Labor Department Should Halt Overtime Rulemaking, NACS Says

Amid supply chain snarls, staff shortages and inflation, now is not the time to change the overtime rule.

May 16, 2022

Labor Department Exterior

ALEXANDRIA, Va.—NACS last week joined with 92 other groups in signing a Partnership to Protect Workplace Opportunity (PPWO) letter urging U.S. Secretary of Labor Marty Walsh to abandon or at least postpone the Labor Department’s proposed rulemaking altering the overtime regulations under the Fair Labor Standards Act (FLSA) for certain white-collar workers.

Last fall, the Labor Department announced its plan to issue a NPRM on the “exemption of bona fide executive, administrative, and professional employees from the FLSA’s minimum wage and overtime requirements” (also known as the “white-collar” exemptions).

Labor law attorneys expect the Department of Labor to recommend higher salary thresholds for the rule’s white-collar exemptions, meaning more employees would be eligible for overtime pay. As of January 1, 2020, employers are required to pay overtime for all employees earning $684 a week (or $35,568 per year) or less per year.

During department listening sessions over the past two months, employers have warned that “the economy today cannot support changes to the white-collar exemptions under the FLSA,” the PPWO letter states.

“Due to significant concerns with supply chain disruptions, workforce shortages, inflationary pressures, and the shifting dynamics of the American workforce following the COVID-19 pandemic, any rule change now would be ill-advised. Importantly, DOL last updated the overtime regulations only three years ago, which strongly suggests there is no need for urgency in issuing more changes.”

The group called for scrapping or at the least delaying the rulemaking “until the current economic situation stabilizes and improves to allow the American workforce, employer community, and DOL itself to more fully understand how the pandemic has shifted the paradigm of work in America.”

Formed in 2014, the Partnership to Protect Workplace Opportunity is a coalition of associations, businesses and other stakeholders representing employers with millions of employees across the U.S. in almost every industry. The PPWO advocates for the interests of its members in the regulatory debate on changes to the FLSA overtime regulations.

PPWO’s members believe that employees and employers alike are best served with a system that promotes maximum flexibility in structuring employee hours, career advancement opportunities for employees, and clarity for employers when classifying employees.

“Industries across the country are still recovering from the impact of the COVID-19 pandemic,” the letter states. “Inflation is at a 40-year high, supply chains are struggling to keep up with demand and businesses nationwide cannot hire enough workers to operate at full capacity. At the same time, we are seeing economic contraction in some sectors and face the specter of both inflation and a recession. Many businesses are not well-positioned to absorb new labor costs associated with changes to the overtime pay regulations, and such changes would only exacerbate the difficulties businesses are currently facing.”

The letter notes that the move toward remote work, hybrid work and more part-time work has changed the labor landscape. “This ‘new normal’ makes compliance with potential changes to the white-collar exemptions measurably more difficult. To comply with overtime regulations, employers will be obligated to monitor non-exempt employees’ worktime, but that may not be compatible with these new workforce dynamics. Consequently, changes to the white-collar exemptions may leave many workers unable to enjoy the part-time or remote work they’ve come to appreciate,” the letter states.