Overtime rule worries ag industryOvertime rule worries ag industry
June 2, 2016
THE U.S. Department of Labor's final overtime rule, finalized May 18, is causing concern that the rule will create fewer job prospects, less flexibility in the workplace and less opportunity to move up the economic ladder. Under the Obama Administration initiative, 4.2 million workers now are newly eligible to receive overtime pay.
House Education & the Workforce Committee chairman John Kline (R., Minn.) and workforce protections subcommittee chairman Tim Walberg (R., Mich.) said they offered to partner with DOL to responsibly address issues with streamlining and modernizing the overtime rule, but "unfortunately, the department has finalized an extreme and partisan rule that will hurt the very individuals they claim it will help."
A total of 270,000 public comments were submitted to DOL. The American Feed Industry Assn. (AFIA) submitted its comments to the department in September 2015. AFIA said it is not apparent, based on the end result, that DOL took the feed industry's comments into consideration. It asked DOL to take rural businesses into further account, as many of AFIA's members are located in rural areas, where competitive salaries are not comparable to metropolitan wages.
DOL marginally decreased the annual salary threshold — from $50,440 to $47,476 — in the final rule versus what was proposed. Many entry-level management employees in the feed industry typically start with salaries of less than $50,400 per year and often work more than 40 hours a week while they are learning the responsibilities of their new positions.
"The one-size-fits-all approach that will be implemented is unfortunate. Many feed industry small business owners and managers will soon be faced with difficult decisions as they begin implementing the overtime requirements," said Richard Sellers, AFIA senior vice president of public policy and education.
"We fear the increase will cause some employers to no longer allow overtime hours or that they'll cut base pay to offset the expense of overtime pay. It is also possible (that) employee benefits and full-time employees could see cuts," Sellers continued.
AFIA noted the six-month compliance period — the minimum requested in its submitted comments — and acknowledged that the automatic annual salary threshold update requirements, found in the proposed rule, have been elevated to once every three years.
In comments on the proposed rule submitted to DOL last September, the International Dairy Foods Assn. (IDFA) said while it supports the agency's efforts to streamline the regulations, the salary level increase and other changes will negatively affect the dairy industry and hurt the employees it is intended to help.
"The rule limits flexibility, and the burden of complying will cause many companies to absorb the cost, resulting in possible layoffs, reduced earnings, damaged employee morale and limited career growth opportunities," said Emily Lyons, IDFA director of regulatory affairs and counsel. "In addition, the increase in the salary level does not reduce unemployment or ensure that employees are fairly compensated."
In its comments, IDFA said DOL could avoid some of the negative consequences of the rule by setting the minimum salary level at a lower percentile than proposed and by rejecting the provision that allows annual automatic updates to the salary and compensation level.
IDFA noted that the salary level in the final rule, despite doubling the previous standard, reflects a lower percentile than what was proposed and delays the proposed annual automatic updates to every three years. The final rule also includes a provision that allows employers to count non-discretionary bonuses and incentive payments toward 10% of the salary level to determine employee eligibility for overtime pay.
The National Grain & Feed Assn. said it is reviewing the final rule and is "concerned about the potential impact from these dramatic changes on agriculture-based employers" as well as the extent of the impact on its members.
The rule is set to go into effect on Dec. 1, 2016.
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