The U.S. Department of Labor (DOL) has recently proposed a rulemaking change that has ruffled feathers in the construction industry and beyond. This change, concerning the Fair Labor Standards Act, seeks to adjust overtime regulations, raising eyebrows and concerns among industry leaders.
Background on the Overtime Rule
The Wage and Hour Division of the U.S. Department of Labor last week announced a new proposal to expand overtime eligibility, expanding overtime to anyone earning less than $55K per year, for companies earning over $500K annually. That means that salaried employees who earn $1,059 per week or less would be entitled to overtime pay for working more than 40 hours per week. While the proposal blurs the line between hourly and salaried workers at $55K, it allows for overtime exempt executive, professional, and administrative employees.
Additionally, this threshold would see automatic updates every three years. On the surface, this move appears to be a step towards ensuring that employees are fairly compensated for their overtime work.
The background to this current proposal is rich with debate and political influences. The DOL’s last update to the overtime regulations was in 2020, a mere three years ago. Before that, the Obama administration in 2016 had attempted to double the minimum salary level for exemption, a move that was successfully blocked in federal court. The Trump administration, in 2019, readjusted this to $35,568 per year, a rule that took effect in 2020.
Challenges for the Construction Industry
However, industry leaders, including the
Associated Builders and Contractors (ABC), have voiced significant concerns regarding the timing and implications of this proposal. Ben Brubeck, ABC’s vice president of regulatory, labor, and state affairs, highlighted the challenges industries like construction are currently facing. From inflation and global supply chain disruptions to rising material costs and workforce shortages, operational costs are skyrocketing.
Brubeck lamented, “It is unfortunate that the DOL did not listen to our repeated requests to abandon or postpone issuance of the proposed overtime rule.” The sentiment is clear: building industries are seeking stability in an already tumultuous economic landscape. Introducing new regulations, especially ones that could increase operational costs, might not be the best move at this juncture.
Furthermore, ABC, as part of the Partnership to Protect Workplace Opportunity, had previously urged the DOL to reconsider or at least delay this rulemaking. Their argument? The last update was just three years ago, suggesting there’s no pressing need for another change so soon.
Conclusion
While the intentions behind the DOL’s proposed rule might be to ensure fair compensation, the timing and potential economic implications cannot be ignored. As the construction industry navigates the challenges of the current economic climate, the question remains: Is now the right time for such a change?
