Now that the USDOL has established $35,000 per year as the new threshold for exempt status, several groups have already taken shots at that new salary level. The deadline for comments has ended and we will see what happens. However, worker advocate groups have assailed the rule and urged the agency to revert back to the Obama level of approximately $47,000. On the other hand, some small business owners decry this new level, asserting it will cause them difficulty for their businesses. In sum, it seems no one is happy.
The new standard sets the threshold at the 20th percentile salary in the country’s lowest-paid regions. Some critics still maintain this is not taking into account that we are dealing with a weak economy. A Dairy Queen franchisee, for example, pays his supervisors a salary of $27,000; these workers, he says, consider themselves part of management, but they would not think of themselves in that way under the new law, when/if they were converted to hourly. Another small business owner asserted that prices would rise, salaried workers would be made hourly or workers would see their hours cut, all of these being unwelcome alternatives. As she said “none of these prove to be a winning solution for business growth.”
The National Restaurant Association labeled the $35,000 as too high. The Association stated that even though the lower paid South was used as the benchmark, there were many higher paying jurisdictions in this region which would skew the results upwards. Thus, restaurants and other small businesses in lower-wage regions would be adversely impacted. Some business groups, however, praised the DOL. The American Hotel and Lodging Association stated that this methodology provided employers with “an easily applied, bright-line rule that protects employees who obviously should not be exempt from overtime pay.”
However, employee advocate groups sharply attacked the rule. Under the Obama-proposed rule, there would be an additional four million employees eligible for overtime. The Center for Law and Social Policy stated that the new level will “undermine the economic security of working families” in that workers will have to work additional hours for just a little more pay. A plaintiff lawyer organization asserted that it was “gravely concerned and disappointed by the unconscionably low salary level” that the new rule would put in place.
The Takeaway
For myself, I think the $35,000 is a reasonable number, a decent compromise. The current 23,000 is way too low and the previously proposed $47,000 was way too high.
You can’t make everybody happy…
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