The U.S. Department of Labor’s proposed overtime rule would disproportionately impact credit unions in rural and underserved areas and could force credit unions to limit services, CUNA said in a letter sent Wednesday. CUNA President/CEO Jim Nussle wrote to Senate Committee on Small Business and Entrepreneurship leadership in advance of its hearing on the rule.
The DOL’s proposal would increase the threshold to be eligible for overtime pay by more than twice the current rate, moving the cut-off up to $50,440 from the current $23,660. CUNA is concerned that credit unions could be forced to limit services as a result of changed employment situations or the inability to hire full-time employees.
“We are greatly concerned about the detrimental consequences the DOL’s rule could have for small credit unions, as well as for larger credit unions, who also are more susceptible to suffer as a result of regulatory burdens than the largest financial institutions,” Nussle wrote.
There are roughly 2,700 credit unions in the United States with five or fewer employers, nearly 3,000 with less than $20 million in assets and approximately 4,000 with less than $50 million in assets. About 35% of all credit unions have no employees making salaries over the DOL’s proposed threshold.
“To illustrate the massive impact this rule will have on credit union operations it is important to understand that among credit unions with less than $10 million in assets, almost all CEOs make less than $50,000 and among those with $10 (million) to $20 million in assets, roughly half of CEOs make less than $50,000,” Nussle wrote. “Approximately, 46% of all credit union CEOs work at credit unions with $20 million or less in total assets.”
CUNA has backed the Protecting Workplace Advancement and Opportunity Act (S. 2707/H.R. 4773), which would require the DOL to more fully assess the impact of this rule, especially on smaller entities. CUNA also attached its comment letter to Wednesday’s letter to the committee, which provides detailed information on CUNA’s concerns.
The hearing will be streamed live on the committee’s website.