ABA Offers Suggestions for Potential New Overtime Rule

In the wake of a federal judge invalidating the Obama administration’s overtime rule, the American Bankers Association offered comments on overtime issues to the Department of Labor, which is seeking feedback as part of a Trump administration effort to reduce regulatory burdens on businesses.

Should DoL revisit the overtime issue, ABA specifically urged the department to retain a historic focus on the “duties test” for exempting executive, administrative and professional as well as highly compensated employees from Fair Labor Standards Act overtime requirements. The Obama-era rule relied more heavily on a salary test that would have captured many managerial employees, especially in lower-cost parts of the country.

ABA also urged DoL to use its 2004 methodology for setting salary thresholds rather than inflation, and for updating salary thresholds only through notice-and-comment rulemaking. Finally, ABA urged DoL to consider the effects on employees of being switched from exempt to non-exempt solely based on a salary level. “For previously exempt employees, their morale suffered when they became nonexempt, as did their flexibility in the workplace,” ABA said. “Despite the fact that the status changes had nothing to do with their performance, employees viewed becoming non-exempt as a demotion, even after the communication efforts of their bank employers.” For more information, contact ABA’s Cris Naser.