NRF Opposes Proposed Overtime Regulation Changes As Damaging

By Marco La Vecchia, VP Channel Sales, AVG Technologies

Retailers say the proposal marks a “step back” for career-track workers.

In a September 2 letter, the National Retail Federation has expressed its opposition to a Labor Department proposal that would change salary levels to expand overtime, asking officials to revise the proposal to lower them.

The letter comes in direct response to the Proposed Rulemaking Regarding the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees (80 Fed. Reg. 38, 515, July 6, 2015), RIN: 1235-AA11.

The retail sector is the largest in the United States, providing one in 4 jobs, according to the NRF, or 42 million working Americans, and contributes approximately $2.6 trillion to the annual GDP.

The letter states, “NRF strongly opposes the Department of Labor’s (DOL) proposed changes to the regulations for the Fair Labor Standards Act (FLSA) and is sorely disappointed in DOL’s approach toward updating the exemption tests. NRF believes that attempting to raise employee wages by fiat ignores economic reality and will end up having major negative consequences for employees, employers, and the economy as a whole.”

Research conducted by the NRF predicts that in the event that such proposed changes become finalized, “the changes would result in many managers, who have enjoyed the benefits and sense of pride associated with exemption status, becoming hourly workers. As hourly workers, many of the affected employees would receive reduced compensation and benefits and be diverted from career opportunities that are a path to middle-class success.”

In fact, NRF research had found that the majority of retail managers, who are most likely to be affected by the proposed changes, oppose these efforts.  These managers state that the proposed changes to FLSA regulations “show the Department greatly misunderstands their roles in the workplace and would effectively strip retail managers of their salaried status, generating negative consequences for the entire industry.”

The NRF told the DOL that the proposed changes would mark a “step back” for career-track workers, and that the newly-proposed figure of $970 is too high and needs to be recalculated based on earlier formulas.  Further, the NRF stated that businesses should be given at least one full year to meet the new regulations without penalty.

A study by Oxford Economics conducted with the threshold of $970 in 2016 demonstrated that 2,189,600 retail and restaurant workers would be affected, with 32 percent being converted to hourly from exempt salaried, and that while 21 percent would see earnings of $11,600 in average overtime wages, employers would lower base wages so that workers would not see any real income gains.

The study also found that 117,100 part-time workers would be hired to fill the labor gaps in businesses, and the cost for retailers and restaurants to comply with the proposed changes could reach $745 million.