RILA: DOL overtime proposal creates enormous burdens for employers

Arlington, Va. -- The Retail Industry Leaders Association issued a strenuous objection to what it called the Department of Labor’s “flawed” overtime proposal.



In comments submitted to the DOL, RILA strenuously objected to the proposal to change workforce classification regulations. The proposal would change the rules by which employees are designated eligible for overtime, more than doubling the current salary level threshold for non-exempt employees and leaving the door open to establishing a rigid test for evaluating the primary duties of an employee, according to RILA.




“The dramatic changes proposed by the Department of Labor could undermine many of the things that retail employees value about their work, including flexibility, training and upward-mobility,” said Jennifer Safavian, executive VP for government affairs. “Further, by undercutting employees’ ability to always prioritize serving customers, the rule could negatively impact the shopping experience. We believe that the proposal fails to recognize the realities of the modern workplace and we urge the Secretary of Labor to carefully consider the input provided by the business community.”



RILA’s comments were submitted by outside counsel, Jason Schwartz of Gibson Dunn & Crutcher LLP.





“RILA agrees with the President that certain aspects of the white collar exemptions “have not kept up with our modern economy” and should be “modernize[d] and streamline[d]. Nonetheless, RILA does not agree that, that the proposed rule will either “modernize” or “streamline” the application of the exemptions,” said RILA in its comments. “The proposed rule would set the threshold salary above that earned by many bona fide exempt retail managers and would set in motion a self-perpetuating ladder of increases that bear no reasonable connection to exempt status or prevailing market conditions.”



In addition, RILA noted, “the changes to the duties tests that the Secretary is considering — but has not yet proposed — would embed outdated and inflexible concepts in the rules and foster confusion for employers and employees alike, leading to increased cost, burden and litigation without any meaningful benefit.”



In its comments, RILA raised six substantial issues of concern:



1. A rigid duties test would run counter to the realities of the modern workplace.



2. Any change to the primary duties test must require a public comment period.



3. The more than doubling of the salary threshold unfairly impacts the retail industry and employers located outside of major urban areas, where a substantially lower cost of living affects compensation.



4. The proposed process for annual updates to the salary threshold would create unreasonable burdens without adequate justifications.



5. Non-discretionary bonuses are an important component of salary and should be included in the salary threshold calculation.



6. Sufficient implementation time should be provided.

A link to the full comment letter can be found here.