DOL’s Overtime and Fiduciary Rules under Fire
President Obama’s Department of Labor (DOL) is rushing to finalize its new “overtime rule” by this summer, just a few months before a new administration takes over. The controversial new overtime rule would expand overtime pay eligibility for salary exempt employees earning under $50,440 a year – a 110% increase from the current threshold of $23,660.
The Obama administration believes its new rule would boost the wages of about 5 million workers, but in reality, employers will be forced to find other ways to make up for the cost of the new regulation. Most likely, businesses will have to reduce wages, limit workers to 40 hours a week, or move employees to part time work and cut benefits. Republicans in the House and Senate have introduced legislation, H.R. 4773 and S. 2702 – Protecting Workplace Advancement and Opportunity Act, to block the new rule from taking effect.
Earlier this month, the DOL finalized a new Fiduciary Rule that is set to take effect June 7th. The Obama administration claims its new fiduciary standard will save retirement investors’ money by forcing all financial advisers to put their individual client’s interests above their own.
While this sounds good in theory, the reality is that the fiduciary standard is entirely unnecessary as financial advisers can serve their clients and earn a living for themselves at the same time. What the rule will do is open up financial advisers to more lawsuits and force financial companies to offer less retirement advice.
The House of Representatives is set to vote on a resolution of disapproval, H.J. Res. 88, later this week to block the fiduciary rule from taking place. While Republicans have the votes to pass the resolution in the House, opposition from Senate Democrats and President Obama will likely prevent it from becoming law.