Removing Barriers Blog

CUNA Submits Comment on Department of Labor's Proposed Overtime Rule
Posted September 01, 2015 by CUNA Advocacy

Today CUNA filed comments with the Department of Labor concerning a proposed rule which would raise the salary threshold for overtime eligibility, from $455 a week ($23,660 a year) to a projected level of $970 a week ($50,440 a year), by 2016. The proposal would also establish a mechanism for automatically updating the minimum salary and compensation levels in the future. In the comment letter, we argued that the proposed salary threshold for overtime is not appropriate for credit union employees in general, but may be particularly inappropriate for small credit unions and those in rural and underserved areas. 

A substantial percentage of credit union employees, specifically employees of smaller credit unions and those in rural or underserved areas, fall into the salary threshold to be eligible for overtime pay under the new proposed rule. The comment makes the point that at some credit unions, even CEOs will fall under the new threshold, and also notes that since those in management often work over 40 hours a week this could make overtime costs increase exponentially.

The letter further points out that among credit unions with less than $10 million in assets, almost all CEOs make less than $50,000. Among those with $10 to $20 million in assets, roughly half of CEOs make less than $50,000.  Importantly, 46% of all credit union CEOs work at credit unions with $20 million or less in total assets.

We also noted that CU employee salaries vary greatly depending on asset size, location, and number of employees, services offered, members, and branches. Setting one salary threshold for the entire country overlooks the fact that the cost of living throughout the country varies, and salaries in different regions also vary to reflect that. The letter references several examples where federal rulemakings and policies account for these differences, and asks the DOL why that same concern is not addressed in the proposed rule.

The letter also outlines several concerns about unintended consequences the proposed rule—for example less benefits and “perks”, stricter guidelines on overtime and time off, and fewer opportunities for participation in out of office events that may be not in the course of a regular workday.

We expressed appreciation to the DOL for attempting to take steps to improve the livelihood of American middle-class families, a cause that credit unions have long supported. However, we also believe the DOL’s proposed rule overlooks a number of important factors outlined in the letter.

As a result of these insufficiencies, we stated that it was necessary for the DOL to engage in further analysis about the likely impacts of its proposed rule, and to more narrowly tailor the proposal to include a more reasonable percentage of the workforce, that does not include entire industries or regions of the country. You can read our letter here.