SUMMER 2019

36 THE DISTRIBUTOR’S

36 THE DISTRIBUTOR’S LINK Jim Truesdell James Truesdell is President of Brauer Supply Company, a distributor of specialty fasteners, insulation, air filtration, and air conditioning with headquarters in St. Louis. Mr. Truesdell is adjunct professor at Saint Louis University and Webster University. An attorney and frequently published writer, he is the author of “Total Quality Management: Reports From the Front Lines”. OVERTIME THRESHOLDS IN CROSSHAIRS AGAIN The Trump Administration’s Department of Labor is following through on an earlier promise to increase the salary level at which supervisory and managerial employees become subject to the overtime rules mandated by the Fair Labor Standards Act. This takes us back to the 2016 cliffhanger when a federal judge’s last minute ruling stopped a President Obama backed DOL rule which doubled the threshold and had businesses up in arms. On March 7 of this year the Department issued a proposed rule for comment that took a more moderate stance, but nevertheless offers some real relief for those employees who might be feeling victimized by employers who squeeze long hours from those workers they place in management positions without really giving them fair salaries. The timing of this is interesting. By putting this change out there in 2019 perhaps the President is hoping to have the issue resolved before the presidential campaign begins in earnest. But the Democrats could take a position opposing the rule as inadequate, blocking it and putting the minimum numbers proposed in the center of political debate, and hope to come back with a stronger proposal if they capture the White House. The risk for them is that they could be pictured as standing against enactment of worker relief. So what are the provisions of the new proposed rule for which a 60 day comment period is now under way? Under current law, workers with salaries below 5 per week (,660 annually) have to be paid overtime (time and a half rate) if they work more than forty hours in a week. This minimum level has not been changed since CONTRIBUTOR ARTICLE 2004. In 2016 the controversial Obama rule was set to more than double this level. Many companies gave out raises or changed job classifications as the effective date approached but then, at the last minute, a federal court in Texas ruled on a case challenging the rule and stopped the change in its tracks. Since the ruling came only days before the effective date some companies had altered their compensation systems and some had not. Few who had already acted could reasonably reverse their actions so it was problematical for many companies. With the Fall elections that year Donald Trump became president. As a result little was heard about this issue for two years. Now the new proposal is out there and it calls for a more reasonable rise to 9 per week or ,308 annually. In preparation for this, some 200,000 plus comments were received in response to a 2017 request for information. As before, the dollar thresholds alone are insufficient to “exempt” workers from overtime. They also must meet three tests. Those are that (a) they have a predetermined fixed salary not subject to reduction based on quality or quantity of work (b) they meet the specified dollar earnings limit and (c) they primarily perform executive, administrative, or professional duties. The Labor Department has estimated that this will benefit over 1.1 million employees who are currently regarded as exempt because they make at least 5 per week but less than 9. The rule also will significantly raise the level for determining who is a “highly compensated employee” (even if not management) who might not otherwise qualify for overtime. CONTINUED ON PAGE 138