September 30, 2015

30/09/2015: AFIA says proposed changes to fair labour standards are hurtful not helpful

In early September, the American Feed Industry Association submitted comments to the US Department of Labour stating the agency's Wage & Hour Division's proposal--Defining and Delimiting the Exemptions forExecutive, Administrative, Professional, Outside Sales and ComputerEmployees--is a "dramatic federal mandate" that is strongly "misguided."

The proposed changes to the Fair Labour Standards Act would increase the overtime threshold from US$23,660 to US$50,400, which, if adopted as it is, would result in fewer entry-level hires in the animal food industry, reclassification of certain executive, administrative and professional positions, and additional record-keeping 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 organisation in its comments.
Image: Sean MacEntee
"AFIA believes the Department of Labour 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 recognise 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 organisation, 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 Labour Standards Act would result in an additional US$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 US$29,000-US$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 Labour 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 organisation's comments in the interim.

Visit the AFIA site HERE.

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