AFIA opposes changes to Fair Labor Standards

by World Grain Staff
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ARLINGTON, VIRGINIA, U.S. — The American Feed Industry Association (AFIA) on Sept. 3, submitted comments to the U.S. Department of Labor (DOL) stating the agency's Wage & Hour Division's proposal -- Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees -- is a "dramatic federal mandate" that is strongly "misguided."

The proposed changes to the Fair Labor Standards Act would increase the overtime threshold from $23,660 to $50,400, which, if adopted as is, would result in fewer entry-level hires in the animal food industry, reclassification of certain executive, administrative and professional positions, and additional recordkeeping woes. The effects, however, would not only be felt by the feed manufacturer (especially smaller firms), but also the consumer as, "In all likelihood, these additional costs would be passed along to consumers, causing an increase in food prices," wrote the organization in its comments.

"AFIA believes the Department of Labor took a 'short cut' upon drafting the proposed rule as it is composed as a one-size-fits-all approach, and that simply will not work for our industry," said Richard Sellers, AFIA senior vice-president of legislative and regulatory affairs. "It modifies salary thresholds for exempt employees but it fails to recognize the regional differences in median incomes. This is particularly concerning as a majority of our members are rurally located where competitive salaries cannot be compared to metropolitan wages."

"The proposed rule...would provide a disincentive to invest training resources in entry-level managers because training time would count against an employee’s 40-hour workweek. Withholding training opportunities could reduce an employee's effectiveness and limit an employee's career advancement opportunities," AFIA commented.

In an unofficial survey conducted by the organization, one-third of AFIA member firms indicated the proposed rule would deter companies from hiring trainee, entry-level employees; more than half of the respondents said the Fair Labor Standards Act would result in an additional $200 or more per week on management expenses associated with monitoring employee overtime. Survey respondents did agree -- by three-fourths -- the overtime threshold should vary, ranging from $29,000-$40,000 per year.

AFIA also opposes provisions in the proposed rule that would link the overtime exemption salary threshold to the 40th percentile of salaries earned by U.S. workers.

"Many of our members, just like companies of various sectors, are known to develop budgets years in advance in an attempt to remain profitable in a low-margin industry. They cannot be expected to factor in the possibility of annual fluctuations in the overtime exemption salary threshold. It is unreasonable. During the 77-year history of the Fair Labor Standards Act, the overtime exemption has never been tied to a particular threshold," commented Sellers.

AFIA expects the final rule to be published in 2016 and urges the DOL to consider the organization's comments in the interim.

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