NATIONAL COUNCIL OF AGRICULTURAL EMPLOYERS

Transcription

1 NATIONAL COUNCIL OF AGRICULTURAL EMPLOYERS September 4, 2015 TO: Mary Ziegler Director Division of Regulations, Legislation and Interpretation Wage and Hour Division U.S. Department of Labor 200 Constitution Avenue, N.W. Room S-3502 Washington, D.C RE: Comments on the Department of Labor's Notice of Proposed Rulemaking (NPRM) to Revise FLSA Regulations Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. WHD submit ted by National Council of Agricultural Employers. The National Council of Ag ricultural Employers (NCAE), and the organizations listed at the bottom of these comments, respectfully submit our comments on the U.S. Department of Labor's July 6, 2015 Notice of Proposed Ru lemaking ("NPRM") to amend the Fa ir Labor Standards Act ("FLSA") regulations implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees (known as the "white collar" or "EAP" exemptions). The National Council of Agricultural Employers (NCAE) is the national trade association representing labor intensive agriculture with Congress and federal agencies since Our nearly 300 members are growers, I

2 agricultural associations, and others whose business interests depend on labor intensive agriculture. Although direct field-work employment in agriculture is generally exempt from overtime pay requirements in most states, Agricultural employers still employ significant numbers of employees in non-production agricultural work in packing houses, transportation, handling third-party products, administration, sales & marketing and other occupations that are covered by FLSA overtime requirements. Therefore changes in the rules governing overtime exemptions as proposed will have significant deleterious effect on agricultural employers, and their employees, around the country. We believe the proposed change to the salary level test has a disproportionate adverse effect on employers located in lower-wage regions, and harms the career growth of mid-level employees. The NPRM proposes increasing the minimum weekly salary level for EAP exemptions to the 40th percentile of earnings for full-time salaried workers nationwide, based on bureau of labor statistics (BLS) data. Additionally, the NPRM proposes automatically adjusting the minimum salary level on an annual basis, using either a fixed percentile of wages or the Consumer Price Index for the first quarter of 2016, DOL projects that minimum annual salary for an exempt full-time employee would be $50,440, more than double the current minimum salary level for exempt employees. While the NPRM may correctly state that adjusting the "bright-line test" of the salary level is a simple and administratively easy way to distinguish between exempt and non-exempt employees, that very simplicity works a hardship on a subset of employers, especially many agricultural employers. You will receive many detailed comments as to how this action would impact businesses, particularly small and/or local businesses and their employees negatively. Due to relatively limited time to construct a detailed comment based on the fact that a July notice of comment period makes it nearly impossible to get widespread data and comments from agricultural employers in most of the country, our comments will be brief and general. First, the new annual salary minimum for an EAP is more than double the current level. Although the current $23,400 level is very low, more than doubling the minimum, with insufficient economic impact data is very excessive. It is also both unusual and extremely disruptive for government z..

3 to impose significant increases in a one-step approach rather than as a multi-year phase-in. Second, one size does not fit all! The average salary in many rural areas and small towns outside of major metropolitan areas and in certain lower-wage regions of the country is substantially lower than the national average. The proposed EAP minimum will mean that many, possibly most, current salaried managers and supervisors in many industries and many parts of the country may (probably will) revert from being salaried employees to hourly employees. This may seem advantageous to employees at first glance; however, the result in many cases, will be that although these employees may well see their paychecks increase substantially during the season, they will see substantial decreases during slower times and off-season as they will now be paid only for hours worked. Additionally, many compensation programs offer perks and benefits to salaried employees that are not available to hourly employees such as company vehicles, education benefits, and some ability to set their own work hours and take time for personal business during the work-week, etc. In short, although some employees may see their annual compensation increase as a result of this proposed action many, probably most, are more likely to find at best that their total compensation remains the same but the distribution is no longer even across the year, and they will probably shift benefits for cash at the same time. Generally, employers pay what the market will bear over the course of the year and raising the minimums will only shift how employees are paid, and not necessarily impact the year-end total. At the same time, without state, regional, and industry indexing, even the higher levels may not be sufficient for the highest cost/income metropolitan areas. It is neither workable, nor right, to assume that a worker in a very small town with the lowest potential cost of living parameters should or can be paid at an income level that a worker in the highest cost of living metropolitan area should or could be paid for a similar level of work. Third, we do not believe the Department has sufficiently investigated or contemplated the real impact this change is likely to have on agricultural workers who are not exempt from overtime rules. The Department's analysis assumes there will be little negative and significant positive, impact on bottom-line employee wages as a result of this proposed rule. In many

4 regions of the country 1 for agriculture/ the proposed change will provide even more incentive for employers to put all workers on an hourly rate and increase the percentage of total workers who are seasonal rather than year-around employees. There are many local/ non-seasonal and non-migratory 1 employees in agriculture who function in middle and lower level management or supervisory roles that may work many hours in-season and while they work full-time off-season have much less onerous schedules and duties. Historically this has been seen as a net positive by both employees and employers as weekly/monthly pay is assured and leveled out over the year and both employee and employer have significant latitude in scheduling and use of personal leave in the off-season. Employees benefit by a level income and full-time employee status over the course of the year and employers benefit knowing that valued employees are incentivized to remain with them year after year. Anecdotally/ this means in that in some parts of the country 1 ag-businesses all but shut-down the first week of hunting seasons/ but everyone still gets paid. As a result of the proposed rule/ employers will necessarily factor-in the need for overtime payments to those non-crop or non-production agriculture jobs where overtime (FSLA) applies and reduce the hourly wage to result in the same bottom-line in a normal year. This will mean/ perhaps rightly/ that employees will take on more of the down-side risk of farming and other agricultural operations as they will not be paid for hours not worked because of bad weather/ poor crops 1 or poor prices/ they will simply be sent home and their hours will be shortened in bad years. We suspect this was not the intent of the Department when proposing this new standard. Fourth, as we have commented on other issues, agricultural producers are not price-setters. Just because the DOL or other governmental entity proposes rules or regulations that increase agricultural (food or other products) production prices/ does not give growers/producers license to increase their prices to cover these new government mandated costs. As a result growers will be forced to take necessary measures to hold bottom-line labor costs which may well result in outcomes that the Department neither anticipates nor intends. If costs cannot be contained then this proposed mandate will add to an already growing trend of out of country production of food 1 ornamentals/ and other agricultural staples being supplied to the

5 American public. We do not see that outcome as positive for employees, employers, or the American public. Lastly, although the bulk of our comment applies to commercial business employers in agriculture, NCAE and many of our Members are structured as associations related to agricultural production, safety. Many of our allies are non-profit groups engaged in making food and/or services available to farm-workers or disadvantaged populations. NCAE itself, as a two staff organization, will be forced to determine how to address maintaining a budgeted bottom-line compensation number by balancing salary, benefits, and seasonality. Therefore we add this segment to our comments specific to the potential impacts of the department's proposal on associations and non-profit organizations. As has been fully and eloquently commented on by The American Society of Association Executives, and many association or non-profit leaders already, this proposal will likely result in overall negative impact on the work of associations and non-profit and/or charitable organizations in agriculture and all other areas. Key points from ASAE's comments relative to associations and non-profit organizations are summarized here: "After numerous discussions with association professionals at the ASAE Annual Meeting on the Department of Labor's proposed overtime rules we wanted to remind the community that the deadline for comments is quickly approaching. The proposed regulations would raise the salary threshold at which eligible workers qualify for overtime pay. ASAE's comments can be found here. We strongly encourage any associations that may be impacted to review our comments to use them as a model or focus on a specific area of concern to your organization. Comments can be submitted electronically here on or before Sept. 4, ASAE has heard from association leaders around the country who are concerned that some of their exempt employees will now be eligible for overtime under the new salary threshold of $50,440 or will have to be switched to hourly pay. Many association employees currently qualify as exempt from overtime eligibility because their annual salary is greater than $23,660 and because their primary duties fall under the executive, administrative and professional (EAP) exemption included in the original Fair Labor Standards Act of While the rule won't likely be finalized for months, the change is forcing companies to consider keeping closer tabs on hours worked by overtime-eligible employees, including how to handle work 525 9th Street, NW s-

6 done out-of-office, such as responding to s in the evening or working at a conference over a weekend. ASAE's comments can be summarized into five main areas of concern: ASAE believes the Department of Labor's proposal of a minimum annual salary level for exempt employees of $50,440, with automatic annual renewals, sets a one-size-fits-all measuring stick for middle-class incomes. The minimum salary level for exemption should instead be keyed to government data on regional cost-of-living differences. The minimum salary level should be set lower than the proposed level of the 40th percentile of average full-time employee salaries, either across-the-board or for the nonprofit sector. Under the current over-inclusive proposal, too many senior-level exempt employees would be reclassified as overtime-eligible because of their salary level, particularly in nonprofit organizations. The proposal would adversely affect nonprofit organizations and other employers with limited revenues and would harm many affected employees. To contain payroll costs from increased overtime obligations, these employers would have to either lay off employees or exclude reclassified employees from telework and career growth opportunities outside of core business hours. Under both scenarios, the remaining exempt employees would bear the brunt of increased workloads. ASAE also believes that no changes to the duties test regulations should be made without providing notice of the specific proposed changes and another opportunity for public comment. If the Department of Labor considers changes to the duties test, it should (i) add clarity to classification determinations by incorporating new examples of exempt occupations, including examples specifically addressing common job roles in membership organizations, and (ii) avoid adopting a rigid minimum time percentage test for assessing the "primary duty" of a position." NCAE strongly supports and stands-by the full ASAE Comments to be submitted, in addition to our own industry specific comments for non-association agricultural employers. Respectfully submitted for NCAE, Frank A. Gasperini, Jr.

7 Executive Vice President/CEO National Council of Agricultural Employers (NCAE) 525 9th Street NW, Suite 800 office mobile NCAE's official public comment speaks for the entire NCAE Membership. The following NCAE Members who are also associations have requested to be listed by name as well: AmericanHort, Columbus, OH Maryland Nursery, Landscape, & Greenhouse Assoc. Inc., Brooklandville, MD Michigan Farm Bureau, Lansing, MI Florida Citrus Mutual, Lakeland, FL Florida Fruit & Vegetable Association, Maitland, FL National Watermelon Association, Lakeland, FL New England Apple Council, Goffstown, NH New York Apple Association, Victor, NY North East Dairy Producers Association, Gainesville, NY UnitedAg, Irvine, CA United Fresh, Washington, DC USCHI Custom Harvesters, Hutchinson, KS