they work more than 40 hours per week. That threshold, now $23,660, would rise to $50,440, resulting in raises for about 5 million workers, according to Administration estimates.

Hourly workers would generally continue to receive overtime pay as they do under current rules, but President Obama has asked the Labor Department to update regulations for salaried workers to guarantee them overtime pay if they earn less than the new salary threshold.

“In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America,” Obama said in a Huffington Post op-ed this week.

Few disagree that the federal overtime rules are outdated, but opponents of the president’s proposal say employers will adjust to the rules by hiring more part-time workers or cutting down on the number of mid-management jobs they offer. While the Administration does not need congressional approval to implement a new overtime rule, the Republican-controlled House has also characterized the new proposal as a “missed opportunity.”

The president’s proposal “will increase costs on small businesses, make it harder for workers to advance up the economic ladder, and do nothing to address the complexity of the regulations or reduce unnecessary litigation,” said House Education and the Workforce Committee Chairman John Kline (R-MN) and Workforce Protections Subcommittee Chairman Tim Walberg (R-MI). “The administration has crafted a regulatory proposal that will stifle productivity and personal opportunity.”

Importantly, the president’s proposal does not include specific regulatory changes to the so-called “duties test” that determines whether salaried workers earning more than the threshold are entitled to an exemption from overtime rules. Under the current rules, salaried workers performing executive, administrative and professional office work are not eligible for overtime pay. It’s expected that many employers will comment on any specific changes to the duties test when the Labor Department’s notice of proposed rulemaking is published in the coming days. The Administration will consider all comments before issuing a final rule next year.