The Department of Labor’s (DOL) overtime rule would create regulatory burdens for credit unions and negative consequences for members, CUNA told the House Committee on Education and the Workforce Thursday. The committee conducted a hearing on the rule, and CUNA President/CEO Jim Nussle outlined a number of concerns in a letter for the record.
“This final rule will not only create regulatory burdens for credit unions when a disproportional percentage of employees are swept into the new threshold, but it will also create unintended negative consequences for those it aims to help, as well as credit union members,” Nussle wrote. “Credit unions in rural and underserved areas, as well as small credit unions, may face even greater compliance and regulatory burdens as a result of the rule.”
The DOL’s rule would increase the threshold of overtime pay eligibility to $47,476 annually, up from $23,660 annually.
A study on regulatory burden conducted by CUNA and Cornerstone Advisors shows that regulatory costs already account for 30% of total operating expenses for smaller credit unions, and the financial impact of these regulations has increased by 40% since 2010.
Credit union employees and members could be harmed by this rule, Nussle argued.
Employees, if a credit union cannot afford to increase salaries, could be changed from exempt to non-exempt, even employees at the management level.
“Changes to the number of employee work hours, or the size of credit union staff would ultimately affect credit union members as well... Limiting credit union staff or hours may make it more difficult to keep branches open during convenient times for working families. If credit unions have to close on weekends or have shorter hours, this could affect the ability of members to receive service,” Nussle wrote.
“Credit unions that have to limit work hours for their employees may also offer fewer products and services. Limited resources could impede efforts to expand credit union products or service offerings, and inhibit innovation,” Nussle added. “Credit unions may be forced to spend more of their members’ resources without necessarily adding any additional value to members.”
He also cited concerns with the rule raised by the Small Business Administration’s Office of Advocacy, which stated that the DOL has not effectively weighed less burdensome alternatives to the rule.