TIA Joins Business Industry Leaders on Proposed Overtime Rule

TIA joined with fellow members of the Small Business Legislative Council (SBLC) to comment on proposed updates to federal overtime regulations. The Trump Administration proposed a new rule in March, which would fully rescind the 2016 Obama Final Rule on this issue (currently under stay from a Federal Court and continued litigation), and increase the salary level tests for exempting certain employees from overtime pay.

The new rule would return to the methodology used in the 2004 update to the salary level test, providing a consistent basis for the updates that will impact business owners nationwide, and increase that level from $23,660 annually to $35,308 (rather than the Obama Administration’s 2016 proposed increase to $47,476).  The proposed rule would allow employers to include bonuses and nondiscretionary compensation to meet up to 10% of the salary level test, a change to the 2004 rule that was included in the 2016 rule).  The rule would also increase the 2004 Highly Compensated Employee salary level test by the same methodology, increasing that exemption level from $100,000 in total compensation to $147,414 in total compensation (provided the employee makes at least $35,308 on a salary basis). No changes to the duties tests, which accompany the salary level and salary basis tests for exemption, were included in the final rule.

TIA and the SBLC agree that increases in the salary level tests should be phased in, that employers should be permitted to count nondiscretionary bonuses and incentive payments as a higher percentage of the salary threshold, and that the Department should undertake formal rulemakings for future increases or changes to regulations.  This position is consistent with comments filed by TIA to a 2017 Department of Labor Request for Information on the issue, where TIA encouraged the Department to:

(1) maintain a single, federal standard applicable across all state lines, because TIA members should not have the underlying costs of their work in interstate commerce distorted by favorable salary standards in specific regions;

(2) allow for bonuses and nondiscretionary compensation to account for a larger part of the salary level test, because the 3PL industry provides head-of-household incomes to thousands of employees through incentive-based compensation; and

(3) allow more time for businesses to understand and adjust to new regulations.

Federal labor regulations can create significant headaches for business owners across the country and throughout the 3PL industry.  TIA closely monitors all legislation and regulations to advocate for your business on these issues.  For more information, please contact advocacy@tianet.org.