WASHINGTON (9/2/15)--The U.S. Department of Labor’s (DOL) proposed overtime rule would affect a substantial portion of credit union employees, particularly at smaller credit unions and those in rural or underserved areas, CUNA told the department Tuesday. In its comment letter on the proposal, CUNA outlined a number of concerns with the proposal, saying the rule is “too extreme and will ultimately not achieve a better situation for many employees.”
The rule would raise the salary threshold to the 40th percentile, a change from $455 a week ($23,660 a year) to a projected level of $970 a week ($50,440 a year) in 2016 and establish a mechanism for automatically updating the minimum salary and compensation levels.
“In the case of credit unions, the rule does not consider the difficult regulatory environment that has increased costs in other areas exponentially over the past few years,” the letter reads. ”Accordingly, it would be extremely difficult for credit unions to find the extra resources to come into compliance with this rule, as opposed to if the DOL took a more incremental and measured approach to modifying the standards.”
About 35% of all U.S. credit unions do not have an employee that makes more than $50,000 per year. CUNA’s Staff Salary Report from 2015-2016 shows that 46% of all credit union CEOs work at credit unions with $20 million or less in total assets.
“Ultimately, this rule could create the dichotomy that credit unions whose mission it is to serve the same segment of workers included in this rule, could be disproportionally burdened by the rule and unable to maintain the equivalent level of service to this same part of the American workforce,” the letter reads. “It is clear that credit unions and other businesses in non-metropolitan areas would be unfairly burdened by the proposed rule and would have to pay overtime to a much larger percentage, or maybe even all, of their workforce.”
CUNA asked that the DOL consider the distinctions between credit unions with fewer members and less revenue and larger institutions, which would all fall under the same overtime salary threshold under the current proposal, “which arguably is not appropriate for credit union employees in general, but may be particularly inappropriate for small credit unions and those in rural and underserved areas.”
The proposal could lead to changes in the number of hours credit union employees work, which would ultimately affect credit union members.
“Credit unions that have to limit work hours for their employees may offer fewer products and services, and focus only on the basic needs of members,” the letter reads. “This may impede efforts to expand credit union products or service offerings, and inhibit innovation. Credit unions may be stuck navigating how to operate in the same way at a higher cost, without adding any additional value to members.”