New OT rule praised, others say it goes too fast, too far

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By James McCarthy

The U.S. Department of Labor issued its long-awaited final overtime rule on Wednesday, more than doubling the exempt employee threshold from the old level of $23,660 to the new one of $47,476 — which is slightly less than the $50,440 level that had been part of the original proposal issued last year.

In addition to raising the salary threshold indicating eligibility for most white-collar salaried workers from $455 per week to $913 per week, the U.S. DOL said in its announcement the final rule will:

Automatically update the salary threshold every three years, based on wage growth over time, which the Obama administration says increases predictability.

Strengthen overtime protections for salaried workers already entitled to overtime.

Provide greater clarity for workers and employers.

“For decades, the salary threshold under which all white-collar, salaried workers qualify for overtime has failed to keep up with the rising cost of living,” U.S. Labor Secretary Tom Perez said in a statement. “In 1975, 62% of full-time salaried workers were eligible for overtime protection based on their pay. Today, only 7% are eligible under the outdated salary level. The current salary level is so low that it does not effectively identify which white-collar workers are entitled to overtime protection. That is an economy out of balance.”

The updates will impact 4.2 million workers nationwide who will either gain new overtime protections or get a raise to the new salary threshold. The effective date of the final rule is Dec. 1.

It’s unclear just how many workers in Maine will be affected by the new threshold. A May 2 report issued by U.S. Sen. Elizabeth Warren, D-Mass., projected the new rules could quadruple the number of workers in Maine who would be covered by the new salary threshold — rising from 16,000 to 64,000 workers. More than half of those benefiting in Maine — 25,000, or 52% of the projected increase in eligibility — are women, while 22,000 (46%) are men, according to her report.

But a fact sheet of the 50 states accompanying the U.S. DOL’s release shows only 16,210 workers in Maine would be affected.

Jeanne Paquette, Maine’s commissioner of labor, issued the following statement indicating that her department is available to provide compliance assistance to both employers and workers to help them understand what the new requirements are, how they differ from the current rules and the steps that would need to be taken to comply.

“As the first step, we urge employers to review the job duties currently being performed by their employees — not only job titles or job descriptions — who fall into the salary range between the old and new exempt thresholds. In addition, we encourage employers who have questions to reach out to their employment compliance advisers. We want employees to be accurately compensated.”

Maine AFL-CIO President Cynthia Phinney applauded the new overtime rules in a written statement: "Maine workers are putting in longer hours and still not getting ahead. One big reason is that many workers have been suffering from unfair federal overtime rules that have fallen woefully out of date. Updating these rules is long overdue and we applaud the Department of Labor for taking this much needed step.”

“For far too long, workers who are classified or misclassified by their employers as executive, administrative or professional have been putting in extra hours without getting paid for them. It's pretty simple — working people should get paid for all the hours we work. This rule restores the basic principle that an honest day’s work deserves a fair day’s pay. This is a big win for working families. Millions of workers will either get more money in their pocket or more time with their families while making the same pay.”

Sen. Collins cosponsors bill to nullify the rule

Not so fast, says U.S. Sen. Susan Collins, who is cosponsor of the “Protecting Workplace Advancement and Opportunity Act,” which would nullify the rule and require the U.S. DOL to take into account the effects it and any future rules would have on small businesses, as well as differences in geographical regions and impacts on lower-wage industries.

“This new rule will be extremely damaging to small businesses, universities, nonprofit organizations and service industries, particularly in rural states like Maine,” she said in a written statement. “While I support an increase in the salary threshold, a huge and sudden increase like this could hurt workers and employers alike and limit the services provided by nonprofits and educational institutions.”

Collins noted, for example, the University of Maine system “has estimated that this new rule change could increase its operating cost by up to $14 million in a single year.”

Modern Healthcare, a leading health care business publication, notes that hospitals and many health-related employers are likely to be impacted by the new rules.

“Health care professions that will likely be affected by the overtime threshold increase are nurses, medical and physical therapist assistants, medical and pharmacy technicians and paramedics,” the online publication stated. “Average mean salaries in these professions range from $25,710 to $47,010. That includes approximately 4.1 million workers, according to 2015 data from the U.S. Bureau of Labor Statistics.”

The Society for Human Resource Management anticipates the new OT rules will have a big impact on retailers, call centers, restaurants and hospitality employers, among other professions.

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