A proposed overtime regulation from the Department of Labor is drawing mixed reviews from the two major national credit union trade associations.
This proposal, part of the Fair Labor Standards Act, is the latest iteration of a
The
Andrew Morris, senior counsel for research and policy for the National Association of Federally-Insured Credit Unions, characterized the new proposal as a “substantial improvement” over the previous rule, noting specifically the new rule’s proposed salary level is “reasonable.”
In a letter to Melissa Smith, DOL’s director of regulations, legislation and interpretation, wage and hour division, the Credit Union National Association called the new proposal more “sensible” and “modest” compared to the previous rule. However, Alexander Monterrubio, CUNA’s senior director of advocacy and counsel, said CUNA “remains concerned” about the potential for an “inordinate impact” on small entities and possibly those located in certain geographic regions.
CUNA’s letter highlighted the ways 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,” 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.”
NAFCU's Morris said the new proposal includes a NAFCU-sought recommendation to remove the requirement for automatic, three-year adjustments to the salary level. Speaking to Credit Union Journal earlier this year, a NAFCU representative said the proposal
Morris said NAFCU asked the DOL to consider other methods to reduce potential negative impact on credit unions, including:
- Creating 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.
“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,” Morris said. “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 noted the 2016 Overtime Rule increased the salary level for overtime exemption to $47,476 annually, which would have been an increase from $23,660 annually. Monterrubio said the new proposed regulation, while “more modest,” has the potential to create a regulatory burden.
“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.”
Monterrubio said CUNA remains 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.
