The American Bankers Association this week joined 243 national, state and local industry trade associations—under the banner of the Partnership to Protect Workplace Opportunity, a coalition of industry trade groups—to urge the Department of Labor to withdraw its proposed rule that would significantly increase the number of employees who are subject to the Fair Labor Standards Act’s overtime and minimum wage requirements.
Under the proposal, employees who earn up to $55,068 annually (and possibly up to $60,209) would automatically be subject to federal overtime and minimum wage requirements. Current regulations issued in 2019 set the salary level at $35,568 annually. Above that level, an employee may be exempted from federal overtime and minimum wage requirements if the employee performs certain duties.
The proposal also would require DOL to update automatically the salary level every three years. In addition, the proposal would increase, to $143,988, the amount of income an employee must receive to be classified as a “highly compensated employee,” or HCE. An employee who earns a salary above the HCE threshold is subject to a less stringent “duties test” to be exempted from federal overtime and minimum wage requirements. The proposal requires DOL to update this HCE threshold every three years as well.
Describing DOL’s proposal as “fundamentally flawed,” the associations said that the proposal, if finalized, would harm the ability of banks and other employers to provide, and employees to take advantage of, remote work and flexible scheduling options; limit career advancement opportunities for employees; and would reduce employee access to incentive pay and a variety of other benefits.
The groups also said that the proposal would result in employees in the same job classification—for the same employer—to be classified and treated differently based on regional cost-of-living differences. Reassigning employees from exempt status to hourly status hurts employee morale, as employees view the change as a demotion, they said.
