The National Retail Federation (NRF) is welcoming the Labor Department’s request for public comment on federal overtime regulations as an important first step toward pursuing more reasonable workplace policies.
“Retailers understand that overtime rules need to be updated occasionally but the extreme changes pushed by the Obama administration were too sharp an increase for most businesses to absorb without negative consequences for both employers and employees,” NRF Senior Vice President for Government Relations David French said. “They were simply out of sync with the realities of retail workplaces across the country. NRF supports a more balanced approach that supports growth for businesses and expands career opportunities for employees.”
Under regulations issued during the Obama administration, most workers making up to $47,476 a year would have automatically qualified for overtime, more than double the $23,660 level that previously triggered overtime eligibility. The threshold would have automatically increased every three years.
The rules were scheduled to go into effect Dec. 1, 2016, but NRF and more than 50 other business organizations filed a lawsuit arguing that the increase exceeded the Labor Department’s statutory authority under the Fair Labor Standards Act. An injunction was issued against the rules in November, and they have yet to go into effect.
Under President Trump, the Labor Department today took the first step toward possibly revising the regulations by issuing a request for public comments on overtime regulations. Rather than proposing a new salary threshold or other details, the department asked for input on issues such as the methodology that should be used, whether “duties” tests should be imposed that determine how much non-management work managers can do without having to be paid overtime, and what the impact of the 2016 regulations would have been on employers. Business and other parties will have 60 days to respond, and NRF will submit comments on behalf of the retail industry.
Research conducted for NRF by Oxford Economics found that the Obama overtime regulations would force employers to limit hours or cut base pay in order to make up for added payroll costs, leaving most workers with no increase in take-home pay despite added administrative costs.
The nonpartisan Congressional Budget Office said last fall that canceling the Obama changes would avoid consumer price increases that would come if companies were required to pay more overtime. The CBO found that real family income would be $2.1 billion higher without the changes in 2017 alone, and even families who had an increase in overtime earnings would have a net gain without the changes. While CBO estimated that the new rules would extend overtime eligibility to an additional 3.9 million workers, it said only about 900,000 work enough hours to actually earn overtime pay. And those workers would make only an extra $650 a year, the CBO found.