ARLINGTON, Va.—Proposed changes to rules governing overtime could have a substantial—and unintended—consequences for credit unions, and NAFCU is raising a number of related concerns in a comment letter to the Department of Labor.
CUToday.info earlier reported on how credit unions could be affected by the proposed changes to the Fair Labor Standards Act here and here, which would apply to certain full-time salaried workers and would make them eligible for overtime protections.
In its comment letter, NAFCU said it is concerned “the proposal does not adequately consider geographic salary differences or provide exceptions for non-salary based employee advancement opportunities such as travel time for conferences and training events.”
“Currently, in order to meet the ‘white collar’ exemption a worker must meet each of the following three tests: (1) the salary basis test; (2) the salary level test; and (3) the duties test,” NAFCU wrote. “This proposal will change the second part of the white collar exemption related to the ‘salary level test.’ The DOL is proposing to update the current salary level to allow any full-time salaried worker making less than $970 per week, or $50,440 annually, to be eligible for overtime pay at a rate of not less than one and one-half times the employee’s regular rate for hours worked over 40 in a workweek. NAFCU and our members are concerned that this drastic change from the current salary rate of $23,660 annually could have severe unintended consequences for the recovering U.S. economy and labor market. We would caution that while the labor market is improving nationally, the recovery is tenuous and could be subject to future shocks such as an increase in interest rates.”
NAFCU noted that the DOL proposal suggests that employers could choose to raise the salary of existing employees in order to remain exempt from the cap, but added, “it is simply not feasible for many small community-oriented credit unions to impose a blanket raise for existing salaried workers to the $50,440 threshold. Most small to midsized credit unions do not have the overhead margins to absorb that cost without a detrimental impact on the services that could be provided to consumers. NAFCU is concerned that the DOL proposal fails to adequately address the needs of small businesses. including credit unions around the country that operate with very small financial margins in a highly competitive service-driven marketplace.”
NAFCU raised a number of other concerns it has with the proposal in the letter, as well.