WASHINGTON – Yesterday, the House Education and the Workforce’s Subcommittee on Workforce Protection held a hearing entitled, “Examining the Costs and Consequences of the Administration’s Overtime Proposal.” The hearing reviewed an issue of great important to the convenience store industry -- the Department of Labor’s (DOL) recently proposed rule that would raise the salary threshold under which employees must be paid overtime rates for hours worked.

Currently, salaried workers that make more than $455 per week or $23,660 per year are not entitled to receive overtime compensation if they perform certain work duties that primarily involve executive, administrative or professional duties. The proposed DOL rule would dramatically increase the threshold that triggers this so-called “white collar” exemption amount to a number equal to the 40th percentile of weekly earnings for full-time salaried workers – approximately $970 per week or $50,440 annually. The threshold would then automatically adjust to stay at that 40th percentile number as wages change over time. Importantly for c-store operators, the DOL is not currently proposing any changes to the standard duties test for exempt employees but rather is asking the public for input on whether they should be changed and how.

During the hearing, Subcommittee Chairman Tim Walberg (R-MI) said the DOL proposal was both “flawed” and “misguided,” arguing that DOL should have sought “a balanced approach that will strengthen employee safeguards, eliminate employer confusion and uncertainty, and encourage growth and prosperity for those working hard to make a living.” Subcommittee Ranking Member Frederica Wilson (D-FL), on the other hand, contended the proposed rule would restore “a fair day’s pay for a fair day’s work.”

Subcommittee members heard testimony from four witnesses: Elizabeth Hays, Director of Human Resources at MHY Family Services; Eric Williams, Chief Operating Officer of CKE Restaurant Holdings, Inc.; Ross Eisenbrey, Vice President at the Economic Policy Institute; and the Honorable Tammy McCutchen, Principal at Littler Mendelson P.C. on behalf of the U.S. Chamber of Commerce.

Policymakers used the hearing to question how the DOL proposal might affect business operations, including employees’ hours and the type of compensation offered to those employees. Republican members tended to view the proposal with skepticism, worrying the higher threshold would have a negative impact on employers and employees. Committee Democrats argued the proposal would improve the lives of American workers by increasing their pay, reducing their hours, and giving them more time at home with their families.