Overtime Exemptions

NATaT Opposes the Department of Labor’s Rule on Overtime Exemptions

The Fair Labor Standards Act (FLSA) requires that most employees be paid at least the federal minimum wage for hours worked and overtime pay at time and one-half for hours worked over 40 hours per week. There are exemptions from both minimum wage and overtime pay for certain “white collar” employees*. To qualify for those exemptions, employees must meet certain job duty tests and be paid a salary of at least $455 per week (or $23,660 per year). In 2015, DOL released a proposed rule that would drastically change the overtime exemption rules and salary threshold. While NATaT supports paying employees for extra work performed, this is an extraordinary increase that will impact town and township budgets that are already struggling.

The new rule is expected to more than double the salary threshold an employee must hit to be overtime exempt to $970 per week (or $50,440 per year). That is a 113% increase. Additionally, the threshold will automatically increase to keep pace with inflation (minimum salary to match the 40th percentile of the average salary earned by full-time employees). The increased salary threshold and automatic increases do not take into account regional cost of living differences, but applies an unreasonable one-size-fits all approach. A $50,440 annual salary in Washington, D.C. is very different than the same salary in our more rural towns and townships.

NATaT supports reasonable increases in the overtime exempt salary threshold in order to reward extra work. However, we are concerned that such a dramatic increase will hurt our workforce and employers leading to reduced hours, decreased productivity and limited growth opportunities for employees.

NATaT supports the Protecting Workplace Advancement and Opportunity Act (H.R. 4773/S. 2707). This bill would nullify the rule and require DOL to conduct a comprehensive economic analysis on the effect the overtime changes would have on small businesses, nonprofits and public employers before promulgating a similar rule. The bill would also prevent the exempt salary threshold from automatically increasing in subsequent rules.

DOL sent the overtime rule to the White House Office of Information and Regulatory Affairs on March 15 for final approval. Once the White House signs off and DOL issues the final rule, employers will have 60 days to comply with the new rule.

*Exemptions do not apply to “blue collar” workers and police, fire and EMS personnel.

To learn more, download the full policy paper.