DOL Releases Final Overtime Ruling
Months of anxious waiting have come to an end – the Department of Labor (DOL) last week released the final revisions to its overtime exemption rule. The new rule, which takes effect December 1, doubles the exempt employee annual salary threshold from $23,660 to $47,476. DOL estimates that the change will impact 4.2 million workers.
Under current rules, full-time, salaried workers who make at least $23,660 per year may be exempt from overtime pay. DOL’s initial proposal would have increased that floor to $50,440, more than a 110% jump. Additionally, the proposal called for automatic increases to the salary threshold, a large bump on the “highly compensated employees” (HCEs) threshold ($100,000 – 122,128 annually) and also sought feedback for changes to the duties test and nondiscretionary bonuses.
The final ruling inches back from the proposed rule, but the threshold still remains more than double the current level, at $47,476, or $913 per week. The threshold for HCEs also soars to $134,004. The new thresholds will also be set to increase automatically every three years.
These changes come as a big win for labor groups, which have been pushing for an update to the current overtime rules. The hope is that the additional pay will help many laborers lift their families out of poverty – as proponents of the new rules claim the current salary threshold is too close to the poverty level for a family of four.
Many chambers and small business owners expressed concern over the problems that the new regulations may cause. They claim that rather than boosting pay, many workers will find their hours cut, benefits rolled back or flexibility decreased in order to avoid or offset having to pay additional overtime. The administrative burden is also of significant concern – with organizations having to assess each employee’s new eligibility, and in the case of those who will remain below the threshold, time and hassle of tracking and reporting time.
The Lubbock Chamber quickly expressed their “disappointment” over the final ruling, saying the federal government may have been hasty in making their decision before a study of the full economic impact could be done. Likewise, the Columbus Chamber issued their own statement of concern about the impact on small businesses and the workers they employ, also suggesting the Secretary of Labor should “conduct a detailed and extended economic analysis."
Compliance will be a major concern for businesses of all sizes, and many chambers will help educate their members. The Greater Des Moines Partnership and other chambers have already announced seminars and trainings around the new rules to help member businesses understand what they will be required to do – to assess their employees for raises, reclassification, or other changes.
Still, some hope to block or adjust the new rule before it goes into effect at the end of the year. Lawmakers in the House and Senate also introduced last week the Protecting Workplace Advancement and Opportunity Act, in order to ensure what they call a more “balanced and responsible approach” to updating the federal rules. House Subcommittee on Workforce Protections Chairman, Tim Walberg (R-MI) stated “Our nation’s outdated overtime rules are in need of modernization, but it must be done in a responsible way that doesn’t stifle opportunities for working families to get ahead.” Stay tuned to the ACCE Government Relations Division for more on that.
In the meantime, several organizations have provided resources that may be helpful to chambers and their members:
- Society for Human Resource Management FLSA Overtime Rule Resources
- The DOL has provided guidance specific to nonprofits on the new pages: overview and guidance.
- Venable LLP has a an overview webinar covering all relevant FLSA rules in this area as they apply to nonprofits and also tips on governing compensable time for non-exempt employees.
The Facts Are In: Evidence-Based Policymaking Works
Policymakers today face tough budget and policy choices that affect the outcomes they can deliver for citizens. By using "rigorous evidence" to inform these decisions, policymakers can achieve better results by funding public programs that are proven to work. "Rigorous evidence" is data from programs that has been evaluated multiple times and found to be reliable by using rigorous testing methods such as randomized controlled trials and statistically controlled evaluations.
New Mexico has become a national leader with its sophisticated evidence-based approach that measures the costs and benefits of public service programs to improve policy and budget decisions. Since state policymakers began partnering with the Pew-MacArthur Results First Initiative in 2011, they have a clearer picture of the value of taxpayer investments and they can direct resources to the most effective programs. By using the Results First model, New Mexico has:
- Helped inform legislative funding decisions to direct $49.6 million to evidence-based programs that will deliver high returns for New Mexico residents.
- Shifted funds from ineffective programs to alternative programs that analysis shows will improve outcomes for citizens.
- Compared the long-term costs and benefits of critical programs in adult and juvenile justice, child welfare, mental health and substance abuse, and early childhood.
In a Sept. 17 letter to the director of the Pew-MacArthur Results First Initiative, the Greater Albuquerque Chamber of Commerce said "The goals of Results First are aligned with many of the Chamber's policy priorities, including transparency and accountability in government, fiscal responsibility, reducing crime and recidivism, and improving education and child welfare outcomes. Because of this alignment, the Chamber's Board has voted to approve an official position supporting Results First."
New Mexico legislators continue working closely with the state's Sentencing Commission and Corrections Department to support ongoing criminal justice reforms and to explore effective means for reducing crime at lower costs. The same approach will be used in other policy areas such as juvenile justice, behavior health, and public education. Details of the New Mexico experience are available in a new 12-page report, "New Mexico's Evidence-based approach to Better Governance," by the Pew-MacArthur Results First Initiative. It highlights next steps for using the Results First approach and how other state policymakers can benefit from it. The report also offers insights from New Mexico's experience and key considerations for using the approach.
With Results First, governments can reduce wasteful spending, expand innovative programs, and strengthen accountability. For details about building a system of evidence-based governing, see Evidence-based Policymaking: A Guide for Effective Government from the Pew-MacArthur Results First Initiative. This 25-page report explains five key components of evidence-based policymaking:
- Program assessment. Systematically reviewing available evidence on the effectiveness of public programs.
- Budget development. Incorporating evidence of program effectiveness into budget and policy decisions, giving funding priority to programs that deliver a high return on investment of public funds.
- Implementation oversight. Ensuring that programs are effectively delivered and are faithful to their intended design.
- Outcome monitoring. Routinely measuring and reporting outcome data to determine whether interventions are achieving desired results.
- Target evaluation. Conducting rigorous evaluations of new and untested programs to ensure that they warrant continued funding.
Everything You Need to Know About the Fiscal Cliff
Now that the presidential election dust has settled, Congress has reconvened to discuss the fiscal cliff. Here are some comprehensive explanations about what the fiscal cliff is and what could happen if we go off it.
WP WonkBlog: Everything you need to know about the fiscal cliff in one post
Dylan Matthews of the Washington Post WonkBlog explains what it is, how big it is, when it will happen, what will happen to the economy, and what could stop it.
Council of State Chambers, State Chamber Policy Center
A new report by Inforum/University of Maryland, Fiscal Shock: America’s Economic Crisis, finds that the U.S. already is struggling due to Washington’s failure to address the fiscal cliff. The Pew Center on the States is finalizing a report that will evaluate the cliff’s impact on states, looking both at the effect of sequestration on revenue sharing and the expiration of dozens of temporary federal tax provisions on state tax systems. That report is expected in December.
Ron Haskins, co-director of the Center on Children and Families and Budgeting for National Priorities Project at the Brookings Institution, authored an interesting opinion piece: The Fiscal Cliff: Predictable, Reprehensible, but Still Avoidable.
Talking Policy in Nashville
Two weeks ago, a group of 21 metro cities government relations professionals gathered in Nashville for two days of roundtable discussion. You can read the official recap here, but here are photos from our trip to Nashville.
Policy, politics and chamber specifics dominated the discussion with a strict “what happens in Nashville stays in Nashville” code for conversation confidentiality.
“The gathering had the perfect mix of peer-to-peer discussions for those of us in the trenches every day running campaigns and crafting policies that support economic vitality, said George Allen, senior V.P., Greater Seattle Chamber of Commerce. “ We shared backstage secrets for victories and hard-earned lessons from disasters. I left Nashville with new political tools and engagement strategies, not to mention some country music CD’s that simply blow me away. Thanks Nashville!”
“I appreciate the opportunity to meet and share ideas and insights with my Metro Chamber colleagues in a roundtable environment,” said Rob Bradham, V.P., public strategies, Chattanooga Chamber. “Our metro areas face many of the same challenges, and exchanging ideas with my counterparts allows me and my chamber to better serve our members and investors. The interaction allows each of us to sharpen our professional abilities and therefore strengthens our profession.”
“The ACCE Government Relations conference was an absolute home-run,” said Jay Barksdale, V.P., public policy, Dallas Regional Chamber. “I’ve been a public affairs professional for many years, but am relatively new to the chamber world. Spending time with colleagues from around the U.S. who face similar challenges and experience the same rewards of this job was the best professional development in which I have participated. I can’t wait to see this talented and motivated group again!”
For a detailed write up, visit the official ACCE news story.