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SBAM supports critique of proposed federal overtime rules

September 9, 2015

The Small Business Association of Michigan’s (SBAM) national affiliate the National Small Business Association (NSBA) recently submitted comments warning against the Department of Labor’s (DOL) proposed rules on overtime pay. In addition to the massive threshold increase, NSBA also criticized the DOL’s process for not allowing an appropriate time frame for stakeholders to properly study and survey the far-reaching impacts the rule will have.

“Beyond the 113 percent increase in salary threshold, the Department raises the possibility of changes to the ‘duties test’ but offers no specific proposals to which businesses can respond” stated NSBA President and CEO Todd McCracken. “Therefore, any such change would be wildly unfair to the millions of small businesses that will be impacted.”

“The cost of compliance for Michigan small businesses will be much greater than estimated by the DOL,” says SBAM’s Vice President Government Relations Tony Stamas. “Many small businesses have no, or very few, non-exempt employees, with most workers being salaried professionals or administrative employees. They do not have timekeeping and payroll systems in place that can accommodate the addition of many more non-exempt employees. Thus, the burden of these changes will fall much more heavily on small businesses than on their larger competitors.” 

Since the release of this rule, NSBA has urged its members to weigh-in on how the 113 percent increase to the salary threshold would impact their businesses, and encouraged small-business owners to comment by the Sept. 4 deadline. Unfortunately, the summer release coupled with a mere 60-day comment period and a dismissive refusal to extend the comment period by the DOL indicates a clear intent to stymie small-business input into the process.

Among the key issues raised in NSBA’s comments: changes to the duties test are likely to miss the fact that there is no bright line between “exempt” and “non-exempt” in the typical small business workplace; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be “downgraded” from exempt managers to non-exempt workers.

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