ARLINGTON, Va.–CUNA and NAFCU have expressed support for improvements in the Department of Labor's overtime rule, but both groups are also offering recommendations for changes, with CUNA further expressing concerns over its implications for smaller CUs.
In its letter to the DOL, NAFCU said the revised overtime rule proposal is "a substantial improvement" over the previous rule and that the proposed salary level is "reasonable."
In the letter, signed by Andrew Morris, NAFCU's senior counsel for research and policy, the trade group noted the proposed rule includes a NAFCU-sought recommendation to remove the requirement for automatic, three-year adjustments to the salary level.
Morris also asked the DOL to consider other ways to reduce credit unions' burden under the rule, recommending:
- Creation of a small entity compliance guide
- Adjusting the 10% limit of the standard level for other compensation such as nondiscretionary bonuses and incentive payments made on an annual or more frequent basis "to accommodate a more diverse range of incentive programs"
- Assessing the impact of the proposal on workforce development resources at highly regulated small institutions, such as credit unions, before proceeding with future salary level adjustments
- Conducting an assessment of the four-year review of the salary level shortly after the first adjustment cycle
‘Careful Consideration’
"We ask that the DOL carefully consider the not-for-profit mission and cooperative structure of credit unions before making future adjustments to the standard salary level,” the letter reads, “We also ask that the DOL consider additional mechanisms for preserving the viability of small credit unions who serve as a vital source of credit in their communities but face significant challenges when adapting to any major regulatory change.”
CUNA's View
CUNA took a tougher view in its response to the DoL on the proposal, and urged the Department to further consider how the current proposal would create excessive costs and compliance burdens for credit unions.
“The proposal attempts to strike a balance between ensuring the salary level test is consistent with present day practice while also avoiding a sudden jolt to the resources of small employers,” CUNA Senior Director of Advocacy & Counsel Alexander Monterrubio wrote. “CUNA agrees the proposal provides a more sensible balance of those two goals than the 2016 Overtime Rule, which we expressed serious concern about at the time."
The 2016 Overtime Rule, which increased the salary level for overtime exemption to $47,476 annually (up from $23,660 annually), while more "modest," said CUNA, still has the potential to burden small financial institutions as well as those located in rural or underserved areas.
“The Department’s proposed increase in the salary level threshold for an employee to qualify for the “white collar” exemption is modest compared to the 2016 Overtime Rule, but even modest increases have the potential to strain small credit unions’ finite resources," the letter reads.
CUNA added it is concerned about the negative effect the rule will have on smaller credit unions and those in rural or underserved areas, as well as with a “one-size-fits-all” national standard for salaries.
The full CUNA letter can be found here.