NMHC/NAA asked the Department of Labor (DOL) in a letter sent on August 22 to modify regulations that would generally require multifamily firms to pay overtime to employees earning under $47,476. Responding to a request for information, the apartment industry recommended that DOL index the current $23,660 overtime threshold for inflation.
If eventually enacted the overtime pay threshold from would be increased from $23,660 to $47,476. The rule, which was set to take effect in December 2016, is not operational due to a Federal judicial injunction. Notably, during his confirmation hearing, Secretary of Labor R. Alexander Acosta indicated a threshold of around $33,000 might be appropriate. DOL in July began to solicit comments about how the rule should be structured.
NMHC/NAA have continued to work to overturn this rule since its initial introduction as it would harm the ability of multifamily employers to implement, and their employees to take advantage of, flexible scheduling options. Experts contend that the final rule will demote many employees from salary to hourly pay, harming employee morale. The final rule would also limit career advancement opportunities for employees. Those nearing 40 hours of work in a week may not be able to participate in training or other opportunities because the employer is unable to provide overtime compensation for the hours spent.
The Trump Administration signaled in late June its opposition to DOL’s overtime regulation and asked a Federal appeals court to rule it could use salary levels to set a lower threshold.
The Fair Labor Standards Act (FLSA) generally requires employers to pay employees at least one and one-half times their regular rate of pay for any hours they work beyond 40 in a workweek. But an employee would be exempt if:
- The employee is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
- The amount of salary paid meets a minimum specified amount (currently $23,660 but $47,476 under the rule); and
- The employee’s job duties primarily involve executive, administrative or professional duties as defined by the regulations. Notably, the final regulation does not change this requirement. Thus, employees paid over $47,476 may remain exempt from overtime if they meet the duties test and are salaried.
The final overtime rule ties the wage threshold to the 40th percentile for salaried workers in the lowest-wage region of the Labor Department’s five established wage regions: Northeast, Southeast, Midwest, Southwest and West. If the rule is allowed to move forward in its current form, the threshold would be updated every three years at the 40th percentile for salaried workers in the lowest-wage region, which is currently the Southeast and it’s likely to remain this region in the future.
More information on the overtime rule can be found here.