House Committee Hears Doomsday Predictions On Impact Of New FLSA Rules

Now that the new DOL exemption rules have issued, commentators have had time to reflect on what these changes may mean for business. A few days ago, a House of Representatives committee heard that the new rules will hinder the ability of businesses to offer flexibility and advancement to newly overtime-eligible workers. To the contrary, the head of the DOL championed the new rules as a great victory for middle-class employees.

Under Chairman Rep. John Kline, R-Minn., the House Education and the Workforce Committee was looking at the potential effects of the rules. A management side attorney told the committee that the changes could lead to a host of potentially negative impacts from converting employees to non-exempt status. He opined that there would be reduced flexibility for workers, limited career advancement opportunities and weakened employee morale. He warned that there would also be more (as if we need it) FLSA litigation.

The lawyer noted that "in the short period of time since the revisions were published, it has become clear that it will be incredibly difficult for many employers to implement. Complicating the analysis is the fact that the Department's revisions would require employers to revisit these issues every three years, deciding whether continued classification of an employee as exempt is worth the new threshold salary increase."

Another witness, a VP for HR from a major university, warned committee members that the overtime changes will be "difficult to absorb without significantly impacting university services." She also stated that the University would be forced to reclassify employees whose jobs were well-suited for exempt status.

The committee Chairman himself warned that the rule "will do more harm than good" and will adversely impact, to a greater extent, lower-income workers and younger Americans. The Chairman stated that "this rule will disrupt the lives of countless individuals and do nothing to remove the regulatory landmines that are harmful to workers and employers. He added that "workplaces are more dynamic and innovative than they have ever been, and the needs of today's workers are much different than for those who worked when the [FLSA] was written more than 75 years ago."

The Takeaway

I am not sure that these doomsday predictions are entirely accurate. Businesses will lose some flexibility, but they may gain some certainty and peace of mind. For those employees whose duties are currently borderline in terms of exemption, the salary changes make it "easier" for employers to now make them non-exempt and hourly and not have to worry about lawsuits challenging their exempt status.

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