Donovan: Roll back of overtime rule would hit 25,000 Vermonters

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Donovan: Roll back of overtime rule would hit 25,000 Vermonters

Mon, 10/23/2017 - 2:55pm -- tim

Vermont Business Magazine Attorney General TJ Donovan joined a coalition of Attorneys General in opposing the US Department of Labor’s efforts to roll back overtime pay protections for 25,000 Vermonters and millions of Americans. The attorneys general submitted comments in response to the US Department of Labor’s (USDOL) Request for Information concerning the executive, administrative, and professional (EAP) exemptions to the Fair Labor Standards Act (FLSA). By this action, the USDOL threatens to roll back the Obama administration’s rule that expanded overtime compensation for workers by raising the salary level test that would limit the number of employees who qualify for the FLSA exemptions.

Donovan said a salary test is an objective test that provides a bright line rule for workers and law enforcement agencies to identify when a worker is misclassified or underpaid in regards to overtime. If fewer workers are eligible for the salary level test, then law enforcement and employers must rely on a duties test which is more subjective and leaves workers more open to exploitation.

Donovan said: “People who work overtime should be paid for overtime. Hard working Vermonters deserve a fair shake.”

"The Obama administration’s overtime rules brought the FLSA into the 21st century, and Attorney General Donovan is, correctly, trying to stop efforts to turn back the clock on these protections. We stand with working Vermonters and will work to prevent further damage to the middle class in our state and across the country," said attorney David Mickenberg on behalf of Working Vermont, a coalition of public and private sector unions in Vermont. 

FLSA overtime rules were established to make sure that no one but higher-level workers with control over their time or tasks are excluded from overtime pay. However, many workers are wrongly classified as having autonomy over their tasks and schedule. Such misclassified workers include first-line supervisors at fast-food stores, car washes, retail stores, and construction sites; administrative employees, such as clerical and office workers; and professional employees, such as medical and dental technicians, mid-level IT employees, and film and television production assistants.

Under the Obama administration, the USDOL issued a new rule raising the minimum weekly salary amount used in part to determine whether an employee should be exempt from the FLSA’s overtime requirement. The increase, from $455 to $913 per week, was an attempt to update salary test from levels established in 1975.

 The attorneys general argue that a meaningful salary test is essential to protecting workers from being misclassified as EAP exempt when they are lawfully entitled to receive overtime for hours worked beyond 40 hours a week. They urge USDOL to set a salary level that is at least as protective as the 2016 Final Rule. 

A meaningful salary level test makes state labor law enforcement more effective and efficient.  A weakening of the salary level test will force employees, employers, and states to rely instead on a fact-specific “duties” test that is more susceptible to exploitation.  Even for well-intentioned, law-abiding employers, a salary level test is a useful bright line. Small businesses may not have sophisticated employment counsel to advise them on the more complex duties test. Without a salary level test, misclassification would be even more pervasive due to employer and employee uncertainty, as well as intentional abuse by employers.  Low-wage workers are particularly vulnerable to exploitation because they generally cannot afford their own private counsel to assist them. 

The attorneys general wrote in part: "Based on our collective experience, if USDOL expands the EAP exemption beyond the scope that was to be set by the 2016 Final Rule, it will result in more workers in our states being subjected to EAP misclassification and unlawful exclusion from minimum wage and overtime protections under FLSA. Weakening the bright-line salary level test and requiring law enforcement to rely increasingly on the easily manipulable “duties” test will make it significantly more difficult to investigate and prosecute EAP misclassification, which remains a pernicious and growing problem in our states.

"Despite federal and state enforcement efforts, rampant violations of labor laws have continued nationwide. A 2009 study of over 4,000 low-wage workers in New York City, Chicago, and Los Angeles found that nearly 26% of workers were paid a sub-minimum wage, and of the workers who had worked over 40 hours in a week, over 76% were not paid overtime in accordance with FLSA. See Nat’l Emp. Law Project, Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, at 20, available at http://www.nelp.org/content/uploads/2015/03/BrokenLawsReport2009.pdf. Workers who were not paid on an hourly basis faced even higher risk of violation, with 46% being paid sub-minimum wages and 92% not being paid overtime. Id. at 30. In other words, at a time when the 2004 salary level test was in effect, there were extremely high labor law violation rates, and salaried workers—who are most at risk of being misclassified as EAP and deprived of their rights under FLSA—were subject to the highest violation rates of all. Since the 2004 salary level has not increased, despite the increased cost of living over the past 13 years, it is reasonable to assume that the rates of violation revealed in this 2009 study are the same, or worse, today."

Click here to read the comments, which were led by New York Attorney General Eric Schneiderman and filed by the Attorneys General of New York, California, Delaware, Illinois, Iowa, Maryland, Massachusetts, Vermont, and Washington.