WASHINGTON (3/17/16)--A wide-ranging congressional hearing Wednesday on U.S. Department of Labor (DOL) policies and proposals kicked off with the committee leader honing in on concerns regarding two proposals of key interest to credit unions: one on overtime rules and another that would expand the definition of a "fiduciary" of an employee benefit plan.
Labor Secretary Thomas Perez was the sole witness at the House Education and Workforce Committee hearing.
Committee Chairman John Kline (R-Minn.) said in his opening remarks that there are "strong, bipartisan concerns with the department’s fiduciary proposal." He warned that the rule will lead to many low- and middle-income families having less access to affordable retirement advice and fewer small businesses will offer retirement plans.
This is a concern shared by the Credit Union National Association (CUNA), which has warned that the fiduciary rule could hurt credit unions and low- and moderate-income retirement savers alike. The rule threatens to raise the cost and limit financial advice for low- and middle-income retirement savers. Also, credit unions that offer investments services through arrangements with third-party brokers could be swept into overly burdensome compliance rules.
Addressing another CUNA concern, Kline also criticized the department's proposal that would raise the salary threshold to be eligible for overtime pay to the 40th percentile, moving the cut-off up to $50,440 from the current $23,660.
Kline stated that the plan "will actually stifle workplace flexibility and make it harder for lower-income Americans to move up the economic ladder."
CUNA also has warned the higher threshold would have adverse and unintended consequences.
As stated in a comment letter to DOL, CUNA explains that the rule will sweep a disproportional number of credit union employees under the threshold and does not take into consideration the significant increase in costs credit unions are already facing because of other recent changes in the regulatory environment.
“So many credit union employees suddenly will be covered under this rule that we worry credit unions will find it extremely difficult to find the extra resources to rapidly come into compliance with it, as opposed to if the DOL took a more incremental and measured approach to modifying the standards,” CUNA wrote.
The hearing addressed a wide range of DOL topics, which included minimum wage, productivity, jobs creation and more. However, a number of committee members brought the conversation back to the fiduciary and overtime rules, and repeatedly noted the level and extent of concern the proposals have sparked.
Kline concluded the hearing by saying to Perez that many have concerns about the proposal. "As I'm sure you've heard every waking moment--because if you haven't, I have."