On May 17, the U.S. Department of Labor (DOL) issued a new rule for the nation’s overtime regulation. According to the DOL, the rule will serve to:

• Raise the minimum salary threshold from $23,660 to $47,476 a year, or from $455 to $913 a week to qualify as exempt from overtime requirements
• Raise Americans’ wages by an estimated $12 billion over the next 10 years, with an average increase of $1.2 billion annually
• Extend overtime protections to 4.2 million additional workers who are not currently eligible for overtime under federal law
• Update the salary threshold every three years
• Raise the “highly compensated employee” threshold – from $100,000 to $134,004 – above which only a minimal showing is needed to demonstrate an employee is not eligible for overtime
• Respond to employers’ concerns by making no changes to the “duties test” and allowing bonuses and incentive payments to count toward up to 10 percent of the new salary level

The DOL notes that under the rule, employers will be required to raise the salaries of employees to or above the salary level to maintain their exempt status, pay overtime in addition to the employee’s current salary when necessary or evaluate and realign hours and staff workload.

The Automotive Service Association (ASA) is encouraging its members to review these rule changes relative to their businesses prior to Dec. 1, 2016, when the final rule takes effect. For more information, click here.

The Auto Care Association also issued a statement last week noting it was “disappointed” in the ruling. In comments previously submitted, the association stated that, “This unprecedented, industry-wide reclassification of a significant portion of our workforce will be severely disruptive to current levels of employee wages and benefits, and the very real probability of the consequent change (negative) in employee morale will affect every aspect of our day-to-day business functions.”

“Members fortunate enough to be aware of the coming changes are already beginning the reclassification of many employees as well as revisiting overall wages and benefits,” said Bill Hanvey, president and CEO, Auto Care Association. “One association member has already advised us that he ‘has to inform 10 percent of his employees that they are now hourly, not salaried’ and he doesn’t know how to deliver that message. Even more troubling is the large number of companies in the auto care industry who remain unaware of the change in regulation and its consequences.”

“No one is arguing that the rules didn’t need updating, but the massive change, all at once, will be financially disruptive and possibly devastating for many businesses. The association and the coalition for the Partnership to Protect Workplace Opportunity are asking members of Congress to support the Protecting Workplace Advancement and Opportunity Act,” said Hanvey.