WASHINGTON—The U.S. Department of Labor has issued a final rule on overtime pay, which the Tire Industry Association said is less of a burden to small business than the original changes proposed during the Obama administration.
The new final rule, which Labor issued Sept. 24, increases the threshold level under the Fair Labor Standards Act exempting executive, administrative or professional employees from receiving time-and-a-half for the first time since 2004.
The new FLSA threshold for overtime pay is $35,684 or $684 per week, up from the previous limit of $23,660 or $455 per week.
The original rule, promulgated in May 2016 but never put into effect, increased the threshold to $47,776 or $913 per week. Also, for the first time, it allowed automatic increases to overtime pay thresholds and increased the salary threshold for "highly compensated" employees to $147,414 annually from $100,000.
The Obama overtime pay rule received unanimous disapproval from industry groups including TIA, the National Federation of Independent Business, the National Association of Manufacturers and the National Retail Federation.
"There are a lot of managers and assistant managers at tire dealerships," Roy Littlefield, TIA's executive vice president, said at the time. "It's not as if small businesses have closets in the bank filled with money."
The new rule first was issued as a proposal in March 2019 with a request for public comments. TIA submitted its comments in May.
While TIA did not oppose the revised overtime pay levels, it did object to the $147,000 "highly compensated" exemption. The final rule cut this exemption to $107,432.
The final rule also eliminated automatic increases to overtime pay thresholds, "and instead simply committed to more regularly updating the salary thresholds through the notice and comment process," TIA said.
"TIA has consistently opposed automatic increases," the association said. "In doing so, TIA has emphasized that imposing such increases is likely to create a lack of certainly and stability for small employers, who are typically less able to absorb frequent new costs and workforce changes."
The final rule goes into effect Jan. 1.