On November 7, AGC weighed in against a U.S. Department of Labor (DOL) proposed rule to increase the threshold for coverage of overtime regulations under the Fair Labor Standards Act by nearly 70 percent, from $35,568 to $60,209, for a litany of reasons. As both the association and its coalition partners explain, the proposal would be too much for employers (especially small business construction companies) to absorb at one time and would, accordingly, threaten employees’ future.
The proposal would also result in large numbers of employees being reclassified under the Fair Labor Standards Act as non-exempt employees that would:
- Limit career advancement opportunities for employees;
- Reduce employee access to a variety of additional benefits, including incentive pay; and
- Harm flexibilities allowed for remote work opportunities.
The proposal would also force employees to be reassigned or let go as employers make operational changes needed to achieve the organization’s mission under new pay and staffing paradigms.
In addition, the proposal would automatically adjust the overtime thresholds every three years that would threaten repeats of such issues noted above.
The impracticality of these solutions is reflected in AGC survey results, which show that an increase in the salary threshold at the proposed level will force construction employers to take drastic measures to maintain the integrity of their compensation budgets.
- When asked how their companies would comply with a new salary threshold level, 74 percent of AGC-surveyed construction contractors responded that they would likely reclassify some or all of the impacted exempt workers to a non-exempt hourly status at their current salaries;
- Over 60 percent of respondents expected to institute policies and practices to ensure that affected employees do not work over 40 hours a week;
- 40 percent expected affected employees to lose some fringe benefits;
- 33 percent expected some positions to be eliminated; and
- 23 percent expected to exchange some fulltime positions.
AGC will continue to engage with DOL on this matter.
For more information, contact Claiborne Guy at claiborne.guy@agc.org.