SelfInformed

September 2015


DOL New Overtime Rule Impacts Small Business

Wednesday, September 23, 2015
Under a proposed rule issued by the Department of Labor, millions of exempted employees would become eligible for overtime and would raise workers’ wages by $1.2 billion in a plan outlined by Secretary Perez. The salary threshold for an employee to be eligible for overtime would be raised to about $970 week/$50,440 annually and the threshold for highly compensated employees would move from $100,000 to $122,148.

In an analysis provide by H.R.BLR.com, “In the first year, the DOL estimates that 4.6 million workers exempt under the current regulations who earn at least the current weekly salary level of $455 but less than the proposed salary level of $921 would, without some intervening action by their employers, become newly entitled to overtime protection under the FLSA. Similarly, an estimated 36,000 currently exempt workers who earn at least $100,000, but less than $122,148, and who meet the minimal HCE’s duties test but not the standard duties test may also become eligible for minimum wage and overtime.”

In information provided by the Department they estimate that the “cost to each small business, on average depending on the number of workers covered by the regulation, $100 to $600 in direct costs and $320 to $2,700 in additional payroll costs to employees in the first year after the promulgation of the proposed rule.”

Nearly 250,000 businesses and organizations submitted comments to the Department of Labor, the NASE joined several organizations in voicing their concern on the impact the new threshold would have on America’s smallest businesses, including the micro-businesses we represent. Additionally, we do not believe that using the 40th percentile of weekly earnings is an accurate tool to use, given that wages fluctuate significantly given geographic location. We hope that the Department of Labor will reconsider its proposed changes and understand the significant financial impact this will have on micro-businesses and smaller employers.

Katie Vlietstra is NASE’s Vice President for Government Relations and Public Affairs.

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