Discussions focus on regulatory burdens for small businesses as the comment deadline on the proposed rule approaches.
10/23/2023 1:55 P.M.
3 minute read
A House committee last week examined the proposed overtime rule changes from the U.S. Department of Labor (DOL)—a topic not unfamiliar to Congress, regulators and the industry.
The Notice of Proposed Rulemaking (NPRM) would update the regulations under the FLSA “implementing the exemption from minimum wage and overtime pay requirements for executive, administrative, and professional employees.”
With the proposed increase in the overtime salary threshold from the current $35,568 to the $55,000 mark, approximately 3.6 million workers would be eligible for overtime pay, according to the DOL.
Comments are due Nov. 7. Experts have said the proposal could face similar challenges to the 2016 version, but businesses it could impact should prepare for the requirements as they are proposed today.
Jessica Mobley, director of human resources and client relations for KLS Financial Services, suggested companies review all current salary-exempt employees and identify whose earnings are below the proposed minimum (about $55,000/year) and decide if you are prepared to raise them.
If not, you should re-evaluate their position and classification, according to Mobley.
Last week, the House Committee on Small Business held a hearing titled “Burdensome Regulations: Examining the Effects of DOL Rulemaking on America’s Job Creators.” The key themes were addressing regulatory burdens and processes, benefits of regulations and negative impacts of regulations, according to a summary from Brownstein Hyatt Farber Schreck LLP.
In opening remarks at the hearing, members including Committee Chair Roger Williams, R-Texas, discussed how regulations such as the proposed overtime rule changes make it challenging for small businesses to hire more employees and grow their operations.
Ranking Member Nydia Velazquez, D-N.Y., said compliance with such regulations can also be difficult for small businesses because they do not have the resources that larger companies have to monitor the changes.
Witnesses for the hearing included Paul Ray, director, Thomas A. Rone Institute for Economic Policy Studies, The Heritage Foundation; Mario Burgos, chief strategy officer, Prairie Band LLC; Ric Suzio, vice president, The Suzio York Hill Companies; and Frank Knapp, president and CEO, South Carolina Small Business Chamber of Commerce.
The committee and witnesses discussed how to make the regulatory process more accommodating for small businesses while still focusing on the goals of proposed rules.
The House Committee on Education and Workforce will also discuss the issue in a subcommittee hearing on Oct. 24, 2023, “Bad for Business: DOL’s Proposed Overtime Rule.”
Will the Rule Be Challenged in Court?
The DOL’s rule in 2016 was challenged in court for its high salary threshold and blocked by a federal judge, but the department moved forward with an update that was finalized in 2019, prompting accounts receivable management companies to review and update overtime and employee exemption policies.
The need to review your company’s overtime policies and job descriptions and prepare for compliance now also comes down to timing.
“Just like in 2016, there is a real chance here that employers do not get court guidance on whether the rule will go into effect until very close to the effective date of the rule,” Brett Coburn, attorney with Alston & Bird in Atlanta, said in an article from the Society for Human Resource Management.
Interested parties can submit comments, identified by Regulatory Information Number (RIN) 1235–AA39, by either of the following methods:
- Submit comments through the Federal eRulemaking Portal at https://www.regulations.gov. Follow the instructions for submitting comments.
- Address written submissions to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S–3502, 200 Constitution Avenue NW, Washington, DC 20210.