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HR Leadership Column

http://www.hreonline.com/HRE/images/SusanMeisinger106x106.jpgMaking a Difference on Overtime Regs

As the Department of Labor begins to revisit overtime regulations, HR leaders would be wise to revisit their organization's own situation and let their voices be heard.

Monday, April 14, 2014
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I'm moving soon, so I've been sorting through boxes of files I haven't looked at in decades. It's like an archeological dig into my past.     

In one box, I discovered copies of regulatory proposals that had been under consideration while I worked at the Employment Standards Administration of the U.S. Department of Labor. The agency has since been reorganized out of existence, but when I headed it up in the 1980s, it included the federal workers' compensation program, the Wage and Hour Division, and the Office of Federal Contract Compliance Programs.

One of the thickest sets of regulatory proposals buried in the box dealt with the Wage and Hour Division's overtime regulations – or, more specifically, 29 C.F.R Part 541, "Overtime Exemption Regulations for Executive, Administrative, Professional, Computer and Outside Sales Employees." The Department of Labor had issued an advanced notice of proposed rulemaking to determine whether the salary thresholds should be changed.

These are the regulations that determine who is or isn't exempt from getting paid overtime.

We never made any changes, and the regulations were virtually unchanged until a revision was made in 2004.

There are many reasons why no regulatory changes were made during my time at the Labor Department, most of which were political. But part and parcel of the politics surrounding changing the overtime-exemption regulation was the recognition that any change to the rules governing who is exempt from overtime requirements would impact every employer in the country.

Any regulation that impacts every employer has a long, complicated road to go. No matter how much you try to draft the rules to be easily understood and simple to implement, rules that are expected to cover every workplace, every industry, every income level, every type of job, well … it gets complicated.

Even if you shorten the regulations, it doesn't mean you've simplified things. Consider this:  While the last change to the regulations in 2004 reduced their length from 31,000 words to 15,000, the preamble was still approximately 250 pages long. Rules that cover every employer need a lot of explanation.

It's this complicated nature of the overtime-exemption regulations that should be the focus of every HR leader this year, because the White House has directed Secretary of Labor Thomas Perez to "begin the process of addressing overtime-pay protections to help make sure millions of workers are paid a fair wage for a hard day's work and rules are simplified for employers and workers alike."

Currently, the determination of whether someone is exempt from overtime involves a combination of salary and duties tests, with a salary of at least $455 per week being required. That means someone who is paid as little as $23,600 per year -- and also meets the duties test -- can be exempt from being paid overtime.  

If adjusted for inflation, that $455 number would increase to about $560, but some reports suggest that a much higher number is being considered by the Department of Labor. The Employment Policy Institute, for example, has urged the administration to increase the salary test to at least $1,000 a week.

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A change won't happen overnight. The Department of Labor must first publish a notice of the changes it's proposing and solicit comments from the public. The comments then have to be reviewed, and internal policy discussions held on what -- if any -- changes should be made based on these comments. Once redrafted, the new set of regulations then has to go through a White House review before it can be finally published. The process could easily take more than a year -- but it will certainly conclude before the next presidential election.

I outline this process because I want to encourage HR executives to become part of it. The regulations governing exemption from overtime impact your organization in some way; and whatever gets proposed is likely to impact your organization, too. Take the time to analyze what that impact might be. If you think some of the regulatory provisions will be harmful, submit comments to the agency explaining the harm and make recommendations on how the regulations could be improved. If you think any part of the proposal is helpful, let the agency know this, too. If you'd prefer not to comment on behalf of your company, do so through a professional society or trade association.  

I know from personal experience working at the Department of Labor that comments often do lead to changes in proposed regulations.  They really do make a difference.

In short, if HR wants to be viewed as a respected profession, it behooves HR leaders to provide their professional opinions on such matters of significance that directly impact their field. Don't let the opportunity pass you by.

   

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

 

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