Will the DOL’s new overtime rule hurt the insurance industry?
May 23, 2016 by Caitlin Bronson
Insurance industry officials are concerned that a new Department of Labor rule relating to overtime will have negative consequences for employers.
The rule, which was issued last Tuesday and will take effect in December, raises the salary threshold below which most salaried workers are entitled overtime to $913 per week, or $47,476 annually for full-time workers. The previous threshold was at $455 per week, or $23,660 annually
That level will be revisited every three years, and will be maintained at the 40th percentile of full-time salaried workers. That could move the threshold to more than $51,000 by January 2020, projections say.
“Companies will have a choice,” said Vice President Joe Biden. “Pay their workers for the extra hours they put in, or cap their hours at 40 hours a week.”
While employees are eagerly anticipating the changes, however, employers are hesitant. Those in the insurance industry are no exception.
Tom Santos, vice president of federal affairs for the American Insurance Association, said the rule will impact property/casualty insurers because many employees may see operational and compensation-related changes.
Stating the AIA’s opposition to the rule, Santos said, “The Department of Labor’s adoption of changes to the overtime rule will have negative consequences for both employees and employers in the insurance industry. Due to the diverse nature of our industry’s workforce, these changes will not be helpful.”
“The rules will not provide the workplace flexibility sought by employers and employees alike. We believe that this rule will result in a scramble to reclassify employees that will ultimately undermine job security and future opportunities for employees.”
