ABC: DOL’s Overtime Salary Level Threshold Increase Will Harm Small Businesses

Associated Builders and Contractors issued the following statement opposing the U.S. Department of Labor’s final rule that will change overtime regulations under the Fair Labor Standards Act. The final rule increases the minimum annual salary level threshold for exemption in two phases: from the current level of $35,568 to $43,888 on July 1, 2024, and to $58,656 on Jan. 1, 2025. In addition, salary thresholds will update every three years starting on July 1, 2027.

“ABC appreciates that the DOL recognized the value in retaining the methodology used by the prior administration in the 2019 overtime rule update for the phase I increase,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Regrettably, the DOL decided to use a new methodology for phase II, which results in a 65% increase to $58,656 from the current threshold only nine months from now—further complicating the current economic outlook. Multiple industries, like construction, are grappling with uncertain economic conditions such as inflation, supply chain disruptions, high materials prices and workforce shortages, all of which push operational costs ever higher. Specifically, ABC estimates that the construction industry must hire more than half a million additional workers in 2024 to meet demand.”

“Virtually all of ABC’s members employ workers who qualify for exempt status, and phase II of the final rule will reclassify huge numbers of these employees as nonexempt,” said Brubeck. “This will disrupt the entire construction industry, specifically harming small businesses, as the rule will greatly restrict employee workplace flexibility in setting schedules and hours, hurting career advancement opportunities. These issues will recur repeatedly because the DOL rule will automatically increase the salary level every three years beginning in 2027. Additionally, the rule’s significant increase in the salary level threshold fails to account for disparate income levels in different regions of the country.

“ABC will consider all options, including a legal challenge, against this final rule,” said Burbeck.

On Nov. 8, 2023, ABC submitted comments to the DOL in response to the proposed rulemaking, calling on the DOL to withdraw it.

Source: Associated Builders and Contractors, Inc.