Copyright: Imilian
The
Labor Department issued its final rule on May 18 that lifts the overtime pay threshold from $23,660 to
$47,476 - impacting an estimated 4.2 million workers nationwide. Effective
December 1, 2016, executive, administrative and professional employees who are
paid by the hour, or earn less than the threshold, will be eligible for
overtime pay.
NMHC and NAA have continued to work tirelessly to
overturn this rule since its initial introduction because, in part, it would
harm the ability of multifamily employers to implement, and their employees to take advantage of, flexible
scheduling options. The final rule would also limit career advancement
opportunities for employees.
According to Politico, the rule
is estimated to raise wages by $12 billion over the next ten years, making it
the Federal Government's most dramatic intervention in the wage economy since
President George W. Bush signed the last minimum wage increase into law in
2007.
On a weekly pay scale, the final rule means that overtime pay for workers would
be raised from $455 to a projected level of $913 a week. And some experts
contend that the final rule will
demote millions of employees from salary to hourly pay. And, while some workers
will have their pay raised, others will see their hours reduced to make room
for lower-wage hourly workers.
Industry Response
NMHC and NAA have taken a multifaceted approach to overturning the rule. Most recently, we joined with the Partnership to Protect Workplace Opportunity (PPOW) coalition in backing introduced legislation, the “Protecting Workplace Advancement and Opportunity Act,” which would block the Obama Administration’s overtime rule. Introduced in both the Senate and House by Senator Tim Scott (R-SC) and Representative Tim Walberg (R-MI), the bill would nullify the rule.
The legislation would also require an economic analysis to be done before moving forward with a new rule. We signed on to PPOW coalition letters to both the House and Senate expressing our support for the bill.
We are currently analyzing the final overtime rule and will update our membership as key additional details and information become available.
What It Means
The Fair Labor Standards Act (FLSA) generally requires employers to pay employees at least one and one-half times their regular rate of pay for any hours they work beyond 40 in a workweek. But an employee would be exempt if:
1. The employee is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
2. The amount of salary paid meets a minimum specified amount; and
3. The employee’s job duties primarily involve executive, administrative or professional duties as defined by the regulations. Notably, the final regulation does not change this requirement. Thus, employees paid over $47,476 may remain exempt from overtime if they meet the duties test and are salaried.
The final overtime rule ties the wage threshold to the 40th percentile for salaried workers in the lowest-wage region of the Labor Department’s five established wage regions: Northeast, Southeast, Midwest, Southwest and West. The threshold will be updated every three years at the 40th percentile for salaried workers in the lowest-wage region, which is currently the Southeast and it’s likely to remain this region in the future.
Related Articles
- PPWO Coalition Letter to DOL on Extending Implementation of the Overtime Rule
- Housing Coalition Letter to HUD on Use of PLAs as Prevailing Wage Determination
- NMHC National Multifamily Industry Compensation Survey
- Construction Industry Coalition Letter to House and Senate Judiciary Committees on H-2B Legislation
- PPWO Coalition Letter to DOL on Overtime NPRM Extension