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Two regulatory issues that were holdovers from the Obama administration may take on new life now that President Donald J. Trump has begun filling the leadership ranks within the federal agencies.
On Tuesday, July 25, 2017, the U.S. Department of Labor (DOL) released a new Request for Information (RFI) to gather public input on potential changes to the overtime rule used to determine which employees are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act. The DOL has decided to begin a new rulemaking process even though the 2016 rule is still enjoined by the U.S. District Court for the Eastern District of Texas.
As you may recall, the final overtime rule was scheduled to go into effect December 1, 2016, until it was halted by litigation. That rule increased the salary threshold, used as part of the determination of whether an employee is eligible for overtime, from $23,660 per year to $47,476 per year. It also included a provision to automatically increase the salary threshold every three years. While SHRM has always supported updating the salary threshold, the methodology the DOL used in the 2016 rule resulted in a more than 100 percent increase in the salary level, which was simply far too high, too fast. This threshold had a disproportionate negative impact on employees in certain industries such as nonprofits, state and local governments, small businesses and employers in lower-wage regions of the U.S.
The RFI highlights the president's Executive Order on regulatory reform and requests public comment on a series of questions on potential changes to the overtime rule. These questions focus on whether the salary threshold level set in the 2016 rule was appropriate, whether a different salary threshold level is preferable, how a new level should be calculated and why a different level would be more appropriate. The RFI offers SHRM members an opportunity to help the department craft a new salary threshold that is better calibrated to identify those employees who should be exempt from overtime because of the type of job they do and the salary they earn.
The DOL has provided the public 60 days to respond to the RFI by September 29. SHRM continues to track the litigation while responding to the RFI and will solicit input from members through our advocacy page, advocacy.shrm.org/overtime. The data SHRM provides the DOL can help the agency re-draft the rule to ensure that it addresses the right employees and works for all types of industries.
Pay Data Collection
In the fall of 2016, the Equal Employment Opportunity Commission (EEOC) finalized changes to the EEO-1 Form to require all employers with 100 or more employees to submit data on their employees' W-2 earnings and hours worked, broken down by ethnicity, race and sex and sorted into 12 pay bands. SHRM opposed this rule in testimony before the commission and Congress, in comments to the Commission, and in comments to the Office of Management and Budget (OMB). SHRM vigorously supports equal pay for equal work and believes that any pay discrimination against an employee should be promptly and fully rectified.
SHRM, however, opposes the data collection requirements because the commission has not provided an adequate explanation of how the data would help it identify instances of pay discrimination, particularly in light of its current backlog of over 1,000 cases alleging compensation discrimination. The lack of utility of the data is compounded by the tremendous burden it places on employers. In fact, the EEOC's revisions increase the total number of data fields for each establishment from 180 to 3,660 and require organizations' HR information systems and payroll systems to communicate with one another—something most employers will need to pay an outside vendor to accomplish. SHRM also remains concerned that the EEOC is not able to protect the confidentiality of this pay data once it is reported to the government.
Employers do not have to file an EEO-1 Form with these changes until the end of March 2018, but many have already begun making investments to upgrade their data systems. The Senate recently approved Neomi Rao as the new head of the Office of Information and Regulatory Affairs in the OMB, and SHRM has, once again, along with many other employer groups, written a letter to that office urging it to reject the changes to the EEO-1 Form and consider more-direct and more-effective ways to combat pay discrimination.
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