Former DOL insider points out flaws in new overtime rules

Testifying before Congress, a former DOL administrator, and an architect of the last changes to the FLSA’s overtime rules, shot holes in the federal agency’s proposal to more than double the minimum salary workers need to be paid to be considered exempt. 

On behalf of the U.S. Chamber of Commerce, Tammy McCutchen testified before the House Subcommittee on Workforce Protections to express her concerns about the DOL’s proposed revisions to the “white-collar” overtime exemption rules.

If you’ve followed this issue on HR Morning, you probably recognize her name. McCutchen is a former DOL administrator-turned-attorney who now works for the firm Littler Mendelson P.C. She not only helped devise the previous revisions to the FLSA’s overtime rules, she sat in on a number of “listening sessions” with current DOL Secretary Thomas Perez when the DOL was still formulating the latest batch of proposed rule changes.

She hasn’t been shy about expressing her thoughts on the rulemaking process, her predictions for the rules and — now — her displeasure over what was introduced.

A transcript of McCutchen’s testimony can be found here.

Changes ‘unprecedented,’ ‘unsupported’

Some of McCutchen’s biggest concerns about the DOL’s proposal:

• The new threshold abandons the original intent. McCutchen said that the threshold was meant to serve as a method of “screening out the obviously non-exempt employees.” But setting it so high — to $50,440 — “expands the number of employees eligible for overtime beyond what Congress envisioned when it created the exemptions.”
• It’ll have a disproportionate impact on states with a lower cost of living. McCutchen pointed out that the proposed salary threshold would far exceed the threshold established in high-cost-of-living states like California ($37,440) and New York ($34,124).
• The DOL’s methodology is “unprecedented.” McCutchen pointed out that in its rulemaking in 1958, the DOL based the minimum salary level for exemption on the 10th percentile of average employee wages. In 2004, the DOL based it on the 20th percentile to account for changes in the “duties tests” made in 2004. She then said if the 2004 methodology were used today the threshold would be $30,000 annually. Instead, the DOL has chosen to use the 40th percentile. This, she said, is an “unprecedented,” “unsupported” leap.