WASHINGTON—Both NAFCU and CUNA are concerned for credit unions over the Department of Labor’s final overtime rule.
The rule was released Wednesday and goes into effect Dec. 1. The new rule will raise from $23,660 to $47,476 the salary threshold at which employees are eligible for overtime pay under the Fair Labor Standards Act.
In addition to the threshold change, the department says the final rule:
- Provides for automatic updates of the salary threshold every three years on Jan. 1, based on wage growth over time;
- Strengthens overtime protections for salaried workers already entitled to overtime;
- Provides greater clarity for workers and employers.
According to a White House fact sheet on the rule, employers will be able to count bonuses and commissions toward as much as 10% of the salary threshold. The rule makes no changes in the duties test for executive, administrative and professional employees, the department said.
Meanwhile, the threshold for a “highly compensated employee” subject to the minimal duties test will rise Dec. 1 from $100,000 to $134,004.
Under the automatic update provision, the salary threshold for overtime eligibility is expected to rise to more than $51,000 with the first update on Jan. 1, 2020, according to the fact sheet. The final rule makes no changes in the duties test for executive, administrative and professional employees, the department said.
“NAFCU and our members support efforts to update the current regulations to ensure that all American workers are granted access to fair pay for their hard work, but we are concerned that this rule will have severe unintended consequences and actually impede growth opportunities for many white collar workers,” said Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “Many small businesses, including credit unions, operate in underserved and non-urban communities, with very low financial margins in a highly competitive service-driven marketplace. NAFCU is concerned they simply will not be able to absorb this large increase without directly impacting the services they provide. Ultimately, this rule could hurt the very people it is trying to help.”
CUNA stated that it remains concerned about the rule’s increased burden on credit unions.
“Several CUNA-suggested changes were included, but CUNA believes credit unions, especially smaller credit unions and those in rural and underserved areas will still face regulatory burdens as a result of the rule,” the trade association said. “While the DOL made some changes to the salary threshold, it is still approximately twice the previous threshold, and the final rule will sweep in a large number of credit union employees.”
NAFCU and CUNA said they are analyzing the final rule to assess its full impact on credit unions.