In May, the White House announced the publication of its final overtime rule, which the administration says will extend overtime eligibility to more than 4 million additional workers within the first year of implementation.
The rule, which will be effective December 1, significantly increases the minimum salary level for “white collar” employees to qualify as exempt from overtime pay requirements. Under the new rule, no employee who has a guaranteed salary of less than $47,476 will qualify as exempt under the executive, administrative, or professional exemptions. That’s more than double the current minimum salary level of $23,660 and only slightly lower than the Labor Department’s proposed $50,440. The rule will not affect hourly or other nonexempt workers, who already are eligible for overtime pay.
Additionally, the final rule includes a mechanism for automatically updating the salary threshold every three years (a change from the proposal of yearly adjustments). The next automatic update to the salary threshold will be on January 1, 2020, and the new salary level will be announced 150 days before it takes effect. The minimum salary level is set based on the 40th percentile of wages of full-time salaried employees in the lowest-wage census region (currently, the South).
ASAE continues to believe that the new rule will adversely affect many nonprofit organizations and other employers with limited revenues, and based on our meetings on Capitol Hill, many congressional offices share our concerns. There still may be ways that Congress can delay the final rule from going into effect. ASAE is a member of the Partnership for Workplace Opportunity coalition, a diverse group of associations, nonprofits, and businesses that are advocating for a regulation that is more considerate of all stakeholders and the economic realities facing employers and employees across the country. ASAE also took this issue to Capitol Hill in March as part of American Associations Day, our annual legislative fly-in for association professionals. We held over 250 meetings on Capitol Hill to share our concern about how this rule will affect association professionals around the country.
Before the rule was finalized, ASAE submitted extensive written comments to the Department of Labor and met face to face in April with DOL and Office of Management and Budget officials to share our concerns 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 continues to believe that the salary threshold is set too high; that the minimum salary level for exempt employees should instead be keyed to government data on regional cost-of-living differences; that the timing of the automatic increases fails to provide enough time for nonprofit employers to plan for personnel costs in their budgets; and that the administration should take into account the limitations of nonprofit budgets in setting the minimum salary threshold.
ASAE is working with a broad coalition to support legislation to delay implementation and make changes to the salary threshold. A bill introduced July 17 by Rep. Kurt Schrader (D-OR) would incrementally phase in the new salary threshold over the next three years to give businesses adequate time to adjust to the new standard while also ensuring workers are fairly compensated. The bill would also eliminate the provision that allows for automatic updates to the salary threshold every three years.
This bill is widely viewed as a reasonable compromise that can win bipartisan support, and ASAE is advocating that Congress pass it. We will continue to monitor this issue closely.