Labor Secretary Tom Perez was grilled Thursday over the impact that the Obama administration’s upcoming rule that would expand who qualifies for overtime would have on higher education.
The secretary had little to say in response to reports that the rule would result in steeper costs for nonprofit colleges and universities. At the same time, Perez did confirm that the rule would be finalized soon, saying it would happen in 45-90 days.
The grilling came during a Senate Appropriations Committee hearing regarding Labor Department’s proposed budget for the next fiscal year. Sen. Lamar Alexander, R-Tenn., a committee member, took the opportunity to highlight a report by a coalition of independent nonprofit higher education institutions in his state that claimed the rule would increase their labor costs $1,000 per student.
“If the president is going to go around … saying we want to keep college costs down, how can you justify an overtime rule that might raise the cost of college by $1,000 a student?” Alexander asked.
Perez had little to say in response. He said there had been outreach by his department to both higher education and nonprofits. “We’ve heard a lot of feedback on the minimum wage rule,” he said, but did not say what happened during the meetings or if the administration addressed the concerns those groups raised.
At one point, Perez began discussing the administration’s recent coal dust regulations and arguing that early criticism of those was unfounded, implying that the overtime rule concerns were similarly mistaken. Alexander cut him off.
“You just think [the colleges and universities] are wrong?” Alexander asked.
Perez responded that he did not know if they were right or wrong. “In the coal context, the concerns that were raised were that we would never be able to meet the new standard. The good news is they were able to meet that standard,” he said.
The proposed overtime rule would expand eligibility for overtime pay to workers who earn up to $50,440 annually, more than double the current level. Perez said the final version of the rule had been sent earlier this week to the Office of Management and Budget for review.
Employers are required to pay hourly employees time and a half for any work done past 40 hours in a week. Employers can exempt workers if they are deemed managerial employees. One requirement for exemption is that the worker must make at least $455 a week. The administration’s proposed update would increase that to $970 a week.
Labor groups have long said the exemption is widely abused by employers. Business groups have complained bitterly about the new rule, saying it raises the threshold too far, too fast.
