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STATEMENT: NRCA disappointed with DOL's final rule regarding overtime pay under the Fair Labor Standards Act

May 20, 2016

The National Roofing Contractors Association is disappointed with the Department of Labor's (DOL's) final rule regarding overtime pay under the Fair Labor Standards Act. The rule is part of the administration's efforts to increase middle-class wages. Although this is a laudable goal, NRCA is concerned the new rule will add an additional paperwork burden and increase labor costs for employers while reducing workplace flexibility and pay for some workers. NRCA outlined these concerns in comments filed on the proposed rule in September 2015.

The new rule is set to go into effect Dec. 1, 2016. It will more than double the current salary threshold of workers who are eligible for overtime from $455 per week (or $23,660 per year) to $913 per week (or $47,476 per year). This will effect an estimated 4 million workers who will now receive overtime pay (minimum of 1 1/2 times a worker's salary) after 40 hours worked in a week.

After the initial increase later this year, the threshold will be updated every three years and tied to the 40th percentile of full-time salaried workers in the lowest-wage region of the U.S. (currently the Southeast). This means the next update will take place Jan. 1, 2020.

Thankfully, DOL did not change the duties test. DOL had made overtures it would make changes to the duties test without outlining a specific proposal in which to review and submit comments. This was concerning as it could have imposed strict requirements to quantify how much time employees spend performing their primary duties as is done in some states.

Employers also will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. However, such payments must be paid on a quarterly or more frequent basis and the employer is "permitted" to make a "catch-up" payment.

An FAQ from the DOL about the rule can be found here:
https://www.dol.gov/whd/overtime/final2016/faq.htm#8
And DOL fact sheet can be found here:
https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm

NRCA recommends members review the wage structure and classification of their employees to ensure they are complying with the rule and to prepare for potential impacts to their payrolls.

NRCA continues to support legislation that would address a number of concerns it has with the rule. S.2707/H.R. 4773, the Protecting Workplace Advancement and Opportunity Act, would require DOL to further analyze the effects the rule has on small businesses. It also would stop any annual increases be made in the future and ensures no changes to the duties test would be made. Congress need to hear from NRCA members about the harmful effects this rule could have on roofing contracting businesses. You can add your voice to the debate and help stop this new regulation that may harm your business by clicking here.



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