New overtime pay rules proposed by the Trump administration could increase operating costs for some electric cooperatives and boost wages for some employees.
“We want to make sure our members are aware of what’s happening since it could affect them,” said Jay Morrison, vice president of regulatory issues for NRECA.
U.S. Department of Labor has announced a plan to raise the amount employees can earn before they become ineligible for overtime pay. It also would change the definition of “salary” to include nondiscretionary bonuses and incentive payments, including sales commissions. Those bonuses and incentives could be tallied to satisfy up to 10 percent of the salary test to exclude executives, administrators and certain professionals from receiving overtime.
Currently, workers who earn less than $23,660 a year qualify for overtime pay under a rule created in 2004. Under the proposed rule, employees earning up to $35,308 a year would be eligible. Employees making more than the threshold could still earn overtime pay, depending on their job duties. The proposal also would leave intact overtime protections for employees in certain job categories, including non-management employees in maintenance and construction.
The impact on individual co-ops would vary based on their existing salary levels, current overtime practices and state overtime laws. For some co-ops, costs could rise because they’d be paying overtime to more employees.
The proposed Trump administration rule stops far short of a proposal by the Obama administration, which would have doubled the salary cap to $47,476 a year for overtime eligibility. It also would have automatically raised the cap every few years based on increases in the cost of living. The current proposal does not provide any automatic hikes in the threshold.
The proposed rule would provide overtime pay to about 1.2 million more employees.
The Obama proposal never took effect because it was challenged in court by 21 states, the U.S. Chamber of Commerce and other business groups. In August 2017, a U.S. District Court in Texas struck down the rule, saying that the Labor Department focused too heavily on how much money workers made and not enough on what their job duties were. The Trump administration decided to rewrite the rule rather than appeal the decision.
Unions have denounced Trump’s proposal for not raising the salary cap higher, while business groups have praised the rule as a reasonable approach.
The Department of Labor is taking
public comments on its proposal through May 21 before issuing a final rule.