SHRM Member Expresses Concerns over Proposed Overtime Regulations During U.S. House Subcommittee Testimony

HR director: Overtime changes will negatively impact her nonprofit’s employees and clients

Jul 23, 2015
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WASHINGTON — A human resource professional representing the Society for Human Resource Management (SHRM) told a U.S. House subcommittee hearing today that she has serious concerns about the financial impact of proposed changes to overtime regulations and the ability of her nonprofit to continue providing services as a result.

Elizabeth Hays, SHRM-SCP, director of human resources at MHY Family Services, a Mars, Pa., nonprofit that serves at-risk youth, detailed the blow that proposed changes to the Fair Labor Standards Act (FLSA) overtime regulations would have on her organization’s employees and clients.

“Raising the exempt salary threshold under the new FLSA regulations to the $50,440 threshold literally presents the risk of MHY closing its doors,” Hays told the U.S. House Subcommittee on Workforce Protections.

Most of MHY’s exempt employees are paid less than $50,000 and would be eligible for overtime under the proposal, she noted.

“If these regulations were to be implemented as proposed, MHY will likely have to decrease services because we would not be able to afford the additional overtime pay.” Her organization would be forced to reassess its programming and services, she said.

A member of SHRM for 20 years, Hays noted that pay at nonprofits tends to be lower than at for-profit organizations. “To attract and retain talent, MHY tries to maintain an attractive benefit structure,” she said. “If the proposed overtime rules become final, nonprofit organizations like MHY will be forced to make difficult decisions to potentially reduce employee benefits.”

The subcommittee testimony comes during a week when two other SHRM members spoke about the effects of Department of Labor (DOL) overtime regulations on employers during a Small Business Administration roundtable in Washington, D.C.

During the subcommittee hearing, Hays outlined SHRM’s concerns about the proposed regulations:

  • The significant increase in the salary threshold presents challenges for employers in industries with lower salaries (nonprofits, as an example) and employers in some areas of the country (rural areas and the Southeast and Midwest, as examples).
  • The automatic wage adjustments will influence employers’ compensation decisions on merit pay and contribute to salary compression. Adjustments also will have ripple effects for HR policies and have consequences for workers’ compensation, payroll taxes and employee benefits.
  • The fact that no changes to the duties test were announced has resulted in a period of uncertainty for employers. SHRM is concerned that DOL still may change the duties test, which would require many employers to restructure their workforce. SHRM calls for a full comment period for any changes to the duties test.
  • Expanding overtime eligibility will not necessarily result in a windfall of overtime income for newly classified nonexempt employees. Employers will likely cap or eliminate access to overtime work or adjust salaries to ensure that an employee’s total wages will remain the same.

SHRM, which will submit comments on the proposed overtime regulations to the DOL, has requested that the comment period be extended to give it time to gather additional feedback from its members.

Hays’ full testimony is available at http://www.shrm.org/Advocacy/Issues/EmploymentandLabor/Documents/FINAL%207.22.15%20SHRM%20Statement%20Elizabeth%20Hays.pdf.

MEDIA: For more information, contact Kate Kennedy at Kate.Kennedy@shrm.org and 703-535-6260 or Vanessa.Gray@shrm.org at 703-535-6072.

About the Society for Human Resource Management

Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at www.shrm.org and follow us on Twitter @SHRMPress.

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