Associated Builders and Contractors today submitted comments to the U.S. Department of Labor in response to a proposed rulemaking that would alter overtime regulations under the Fair Labor Standards Act.

“ABC called on the DOL to withdraw the new proposed rule, which is unlawful, inconsistent with historic norms and will specifically harm small businesses,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “ABC has consistently told the DOL that there is no compelling reason for an adjustment to the minimum salary threshold for exemption since it was increased roughly four years ago. Most importantly, the DOL should recognize that the construction industry, as well as multiple other industries, is currently up against increased geopolitical uncertainty, high materials prices, inflationary pressures and workforce shortages. Specifically, ABC estimates that the construction industry needs to hire more than half a million workers in 2023 alone. Regrettably, the DOL’s proposed salary level increase will further complicate the current economic outlook.

“Virtually all of ABC’s members employ some workers who qualify for exempt status and the proposed rule will result in large numbers of employees being reclassified as nonexempt,” said Brubeck. “In fact, 63% of ABC members surveyed in October indicated that they would have to consider reclassifying employees as well as restructuring if the salary level is increased to $55,000 annually. This will have a disruptive effect on the construction industry as a whole, as the rule will greatly restrict employee workplace flexibility in setting schedules and hours and hurt career advancement opportunities for employees. Moreover, because the DOL proposes to automatically increase the salary level every three years, these issues will recur repeatedly.

“Additionally, the rule’s proposed significant increase in the salary threshold fails to account for disparate income levels in different regions of the country. This will be particularly true in rural parts of the country and in areas where the cost of living is significantly lower than average.”

The DOL expects the minimum salary threshold will increase to at least $55,068 (annualized) and projects the minimum salary threshold to be $60,209 (annualized) in the first quarter of 2024—an increase of nearly 70% from the current $35,568 salary level.