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20–700 2017

DAMAGING REPERCUSSIONS: DOL’S OVERTIME 

RULE, SMALL EMPLOYERS, AND THEIR 

EMPLOYEES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JUNE 23, 2016 

Small Business Committee Document Number 114–066 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

CRESENT HARDY, Nevada 

WARREN DAVIDSON, Ohio 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

JAN OLIVER, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESSES 

Mr. Adam Robinson, Co-founder/CEO, Hireology, Chicago, IL, testifying on 

behalf of the Job Creators Network .................................................................... 5 

Hon. Jerrie Tipton, Commission Chair, Mineral County, Hawthorne, NV, 

testifying on behalf of the National Association of Counties ............................ 7 

Mr. Albert F. Macre, General Partner, Payroll + Services, Steubenville, OH, 

testifying on behalf of the National Federation of Independent Business ...... 8 

Ms. Christine V. Walters, JD, MAS, SHRM-SCP, SPHR, Sole Proprietor, 

FiveL Company, Westminster, MD, testifying on behalf of the Society for 

Human Resource Management ........................................................................... 10 

Mr. Ross Eisenbrey, Vice President, Economic Policy Institute, Washington, 

DC .......................................................................................................................... 12 

APPENDIX 

Prepared Statements: 

Mr. Adam Robinson, Co-founder/CEO, Hireology, Chicago, IL, testifying 

on behalf of the Job Creators Network ....................................................... 27 

Hon. Jerrie Tipton, Commission Chair, Mineral County, Hawthorne, NV, 

testifying on behalf of the National Association of Counties .................... 30 

Mr. Albert F. Macre, General Partner, Payroll + Services, Steubenville, 

OH, testifying on behalf of the National Federation of Independent 

Business ......................................................................................................... 38 

Ms. Christine V. Walters, JD, MAS, SHRM-SCP, SPHR, Sole Proprietor, 

FiveL Company, Westminister, MD, testifying on behalf of the Society 

for Human Resource Management .............................................................. 41 

Mr. Ross Eisenbrey, Vice President, Economic Policy Institute, Washington, DC ..................................................................................................... 49 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

ABA - American Bankers Association ............................................................ 58 

CUPA-HR - College and University Professional Association for Human 

Resources ....................................................................................................... 60 

CUNA - Credit Union National Association ................................................... 62 

ICBA - Independent Community Bankers of America .................................. 65 

IEC - Independent Electrical Contractors ...................................................... 66 

IIABA - Independent Insurance Agents & Brokers of America .................... 69 

NAFCU - National Association of Federal Credit Unions ............................ 72 

NAMIC - National Association of Mutual Insurance Companies ................. 74 

NRF - National Retail Federation ................................................................... 79 

Partnerships to Protect Workplace Opportunity ........................................... 81 

WorldatWork ..................................................................................................... 82 

Gila County Board of Supervisors ................................................................... 84 

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(1) 

DAMAGING REPERCUSSIONS: DOL’S OVERTIME RULE, SMALL EMPLOYERS, AND 

THEIR EMPLOYEES 

THURSDAY, JUNE 23, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:14 a.m., in Room 

2360, Rayburn House Office Building, Hon. Steve Chabot [Chairman of the Committee] presiding. 

Present: Representatives Chabot, Luetkemeyer, Huelskamp, 

Radewagen, Hardy, Kelly, Davidson, and Vela ́zquez. 

Chairman CHABOT. The Committee will come to order. I want 

to thank everyone for being here today. 

Last month the Department of Labor finalized the overtime rule 

which will affect millions of small employers all across this country. 

The Department of Labor has heralded this rule as a long overdue 

action that will provide tremendous benefits to workers. However, 

like so many of this Administration’s policies, this one-size-fits-all 

will do, I believe, far more harm than good. 

I have been meeting with small business owners, as Chairman 

of this Ccommittee, from all across the country. In fact, I just had 

a group of restaurant owners in my office right before this meeting, 

and I would like to share with you some of the things that they 

have told me. 

They are only successful if they treat their employees well. Many 

give their employees the flexibility to leave work early and provide 

paid time off. They pay their employees as much as they can afford. 

When they can provide a bonus or a raise, they do. And when 

budgets are tight, many of the owners, the people who own these 

businesses, forgo paying themselves, so that each of their employees can take home a full paycheck. 

Countless small employers, including small businesses, small 

nonprofits, and small local governments, do not have the profit 

margins or the budget flexibility to increase currently exempt 

workers’ salaries to the new salary level. 

The Department of Labor seems to think that employers will 

simply be able to raise prices or find extra money elsewhere. This 

just is not the case, particularly in rural parts of the country where 

the cost of living and wages are lower or for cash strapped technology startups that often pay lower based salaries, but provide equity in the companies as incentive to work there. 

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For many small employers, their only choice may be to shift 

workers from salaried positions to hourly status and require them 

to punch a time card. This means that many workers, particularly 

entry level managers, will have reduced flexibility, reduced paycheck certainty, and reduced benefits, as well as fewer opportunities for career advancement. 

Numerous small employers weighed in on this proposal and told 

the Department of Labor that the unprecedented salary level increase would have very negative repercussions. They asked for a 

common sense rule that recognized that not all employers have the 

same resources or utilize the same compensation structures. Unfortunately their pleas fell on deaf ears. 

I want to assure the small employers here today, and those tuning in from across this great country, that while the Department 

of Labor didn’t listen to you, this Committee will. We are. 

The December 1st compliance deadline is rapidly approaching. So 

today we want to hear how small employers are working to comply 

with these new requirements and what challenges that you are encountering. 

We want to thank the witnesses, particularly those who have 

traveled from all across the country to be here today. And we are 

looking forward to hearing your testimony. 

And I would now like to yield to the Ranking Member, Ms. 

Vela ́zquez, for her opening statement. 

Ms. VELA ́ ZUEZ. Thank you, Mr. Chairman. 

Overtime pay and the Fair Labor Standards Act are cornerstones 

of economic fairness in our society. For nearly 80 years overtime 

rules have ensured that millions of workers are justly compensated 

when they work longer than the traditional 40 hour workweek. Yet, 

more and more Americans are working longer hours than ever before. 

Those employed full-time report working an average of 47 hours 

per week and nearly 40 percent report logging 50 hours or more. 

Preserving the right to overtime pay is particularly crucial at a 

time when lower and middle-income families’ wages are stagnant. 

These changes in the broader economy landscape prompted the Department of Labor to examine whether the standards used to determine which employees are eligible for overtime no longer reflected 

economic realities. In fact, it has been estimated that just 11 percent of salaried workers qualified for overtime. This is a significant 

decrease compared to 40 years ago when two out of three workers 

received time and a half working overtime. 

In May the Department of Labor published its final revision of 

the overtime rules. The new regulations will extend overtime pay 

to 4 million workers currently exempted and strengthen protections 

for 6 million white collar and 3 million blue collar salaried workers 

within the first year of its implementation. This is the government’s most significant step to address income inequality in recent 

memory. 

The new overtime requirements will bring a number of important 

benefits to working families and to our economy as a whole. Lower 

wage workers tend to quickly spend any additional earnings they 

make. This means that if workers start receiving additional pay, 

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they will likely spend that money stimulating their local economies, 

in many cases supporting small businesses in their community. 

Likewise, if businesses elect to hire more workers, rather than 

having employees work overtime, then there could be potential job 

creation, furthering economic opportunity. Despite these positive 

outcomes, we have heard concerns as to how these regulations will 

impact the small business community. Increasing the salary 

threshold and the number of workers eligible for overtime pay 

could augment compliance and labor costs, putting financial strain 

on small business owners. This fact is particularly true for small 

employers located in low wage regions and in industries that operate with low profit margins. 

More concerning is that small businesses have commented that 

the high costs of this rule could lead to hourly cutbacks to employees or even salary adjustments. Such actions runs counter to the 

goals of this rule and could ultimately harm employees. 

Now that the rules have been finalized, we in Congress can get 

a better understanding of their impact. All of us want to see workers treated fairly and it has become clear that the overtime rules 

were due for an update. However, it is critical that we understand 

the new rules’ impact on small businesses. This hearing is intended 

to accomplish that. 

I thank the witnesses for being here today. And look forward to 

your comments. I yield back, Mr. Chairman. 

Chairman CHABOT. Thank you. The gentlelady yields back. And 

if Committee members have opening statements prepared, we ask 

that they submit them for the record. 

And I would now like to take just a moment to review our rules 

here relative to timing. It is pretty simple. We operate by the 5 

minute rule. Each of you gets 5 minutes to testify and each member gets to ask questions for 5 minutes. Sometimes we go into a 

second round, sometimes we don’t, depending on time. 

There is a lighting system to help you out. The green light starts 

out, it is on for 4 of the 5 minutes, the yellow light comes on for 

1 minute to let you know you are kind of getting near the red light, 

which means you are supposed to conclude your testimony by then 

if at all possible. We will give you a little time in addition if you 

need it, but we would ask you not to abuse it and stay within it 

as closely as you can. 

And now I would like to introduce our distinguished panel here 

today. We will begin with you, Mr. Robinson. Our first witness will 

be Adam Robinson, the cofounder and CEO of Hireology, a Chicagobased technology firm that was launched in 2010 to revolutionize 

the hiring process. In 2015 Mr. Robinson was added to the Chicago 

Tribune’s Blue Network, a listing of Chicago’s most influential entrepreneurs and innovators, and named a ‘‘Top 25 HR Industry 

Game Changer Under 40’’ by Workforce Magazine. 

Under his leadership, Hireology has been recognized nationally 

by Entrepreneur magazine as a ‘‘Top Company Culture’’ and by 

Crain’s Chicago Business as a ‘‘Best Places to Work’’ for both 

Millennials and Generation X. Mr. Robinson is testifying on behalf 

of the Job Creators Network today and we welcome you here. 

Our next witness is the Honorable Jerrie Tipton. Ms. Tipton is 

the chairman of the Mineral County Board of Commissioners in 

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Nevada. Commissioner Tipton was elected to the Board in 2006 

and also serves as Mineral County’s representative on many associated boards, including the local Conservation District. She and her 

husband have a livestock operation and a business that supports 

exploration drilling in the region. 

Commissioner Tipton is also an active member of the Nevada Association of Counties. Today she will be testifying on behalf of the 

National Association of Counties. And we welcome you here as 

well, as a former county commissioner myself we especially welcome you. 

Our third witness is Mr. Albert—is it Macre? 

Mr. MACRE. Macre 

Chairman CHABOT.—Macre, who is testifying on behalf of the 

National Federation of Independent Business, NFIB. He is the 

owner of three small businesses, including a small payroll firm 

based in Steubenville, Ohio, called Payroll + Services, which has 

served 200 small to medium size businesses since 1994. Mr. Macre 

also—did I pronounce that right? 

Mr. MACRE. Macre. 

Chairman CHABOT. Macre—I have a mental block and it— 

Macre, sorry about that. Everybody is always mispronouncing my 

name so—Mr. Macre, also currently serves as an assistant professor of accountancy at the Franciscan University of Steubenville 

and lends his expertise to various boards and organizations such 

as the NFIB/Ohio Leadership Council and the Ohio Business Gateway Steering Committee. 

He received a master of accountancy from Miami University in 

Ohio with an emphasis in financial accounting and taxation. A 

great university. The head of our Small Business Committee, a 

Miami graduate, my brother a Miami graduate, our son a Miami 

graduate so a great school. 

Our fourth witness is Ms. Christine Walters. She is an attorney 

and the sole proprietor of FiveL Company in Westminster, Maryland, and will be testifying on behalf of the Society for Human Resource Management. Since 2002, Ms. Walters has provided fulltime human resources and employment law consulting to small 

businesses and small nonprofits. 

Prior to starting her firm, Ms. Walters worked nearly 10 years 

in human resource administration. She has also served as an adjunct faculty member of Johns Hopkins University and worked in 

a law firm, Saul Ewing L.L.P. Ms. Walters has received numerous 

nominations and awards for her work, including the small business 

of the year award by Baltimore Washington Corridor Chamber of 

Commerce in 2010. Congratulations for that and we welcome you 

here. 

And I would now like to yield to the ranking member to introduce our fifth and final witness. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. It is my pleasure 

to welcome back Mr. Ross Eisenbrey, vice president of the Economic Policy Institute. Prior to joining EPI, he worked as a former 

commissioner of the U.S. Occupational Safety and Health Review 

Commission and as the policy director of the Occupational Safety 

and Health Administration. Welcome. 

SBREP-219A with DISTILLER

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Chairman CHABOT. Mr. Robinson, you are recognized for 5 minutes. 

STATEMENTS OF ADAM ROBINSON, CO-FOUNDER/CEO, 

HIREOLOGY, CHICAGO, IL, TESTIFYING ON BEHALF OF THE 

JOB CREATORS NETWORK; THE HONORABLE JERRIE TIPTON, COMMISSION CHAIR, MINERAL COUNTY, HAWTHORNE, 

NV, TESTIFYING ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES; ALBERT F. MACRE, GENERAL PARTNER, 

PAYROLL + SERVICES, STEUBENVILLE, OH, TESTIFYING ON 

BEHALF OF THE NATIONAL FEDERATION OF INDEPENDENT 

BUSINESS; CHRISTINE V. WALTERS, JD, MAS, SHRM-SCP, 

SPHR, SOLE PROPRIETOR, FIVEL COMPANY, WESTMINSTER, 

MD, TESTIFYING ON BEHALF OF THE SOCIETY FOR HUMAN 

RESOURCE MANAGEMENT; AND ROSS EISENBREY, VICE 

PRESIDENT, ECONOMIC POLICY INSTITUTE, WASHINGTON, 

D.C. 

STATEMENT OF ADAM ROBINSON 

Mr. ROBINSON. Thank you, Chairman Chabot, Ranking Member Vela ́zquez, and members of the committee for the opportunity 

to testify about the impact of the Department of Labor’s new overtime rule. This rule requires employers to provide overtime pay to 

employees whose salary is less than $47,500, which is about double 

the existing threshold. 

What I want to do in my time today is focus on how this rule 

will adversely affect technology startups and high growth small 

business owners like me and what that means for the people we 

employ. I am the CEO and co-founder of a human resources technology business called Hireology. We have streamlined and improved the hiring process to help companies eliminate bad hires 

and identify good ones. 

We have also fielded hundreds of confused inquiries from our 

customers about how to comply with this rule. As a result, we have 

a unique perspective to speak about its impact. Like most Federal 

regulations, the overtime rule is a one-size-fits-all policy that 

doesn’t distinguish among firm size, sector, location or comp structure. This means that companies that don’t fit the Department of 

Labor’s outdated model will disproportionately be hurt by the rule. 

Take the capital constrained technology startup sector that I work 

in for example. Employees at these companies trade long hours and 

lower pay for the opportunity to get amazing professional experience early in their careers and the potential for a significant financial windfall later on. 

Are we exploiting these employees? Of course not. Those working 

at tech startups voluntarily recognize that their positions are highrisk, high-reward ventures and that they may have to go years 

with below market pay to get a big pay out in the end. Do we want 

to regulate these opportunities out of existence? 

Looking back on when I started my company in 2010, I can tell 

you with 100 percent certainty that I would not have been able to 

hire my first employee had this rule been in place. My company 

now has 100 employees with median, median annual compensation 

that exceeds $70,000 a year, well above the U.S. average. How 

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6 

many ‘‘Hireology’s’’ won’t get started as a result of this rule, making that first employee unaffordable for the entrepreneur. Are 

fewer good paying jobs created and fewer businesses launched outcomes that this ruling is desiring? I don’t think so. 

Sales professionals, the lifeblood of almost every company, also 

suffer from this rule because their commission-based compensation 

structure doesn’t align with the Department of Labor’s vision of the 

workplace. Consider what my company is facing, 40 of our 100 fulltime salaried professionals are salespeople whose success, like with 

most sales positions, depends on persistence. That means working 

until the sale is made, whatever the hours. We pay new sales people a base salary of $40,000 a year. And those who hit their quota 

can earn $70,000 to $120,000 a year or more. This compensation 

structure is pretty typical in software startups and sales sectors because it allows employees to directly share in the profits they 

produce for the company. 

However, the overtime rule forces us to choose between raising 

base salaries to the new exempt threshold or convert everyone on 

the sales team, about half my business, to an hourly rate, capping 

hours at 40 a week. Both alternatives are very unattractive. A 20 

percent pay increase for new hires to put them above the threshold 

would hamstring our expansion plans, but capping hours at 40 a 

week would mean a loss of earning potential for all of our sales 

people, and add costly time tracking overhead to our bottom line. 

Both paths result in less opportunity and fewer middle class jobs. 

To the extent that employers like me are forced to reclassify employees as hourly to avoid unexpected overtime costs, these high 

paying job opportunities will be reduced. Millions of Americans 

have entered the middle class by securing a salaried job when 

working their way up by working until the job gets done. That 

means sometimes during a busy season, a financial month-end, or 

when a coworker is out sick, working longer than 8 hours a day. 

In return these employees are rewarded with the flexibility, benefits, bonuses, status, and promotions that come with a salaried position. It is not exploitative. It is a key tenet of American work culture and startup culture. 

Reduced middle class job opportunities as a result of this rule 

will be compounded in parts of country with lower standards of living. Companies in Chattanooga will have a much more difficult 

time complying with a $47,500 salary threshold than companies in 

Chicago. As a result, the rule will be another hurdle for smaller 

communities across the country that are still suffering from high 

unemployment and a lack of middle class job opportunities. 

I urge you to pursue legislative solutions to undo the harm that 

will be inflicted by this overtime rule. At a time when the middle 

class in this country is already being squeezed, the tech sector, 

sales jobs, and middle management positions are a few areas that 

still provide relief. The overtime rule threatens to close those career pathways that have been paved by hard work. 

Thank you for your time today, and I am happy to take any 

questions. 

Chairman CHABOT. Thank you very much. Commissioner Tipton, you are recognized for 5 minutes. 

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7 

STATEMENT OF THE HONORABLE JERRIE TIPTON 

Ms. TIPTON. Thank you, Chairman Chabot. Is that right? 

Chairman CHABOT. Chabot like rabbit, but yeah. 

Ms. TIPTON. Chairman Chabot, Ranking Member Vela ́zquez 

and members of the Committee, thank you for the opportunity to 

testify today on the impact of U.S. Department of Labor’s overtime 

rule on entities including small governments. 

My name is Jerrie Tipton, I serve as chair of the Mineral County 

Nevada Board of Commissioners, and today I am representing the 

National Association of Counties. 

Mineral County has a population of 4,479. Our county employs 

102 full-time salaried workers—no 102 full-time employees and has 

a median household income of the county of $38,664. Mr. Chairman 

and members of the Committee, as you continue to assess this new 

rule and the potential impact on small entities, including counties, 

I would like to highlight three observations. 

First, America’s 3,069 counties employ 3.6 million people and deliver public services to more than 300 million Americans. Because 

of our role as employers we are concerned that the new rule could 

have unintended consequences for counties, especially small and 

rural counties, hindering our ability to provide crucial services to 

the communities from transportation and health, to public safety 

and emergency services. 

Almost 70 percent of counties are considered rural, with fewer 

than 50,000 residents. Together we employ over 410,000 full-time 

workers, and serve almost 40 million Americans. Most of us do not 

have the flexibility in our local budgets to pay the newly eligible 

employee overtime pay, especially as soon as December. Rural 

counties have been doing more with less, and without new revenue 

sources it is hard to see any alternative than to cut services that 

benefit the residents to pay for this rule. 

Second, the new rule does not adequately address the wide variations in local labor markets across the country. Labor markets 

across the country vary dramatically in our counties. However, the 

DOL’s overtime rule takes a one size fits all approach. Let me explain why this is a problem. In 34 of the 50 States, local government employees earned less than $46,000 a year, less than the new 

salary threshold. In 97 percent of the counties in the South Census 

Region, the average wages in local government are less than the 

new threshold. That is why DOL rule does not provide an accurate 

picture of the major differences in labor markets across the local 

communities. 

Finally, the new rule will have broad consequences for taxpayers 

and county services. Many counties are still struggling to recover 

from the recession and may not have the resources to absorb sudden spikes in labor costs. According to the NACo’s County Economies 2015 report, only 214 of those county economies have fully recovered to their pre-recession levels. In Mineral County the new 

rule would make 13 to 17 of our full-time, 102 full-time employees 

eligible for overtime pay. The additional cost would be up to $45,000 a year for us. It 

might not seem like a lot but it poses quite a financial challenge 

since counties are limited in our ability to generate local revenue. 

In fact, more than 40 states limit the county’s ability to collect 

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sales tax and/or property tax and other fees. This leaves us with 

a difficult choice: Which critical local services do we cut to fund the 

rule? 

Additionally, 62 percent of counties nationwide have considerable 

federal land within their boundaries. Federal lands are not subject 

to local property taxes, further reducing the local property tax base. 

Moreover, many counties have budget years that run from July 1st 

to June 30th, which means their budgets have already been approved for the coming fiscal year. In my county, we finalized our 

budget before the 1st of June and had it certified and approved by 

the State of Nevada. Since the DOL rule goes into effect in December, it doesn’t take into account that our finances are already set 

through next July. It complicates our ability to comply with the 

rule in the short term. And furthermore, counties have limited 

human resource personnel and advisory staff. 

While the DOL estimated the small entities may incur $100 to 

$600 in compliance costs, counties typically spend a higher amount 

of time and money on compliance because we have less staff capacity and in-house expertise. Many counties may need to hire outside 

consultants which is again costly. 

Finally, comp time not a complete solution for counties. Where 

the DOL rule allows us to provide comp time this isn’t realistic 

since we have such a small number of employees to start with. If 

one key employees uses comp time, I may not be able to carry out 

public services that protect the community. For example, we have 

one librarian who is now eligible for overtime pay. If she uses comp 

time, we would have to shut the library down and that would create a problem for some of the residents because the library is the 

key source for Internet access in a county with limited broadband 

service. 

In conclusion, while we share the same goal of fair wages, we are 

concerned that the new rule will impose considerable burdens on 

the counties. We stand ready to work with Congress to help craft 

policies that are fair to workers and workable for county governments. 

Thank for the opportunity to testify and I will be happy to take 

any questions. 

Chairman CHABOT. Thank you very much. Mr. Macre, you are 

recognized for 5 minutes. And feel free to mispronounce my name 

if you so choose. 

STATEMENT OF ALBERT F. MACRE 

Mr. MACRE. Good morning, Chairman Chabot, Ranking Member 

Vela ́zquez and members of committee. My name is Albert Macre. 

I am a CPA, and the owner of several small businesses located in 

eastern Ohio, one of which, Payroll + Services, is affected by the 

new Department of Labor overtime rules for salary exempt personnel. And I am pleased to be here on behalf of the National Federation of Independent Business to discuss these rules at today’s 

hearing. 

NFIB is the Nation’s leading small business advocacy organization, representing 325,000 independent business owners located 

throughout the United States, 25,000 of which are located in my 

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home state of Ohio and several who are here to support me in my 

testimony today. 

As a small business owner with several salaried employees positioned between the current exempt overtime earnings threshold 

and that created by the DOL new rule, I now find myself standing 

with countless other small businesses forced to swallow more government medication prescribed before an accurate attempt at diagnosis has been completed. 

NFIB believes that the rule will have a substantial negative impact on small businesses and their employees. Frankly, the 100 

percent increase in the salary exempt threshold to $47,500 is too 

much too fast. To put the significance of this into perspective from 

the time the last is salary threshold was increased in 2004, the 

Consumer Price Index has only risen by 28 percent. 

To make matters worse, the threshold will be automatically updated every 3 years. And while the rule does allow for the use of 

nondiscretionary bonuses and incentive payments to satisfy up to 

10 percent of the standard salary level, the reality is that few administrative and lower level supervisory personnel receive such 

compensation. 

NFIB estimates that the new rule will impact approximately 40 

percent of small businesses, while the Department of Labor has 

said that the rule would affect over 4 million employees. Instead 

of increasing wages for certain employees as the DOL might 

project, the rule will force small business owners to take more control of employee hours and benefits to keep costs in check. These 

controls could ultimately result in employees taking home less 

money annually. And don’t underestimate the impact on employee 

morale as affected employees are told that they must now punch 

a time clock for the first time in their careers. 

In addition to these negative impacts, the implementation window is very short. This rule will become effective on December 1, 

2016, just over 5 months from now. Given that many small businesses are still struggling with the implementation of the Affordable Care Act 5 years after enactment, this window of compliance 

barely seems cracked open. 

From a personal perspective, this rule is likely to have negative 

consequences not only to my company but my employees as well. 

Payroll + opened in 1995 in response to my clients’ desire to farm 

out payroll processing services to a local, low cost provider. We currently have three salaried employees earning above the current 

threshold and below the new amount. We operate on a 30 to 35 

hour workweek for 8 months of the year but do incur substantial 

overtime during the four payroll tax months. 

Our employees appreciate the certainty of their salary-based take 

home pay each period. They also appreciate the fact that they don’t 

have to punch a time clock every day. And I estimate that the 

roughly 600 hours of overtime our employees work each year are 

offset by the less than 40 hour workweek the remainder of the 

year. 

Unfortunately, the law doesn’t allow me to bank the short weeks 

to offset the long weeks. In addition, we pay 100 percent of our employees’ health insurance and have done so since we opened our 

doors. 

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Without getting into the analytical weeds, in order to keep employee take home pay consistent, we are contemplating a system of 

salary advances to be recovered during the overtime months. In 

order to keep our cash flow level, we are contemplating for the first 

time in 20 years requiring employees to bear a share of the cost 

of their health insurance benefits. 

DOL’s new overtime rule will have a significant, and in my belief, negative impact on employers and employees alike. In order 

for small businesses to avoid costly overtime pay, managers move 

from their salaried positions to hourly jobs will need to keep time 

cards and be prohibited from working overtime, including answering email from home. This will not only be a burden financially, 

but in terms of productivity, as managers and supervisors will only 

be allowed to work when permitted. From an employee perspective, 

the flexibility that so many had will become a thing of the past. 

NFIB anticipates the changes will hit hardest those low- to midlevel managers. These managers currently make less than the proposed threshold but value workweek flexibility and benefits such as 

health insurance and employer provided pension benefits. Also 

fewer salaried managerial positions would signal to employees that 

there is little opportunity for growth at the company. These consequences will severely hamper opportunities in growth and development, not just for the small business but their employees as well. 

Unfortunately, neither can afford it. 

Thank you for allowing me to share my thoughts with you and 

at the appropriate time I will answer questions. 

Chairman CHABOT. Thank you very much. Ms. Walters you are 

recognized for 5 minutes. 

STATEMENT OF CHRISTINE V. WALTERS 

Ms. WALTERS. Thank you. Good morning, Chairman Chabot, 

Ranking Member Vela ́zquez, and Committee members. 

I am Christine Walters, sole proprietor of FiveL Company where 

I serve as an independent human resources and employment law 

consultant to numerous nonprofit and small business clients. Prior 

to that I worked as an in-house HR practitioner for 12 years in the 

nonprofit sector, including government contracting. 

I appear before you today on behalf of the Society for Human Resource Management or SHRM. 

I appreciate the opportunity to share a little bit about what this 

new overtime rule means for my clients, as well as SHRM’s reaction to the final regulation. 

In short, Mr. Chairman, while SHRM supports an increase to the 

salary threshold, we agree that the final overtime rule may be too 

far too fast. Small businesses and nonprofits in particular may be 

disproportionately impacted by the rule’s dramatic and more than 

100 percent increase to the salary threshold, and this threshold 

may escalate since the final rule includes an automatic update 

every 3 years. 

Let me explain briefly how the rule may impact some of my clients, their employees, and the services that they provide. Let me 

start with the employees and how they may be impacted. 

Under the final rule, newly nonexempt employees will likely face 

reduced workplace flexibility or I will call it work flex. Today, many 

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employers provide exempt employees with work flex opportunities, 

such as, for example, the ability to leave work early next week, 

such as for a parent-teacher conference, in consideration of having 

worked extra hours this week, and to do that without using paid 

leave and without reducing their pay. In fact, employers are generally prohibited today by law from docking an exempt employee’s 

pay for a partial-day absence. 

And that is at the heart of exempt compensation. The salary is 

based on an understanding that an employee’s work schedule regularly exceeds 40 hours a week and that employee is paid the same 

wages every week regardless of hours worked, whether it is 46 or 

36. 

However, employees classified as nonexempt cannot be granted 

the same flexibility that I just described. If they work in the private sector more than 40 hours this week, they must be paid overtime, and that cannot be offset by taking hours off from work next 

week. Thus I find most employers require nonexempt employees to 

use paid leave for any partial or full day absence. And if an employee has no paid leave remaining, then the absence from work 

may be without pay where that is permitted by state or local law. 

It is clear to me and others that nonexempt employees do have 

fewer options and less flexibility to manage work-life needs than 

exempt employees. 

And while the rule affects all employers, the rule will drastically 

impact the operations of small business and nonprofits who cannot 

simply raise the fee or price for the services they offer to offset 

those increased labor costs. They must find a way to raise additional funds, obtain an increase from public or private sector funding sources, all of which are limited. 

For example, one of my clients provides rehabilitation services to 

a disadvantaged population of whom 85 percent currently meet the 

poverty threshold. This organization will not and really cannot 

transfer those increased labor costs to their low-income consumers. 

They have to face some unattractive alternatives. One might be reassigning the overtime duties that are currently performed in excess of 40 hours in a week to those employees who will remain exempt, and that is likely to adversely impact those coworkers’ working relationships as well as the employer and employee relationship. 

And the impact won’t be just in the form of expenses, but also 

in the form of compliance. The Office of Advocacy of the U.S. Small 

Business Administration noted that increasing the salary level 

would add significant paperwork burdens on small entities, particularly businesses in low-wage regions and industries that operate with a low profit margin. 

For example, employers also have to consider federal, state, and 

local laws and regulations that apply to nonexempt employees, including and not limited to dictating pay frequency, paid leave mandates, minimum wage, fair and predictive scheduling requirements, 

limits on mandatory overtime, on-call pay, travel pay, waiting pay, 

pay before and after a holiday, to name a few. 

So for small businesses and nonprofits who often have a one-person HR manager/payroll manager, navigating all these complex 

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rules can add an additional compliance burden that is overwhelming. 

So with that, in closing, SHRM and employers across the country 

have serious concerns with the implementation of the final overtime rule at this time. We strongly support House Resolution 4773, 

Protecting Workplace Advancement and Opportunity Act. It simply 

seeks more time for further study on the economic impact of the 

rule and what it will have on employers for varying sizes, industry 

sectors, and locales. SHRM and its members look forward to working with Congress to improve this rule in a way that works for employers and employees. 

I thank you and also welcome your questions. 

Chairman CHABOT. Thank you very much. 

Mr. Eisenbrey, you are recognized for 5 minutes. 

STATEMENT OF ROSS EISENBREY 

Mr. EISENBREY. Thank you, Mr. Chairman, Ranking Member, 

members of the Committee. I am Ross Eisenbrey with the Economic Policy Institute, a small nonprofit with one HR manager who 

somehow manages to have us comply with the law. 

And we have looked at this, and the amount of time it takes to 

figure out what this rule does and comply with it is minuscule 

since what it says simply is, if you make less, if you pay your employee less than $47,476 a year, pay overtime. That is what the law 

does. 

It makes it much easier to comply for nonprofits. We have talked 

to nonprofit managers who say that they have maybe even 100 employees at various nonprofits scattered across the country that they 

supply HR services to and it will make the job so much easier for 

them. They don’t have to look at duties tests. They don’t have to 

figure out whether somebody is an administrative employee or 

qualifies as a professional. They just know, if is less than $47,476, 

that is the end of the story. 

The rule that the Department has issued increases the number 

of salaried workers who are entitled to overtime pay and does several important things. It will encourage employers to give raises. 

And the rulemaking record is full of employers and employer associations who did surveys and their members say they will raise 

their employees above the threshold. So there will be pay increases 

across the country as a result of this rule. 

It will reduce the excessive number of hours worked by millions 

of others, giving them a better work-life balance. It will ensure that 

salaried employees get paid time and a half when they work more 

than 40 hours in a week. And it will cause employers to create 

more than 100,000 jobs, according to the National Retail Federation, in its sector alone. And Goldman Sachs affirms that view. 

This is a job-creating rule. 

They make it clear, the rules make it clear that it doesn’t matter 

whether you are salaried or hourly, blue collar or white collar or 

pink collar, you will be entitled to overtime pay if you make less 

than $913 a week. This provides clarify that will prevent litigation. 

It tells people their rights in a way they haven’t known them before. 

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It is popular. The Gallup Poll found that 67 percent of the public 

supports making more employees eligible for overtime pay and only 

14 percent oppose it. 

It carries out the statutory intent of the Fair Labor Standards 

Act, and this is the Department’s duty after all. The law says that 

everyone is entitled to overtime pay, essentially, except bona fide 

executives, bona fide professionals and administrators. There is no 

exception from the rule for salaried workers, white collar workers, 

supervisors, paraprofessionals, or, incidentally, sales employees. 

The exemption applies only to a narrow class of genuine professionals, genuine executives, and other highly paid employees whose 

independence and bargaining power make protection against overwork unnecessary. Being called a manager and being paid a salary of $35,000 or $40,000 a year doesn’t make you that kind of an executive. Dawn 

Huey, a woman I met who lives in Swartz Creek, Michigan, was 

a dollar store manager for almost 3 years. When she was hired, she 

had 28 years of retail experience and felt she had finally climbed 

up the ladder into the middle class. She was told she would work 

44 hours a week at about a $35,000-a-year salary. 

But the 44-hour weeks quickly stretched into 60 and 70 hours 

with no overtime compensation. She wasn’t allowed to hire enough 

staff to do all the work, so she did it herself; 13-hour shifts from 

open to close became common. At one point, she went 4 straight 

weeks without a day off and usually worked holidays with no overtime compensation. The first 4 to 5 hours of every day she was the 

sole store employee, she worked the cash register, did inventory, 

stocked shelves, moved heavy boxes. She literally ran the store on 

the run and ended the day mopping floors from front to back. 

You hear from some employers and lobbyists about flexibility 

that salaried workers have. Here is what Dawn said: ‘‘The idea 

that I had been hired with a flexible salary was a cruel joke.’’ 

There were times her executive—her so-called executive salary—divided by her weekly hours was less than the minimum wage, and 

that was legal because exempt executives are exempt from the minimum wage too. 

Her story is repeated all across America at major corporations 

and their small business franchises from Burger King, to Dunkin’ 

Donuts, to Walgreens. The new rule will not completely eliminate 

that kind of abuse of overtime, but it will make it more costly, and 

therefore less likely. 

This rule has great benefits for people like postdoctoral researchers who are paid $43,000 a year on average and work 55 hours or 

60 hours a week. They will get salary increases at universities all 

across the country because it will be much cheaper for a university 

to pay them a more reasonable salary for their Ph.D. in science and 

their science research abilities than it will be to pay them the overtime that would otherwise be required. 

The truth of the matter is that the rule will hardly make a dent 

in most employers’ payrolls and profits. And I encourage you to 

look at the Department’s rulemaking where table 30 shows that 

the impact on every industry group is less than one-tenth of 1 percent of payroll. Only transportation and utilities will experience 

costs as great as 1 percent of profits. 

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That is a tiny price to pay for a rule that will provide a better 

work-life balance for millions of Americans, that will improve 

health and productivity, reduce employee turnover, and put more 

money into the pockets of millions of middle class Americans. 

Chairman CHABOT. Thank you very much. 

We will now turn to ourselves and ask questions. I recognize myself for 5 minutes. 

I had a number of questions I was going to ask but your testimony, Mr. Eisenbrey, I am going to shift direction. I think that 

perhaps all the concerns that I have heard from America’s small 

businesses for months and months and months now, and perhaps 

the panel here today, our concerns must have been unfounded. This 

is a good rule that is going to benefit workers all over the United 

States apparently. 

I would be happy to open it to the other witnesses. Do you want 

to tell the panel why you think that perhaps the point of view that 

you just heard testified to by Mr. Eisenbrey is incorrect or is he 

right? 

Mr. Robinson. 

Mr. ROBINSON. Thank you, Mr. Chairman. 

I can comment pretty directly there. I mean saying it is so easy, 

all you have to do is pay overtime to people that make less than 

$47,500 a year is like telling me 5 years ago: The ACA is so easy, 

just buy everybody health insurance, no problem. 

Chairman CHABOT. Yeah. And the ACA, for anybody who may 

be watching out there, is the Affordable Care Act, or some people 

refer to it as the un-Affordable Care Act or ObamaCare, that is 

what you are referring to. 

Mr. ROBINSON. Correct. And we do provide and have always 

provided health care for our employees, but it makes the compliance so much harder. 

And buried in table 30—and I haven’t read that report—but buried in table 30 is Hireology and thousands of other technology 

startups. And I am telling you firsthand this is going to take our 

cost up 20 percent, not a tenth of a percent, 20 percent. 

And, yes, we can do that, but what that means is we shift very, 

very scarce resources from one part of the business, where we can 

maximize our growth and create more opportunity, to complying 

with this rule and to hitting a salary threshold. 

And the net effect for those employees that we bump base is we 

have to reduce their upside, because you cannot take up fixed cost 

and not reduce variable upside. There is just not enough money to 

do that. 

Chairman CHABOT. Let me go ahead and ask another question. 

Commissioner Tipton, I will turn to you, if I can. 

In your testimony, you explained that Mineral County, your 

county, doesn’t have the flexibility within its budget to comply with 

the overtime rule by December 1, and that you don’t see any alternative to cutting services. What type of services would you have to 

cut? And how would this affect the residents of your county that 

you represent? 

Ms. TIPTON. Okay. Our budgets are set. The State of Nevada 

says this is when your budget cycle is. They are done. 

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For us, we can’t raise revenue. Mineral County is 2 cents over 

the state cap already paying off a school bond debt. We had less 

than 1.5 percent of our land base has taxable infrastructure on it 

out of 3.4 percent private land and the rest of it is federal in one 

form or another. There is nothing to raise taxes on. 

What it is going to mean is, in order to make this work, if we 

have to fall in compliance, and we are going to have to, we are either going to reduce, to start with, what is considered nonessential 

services like the library, the park and rec. And my offset to that 

is in that community, if I don’t have something for those kids to 

do, I am going to have it them in JPO. 

Chairman CHABOT. And JPO is? 

Ms. TIPTON. Juvenile protection. 

Chairman CHABOT. Thank you. 

Let me shift over to Mr. Macre now, if I can. 

Sir, could you give us some examples of employee perks and benefits that are likely to have to be reduced because of this new overtime rule. 

Mr. MACRE. From our perspective, again, not only are we a 

small company, but we are a small payroll company that performs 

payroll services for other small companies. A lot of those businesses 

do provide pension benefits, 401(k) contributions, health insurance. 

There is not a finite number of dollars here. In Mr. Eisenbrey’s testimony he said, if they make over $47,500 just pay them overtime. 

Well, hell, that is real easy, but where does this money come from? 

We figured that that increase in overtime cost to our small, little 

company would entirely consume the revenue that is generated by 

12 clients. So where do we just magically get this 8 to 10 percent 

increase in size to automatically cover this? So we are likely to 

have to for the first time, like I said, take health insurance dollars 

from these employees. 

And the way I projected it, our take-home pays are actually going 

to decrease as a result of paying our employees more. The math is 

a little bit funky, but accountant math and economics math are a 

little bit funky at times. But we have determined that actually payroll, net pay, could decrease as a result of gross wages going up. 

Chairman CHABOT. Thank you very much. My time has expired. 

The Ranking Member is recognized, Ms. Vela ́zquez of New York, 

for 5 minutes. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Mr. Eisenbrey, from 1979 to 2013 inflation-adjusted wages have 

grown 15 percent for the bottom 90 percent of income earners, 

while wages for the top 1 percent have grown 137 percent. I think 

that it is very clear that something has to be done. How will this 

rule accomplish that? 

Mr. EISENBREY. It is a great question and it answers Mr. 

Macre’s query, which is the money will have to come, as he says, 

from somewhere. Where it will come is from the owners of the businesses. There is no question about that. And if you are the owner 

of a business, you can not like that or you could be like Mitchell 

Kaplan at Kaplan Stahler in Las Angeles who said: I make a good 

income, and the law will change and I will pay my people more. 

SBREP-219A with DISTILLER

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Executive salaries have increased in the United States so much 

faster than salaries at the bottom, the share of national income 

that goes to business owners has increased so much that we now 

have a trillion dollars less that is being paid to the labor force in 

the United States than we otherwise would have if we had the kind 

of equality that the Ranking Member mentioned. 

Ms. VELA ́ ZQUEZ. California has the highest state overtime 

standards and over the last 5 years has led the country in employment growth. Is what California did a model for the Nation? 

Mr. EISENBREY. That is exactly right. 

Ms. VELA ́ ZQUEZ. And how do these findings compare to the testimony we have heard today? 

Mr. EISENBREY. The fact of the matter is that employment 

growth depends on businesses having customers, and businesses 

have customers when working people are paid enough that they 

can go out and shop and buy things. California has been the leader 

in the overtime threshold at $41,500 and, as you say, its employment growth is much faster than the Nation as a whole. It is not 

proof, but it is a real indication that this kind of policy, putting 

more money into the pockets of the workers, is good for the economy overall. 

I would just like to say that back in 1975, for example, and in 

the 1960s, we had a much higher threshold. Small businesses did 

not suffer then, they managed. I am old enough, maybe older than 

the rest of the people on the panel, to remember working back then 

when the threshold in today’s dollars would have been $64,000. 

So this is a much easier rule to adjust to than businesses had 

to adjust to in the past. They did it well then, they can do it today. 

Ms. VELA ́ ZQUEZ. Thank you. 

As we all know, the cost of living and therefore wages drastically 

differ based upon the location of the business. And this one was 

one the most common concerns in comments filed, that the proposed changes do not account for the diverse economies across the 

country. 

Why did DOL choose to go with a national minimum salary 

threshold instead of keying it to government data on regional costof-living differences? 

Mr. EISENBREY. What the Department did was actually it did 

what some people will call one-size-fits-all, but the one size was fit 

to the poorest region in the country. They set the salary at the 40th 

percentile for salaries in the South, in the poorest of the four census regions. As I say, it is a very modest level. This is not an executive salary in New York and an executive salary in Boston. It has 

been set at the level for an executive salary in Chattanooga or in 

Tipton, Nevada. 

Ms. VELA ́ ZQUEZ. Small-business owners, and we heard them 

here, are warning that they may have to move currently salaried 

employees to hourly rates. This can be construed as a demotion by 

these workers and can impact their morale and even their fringe 

benefits. Is there a way for small businesses to avoid such changes 

under the final rule? 

Mr. EISENBREY. Yes. If you look in the comments that were 

submitted for the record, there are numerous comments where employers say they will not do that, they will either reduce, just hold 

SBREP-219A with DISTILLER

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people to 40 hours a week. They don’t have to change them to hourly. That is not the majority of the survey findings that I see in the 

record in the comments that were submitted. 

There is nothing in the rule that says that you have to change 

someone from salaried to hourly. This Committee had a witness 

who made this claim back in the fall. She herself was already 

tracking the time of workers and giving them bonuses based on the 

extra time that they worked. 

So there is nothing in the rule that dictates how an employer responds to this. There are a variety of different responses possible. 

I have talked to employees, incidentally, who have already in some 

cases been switched to receiving overtime. I am not sure whether 

they were salaried or hourly after the change. But they said: This 

doesn’t feel like a demotion to me, I am happy getting the overtime. 

Ms. VELA ́ ZQUEZ. Thank you. I yield back. 

Chairman CHABOT. The gentlelady’s time has expired. 

The gentleman from Missouri, Mr. Luetkemeyer, who is the vice 

chairman of the Committee, is recognized for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman, and I appreciate the opportunity. 

I think we need a little clarification here. I was listening to Mr. 

Eisenbrey’s testimony, and he made the comment that we have 

117,000 new workers that are going to be hired. Those, according 

to the study that he quoted, an Oxford Economics study that was 

commissioned by National Retail Foundation, those are part-time 

workers, by the way. 

And those part-time workers are required to be hired because 

you are going to have to have somebody else to do the additional 

work that the people who have been working will not now be doing 

because you are not going to pay them overtime. It is cheaper to 

hire someone part-time than it is to pay them overtime. So it is a 

part-time worker. 

Also, you made a comment with regard to 42 million new people 

that are going to be eligible for overtime. The same study indicates 

that three-quarters of those people right now don’t get overtime. So 

you are only talking about 825,000 people. And the same study also 

indicates that they probably would get about 1 hour per work of 

overtime, which would be about $20 per week that they would increase. 

In the meantime, the Regulatory Flexibility Act analysis by DOL 

itself indicates that there would be $3,265 of total compliance costs, 

including wages, which means that for $20 an hour for the employees it is going to cost the employer $3,265 for the individual. Plus, 

the employee is probably going to lose benefits, flexibility from the 

standpoint of health benefits, retirement benefits. 

And, Mr. Macre, you deal with a lot of small businesses. Is that 

the experience that you see with what is going on, that people are 

going to have to hire part-time workers to make up the difference, 

cut back on benefits to be able to make the bottom line? 

Because at the end of the day, as Mr. Eisenbrey made the comment a while ago, I don’t think he understands there is only a finite number of dollars in each one of the pockets of the owners. 

You can only pay for so much increase in cost. You can’t continue 

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to pay to increase this otherwise your competition is going to eat 

you and you are going to go out of business. 

Mr. MACRE. Well, again, where we are, we are in eastern Ohio, 

we are in that Appalachian area, we really can’t raise fees. So it 

was pointed out that the money could come from the owners’ pocket, and I would be happy to send you my K-1 from Payroll + Services. There is no money that goes into my pocket from that business. So it is going to come from the employee’s pocket. 

The business was never designed to generate immense amounts 

of profits. It was designed to generate a service and actually to employ people. That is probably an anomaly in the business world, 

but that is the way it was set up. 

So I don’t it know what option we have other than to reduce 

costs, because, again, the increasing revenue option is probably off 

the table. 

Mr. LUETKEMEYER. Commissioner Tipton, you are in a unique 

situation where you can’t go out and price your product. You are 

delivering services with a finite number of tax dollars. How do you 

anticipate trying to do this? Are you going to wind up having more 

part-time workers, are you going to reduce the benefits, health insurance, retirement benefits for the employees? I mean, how are 

you going to make the same number of dollars stretch to comply 

with the rules? 

Ms. TIPTON. Yes, sir. I am not the king of the world, and so this 

is something that we have been having conversations on at the 

board level. Our options are right now Mineral County pays 100 

percent of the employee benefits and at least half of their retirement right now. We are either going to have to say, okay, boys if 

we have to do this, then those of you we are doing this for, you are 

going to have to pay part of your benefits. And if it is sauce for the 

goose, is it also sauce for the gander, see? So do we make everybody pay part of their benefits? 

I look for us to reclassify some of those individuals and take 

them out of a salary exempt to an hourly exempt, and what business does not get done does not get done. We can’t afford to hire 

part-time people, not even school-to-career people 19 hours a week 

to pick up the slack. We don’t have the revenue, sir. 

Mr. LUETKEMEYER. Mr. Robinson, what kind of a problem do 

you have with employee morale when you have to reclassify somebody down to an hourly worker? Even though they are making the 

same amount of money, now they lose benefits, lose retirement, 

even though they are doing the same job, but they are being viewed 

as an hourly worker. 

How does that work with employee morale? And if you do wind 

up paying benefits, how is that going to affect the rest of the employees who don’t get the benefits? 

Mr. ROBINSON. Well, it is going to have an impact. And I invited my whole company to tune in and listen to this, and we are 

going to have a talk about it when we get back to Chicago and explain why we are having to take these actions. 

We offer our employees unlimited time off. We don’t track time 

off. People need to take time, they get the job done, they can take 

2 weeks, they can take 3 weeks if they want, with permission to 

do that. They can take as much or as little as they want. They can 

SBREP-219A with DISTILLER

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work from home 100 percent. They can come in the office 100 percent of the time. They can do whatever they want. We don’t track 

any of that. 

Let me state for the record, our goal, we would love to see wages 

lifted as well. We share that goal. You do that by attacking opportunity and growing it, right, and employing people, that is how you 

do that. 

And I would invite Mr. Eisenbrey to come in and tell my sales 

force that they are not a bona fide professional. These folks went 

to school, it is 100 percent college degree, most of them are carrying huge student loan payments. They have invested in themselves to get ahead. 

And imagine me walking back in there and saying: Hey, guys, 

here is your new time clock. We are going to punch it. And I know 

you are really striving to make that extra money, but you can’t 

over 40 hours a week. And you can’t work from home anymore unless we put this time-tracking app on your phone. And by the way, 

don’t respond to customer inquiries after 5 o’clock, they are just 

going to have to wait till tomorrow. 

And so this cascades and impacts our ability to compete against 

big players. All we can do is work harder to earn that business. I 

am concerned at every level of how we have built this company 

that we are negatively impacted. 

Mr. LUETKEMEYER. Thank you. I yield back. Thank you, Mr. 

Chairman. 

Chairman CHABOT. The gentleman yields back. 

The gentleman from Nevada, who is the chairman of the Subcommittee on Investigations, Oversight and Regulations, Mr. 

Hardy, is recognized for 5 minutes. 

Mr. HARDY. Thank you, Mr. Chabot, for holding this hearing. I 

think it is highly important. 

Mr. Eisenbrey talks about these groups with the realtor folks 

being on board with this situation. I have heard nothing but negative in my office from everybody that I have talked to, whether it 

is NFIB or the real estate folks. So I guess I am getting a little 

bit different data than maybe you are getting. 

Mr. Eisenbrey, have you ever been an employer? Have you ever 

had your own business? 

Mr. EISENBREY. I am an employer now. 

Mr. HARDY. Have you had your own business? 

Mr. EISENBREY. I am the vice president of a 40-person nonprofit. 

Mr. HARDY. So you consider that—— 

Mr. EISENBREY. So I have to meet a payroll, yes, absolutely. 

Mr. HARDY. Okay. Interesting. 

With the comments that have been made here, you know, we 

have had a letter that has gone out, myself and Mr. Knight, we 

joined together, over 100 Congressmen signed on to it, bipartisan 

letter. This has been one of the most disturbing rules for the business sector that I ever listened to, even with the state legislature. 

We do things that more directly impact. But this across-the-board 

legislation, and in my district every county is going to get hit by 

this. Even the Las Vegas area is going to get hit very hard by this. 

SBREP-219A with DISTILLER

20 

So, Ms. Tipton, I would like you go in, you talked about you have 

100 employees, tell me what kind of impact that is going to do 

overall. And maybe even dabble into—all of you would like to 

maybe dabble into what is going to maybe happen to the hiring 

process. We have talked about the impact on those that are employed. What happens to the future of the hiring process? 

So, Ms. Tipton, I will give you first. 

Ms. TIPTON. Thank you. 

For Mineral County, depending on how the board determines we 

are going to handle this, we may not hire anybody. That is the bottom line. We have a finite amount of resources. 

If I had an ask of this commission, see if Congress can’t step 

back and look at this from a more commonsense standpoint maybe. 

Look at a sliding scale. $28,000 dollars is ridiculous, and we all 

know that, even in Mineral County, that is one of the poorest of 

the poor. 

But look at this from a different—what is your population base? 

And when you are talking regional, if you throw Intermountain 

West into the Pacific Rim, the rural Intermountain West falls off 

the board. It doesn’t even get looked at. You throw 15 counties in 

Nevada in with the two urban counties in Nevada, it doesn’t get 

addressed. 

What is your public to private land? All of you back here, you 

have private land that you have taxes on, and every square inch 

of your land back here produces. Ours doesn’t and it can’t because 

of the nature of the beast. 

What is it going to do to us, Congressman? We won’t hire. We 

will not increase hiring. We can’t. We can’t afford to. 

Mr. HARDY. Anybody else care to address that? 

Ms. WALTERS. I would share one thought and that is the challenge in the recruiting process. I think in 1938, when the FLSA 

was enacted, America had a very different economy. We were 

strong in manufacturing. An employer would have the same job 

with lots of employees working in the same job, so that if those employees were cut to 40 hours, creating those part-time jobs would 

be—could be full-time employees, easier to recruit. 

Today, for example, one company I know, they have 38 employees. They have 32 different job titles. So when it comes to reclassifying some of those employees who are exempt today to nonexempt, 

and then trying to recruit a part-time worker, to work those hours 

over 40 at straight time, it is going to be incredibly challenging, I 

think, to find someone who was qualified and interested in working. 

And Ranking Member Vela ́zquez, I think you said today the average may be 47 hours a week and working 7 hours overtime a 

week. And so the ability to merge those extra hours into a full-time 

job is just not feasible because they are all different jobs. So I think 

that is a challenge that is on the table as well. 

Mr. HARDY. You know, the issues that we have also heard about 

is the education system, whether it be at the higher ed or the K 

through 12 situation with certain counties and areas and how that 

overtime ruling will impact our university system, and the individuals coming out of those higher ed programs. A lot of schools pride 

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themselves in how they place their graduates and the opportunity 

they have for the students. 

Do any of you hire from the university systems, and is that going 

to impact their opportunity to maybe enter into a job in the future? 

Chairman CHABOT. And the gentleman’s time is expired, but 

you can answer the question if you like. Ms. Walters. 

Ms. WALTERS. Thank you. One academic client I have, they are 

estimating the biggest impact to them will be for their coaches and 

their academic counselors. The coaches operate very, very independently now. They coach evenings, weekends, flexible hours, do 

not track time. Currently, they are properly classified as exempt, 

based on the salary increase they may, need to be reclassified as 

nonexempt. So that is a big philosophical change, you know—the 

issue of what I hear—a common response from employees is a trust 

issue. What are you telling me? Why do I have to track my time 

today and I didn’t yesterday? Is it because you no longer believe 

I am really working, I am really producing? 

Also for the admissions counselors, folks who, again, have come 

out of school, many have a certification. They belong to a professional, a national association. They travel, they go to college fairs. 

You know, they are the representative of the university or the college. Converting them to nonexempt I think, again, is going to be 

this philosophical, employee/employer relations challenge of, I don’t 

understand. 

So it is, I think, starting the dialogue with why we are changing 

and then what the strategy is. And I think the beauty of part of 

this dialogue is, as I don’t disagree with some of what Mr. 

Eisenbrey has shared, what I would reverse is I think, yes, the 

analysis becomes easier. If you make less than $913 a week, you 

need to be reclassified as nonexempt, but I don’t think that is the 

end. I think that is the very beginning. 

And what I am hearing employers say is, okay, now what do I 

do and how do I do it? For example, I have heard at least seven 

different options how employers may respond to the new regulations. Four of those seven would not result in the employee receiving any more compensation than they do today. Three would. And 

so employers are trying to figure out which option is going to work 

for them, what the fiscal impact will be to their company, and what 

the relationship impact will be to their employees. 

So it is just a lot of dialogue, and I think we are asking for time 

to just, you know, have the economic study, figure out what the impact is, and then move forward in a way that is going to work really well for the employees and the employers. 

Chairman CHABOT. The gentleman’s time has expired. 

The gentleman from Ohio, Mr. Davidson, who is a relatively new 

addition to this Committee—and for those who may not know replaced Speaker Boehner in the House—is recognized for 5 minutes. 

Mr. DAVIDSON. Thank you, Mr. Chairman. 

Guests, thank you for coming here and thanks for your testimony. 

The past 15 years I have spent growing small manufacturing 

companies. I had very little background with politics other than as 

a news junkie and decided to run for office, so pretty recently here 

from the small business world. Our businesses in Ohio have about 

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200 employees and will have some firsthand experience from it, but 

I have enjoyed some roundtable feedback. 

And I will say, Mr. Eisenbrey, your perspective seems out of 

touch with the folks in the Eighth District of Ohio. We cannot create a bigger middle class simply by decreeing it from Washington 

any better than it has been decreed from any throne anywhere in 

the world. It is ignorant of history, economics, and math. 

And as an example, California was well below the threshold at 

41. Do you know the median annual income in California? 

Mr. EISENBREY. Not offhand, no. 

Mr. DAVIDSON. It is $67,458 in 2014. That was number three. 

Mr. EISENBREY. That is not true. That could be a family income. That is not an individual income. 

Mr. DAVIDSON. And in the State of Ohio it is $45,000, which 

is down at number 35. So the idea that there could be some national edict, that is going to set a standard, is entirely market distorting. And when your solution, which is in line with the Administration’s solution, is we will just confiscate it from the owners, is 

also ignorant. 

Commissioner Tipton, thanks for your testimony. Who are the 

owners of your county that this would be confiscated as from? 

Ms. TIPTON. Sir, it is my taxpayers whose median annual in- come is $38,000, per household. 

Mr. DAVIDSON. Thank you. 

Ms. TIPTON. Twenty-five percent of my county lives at or below 

the poverty level. Twenty-four percent of my county is 65 or older. 

Those are the constituents that it would impact. 

Mr. DAVIDSON. Very similar for some of our counties in the 

Eighth District of Ohio. We have some great universities in the 

Eighth District of Ohio, and our country is blessed with some great 

educational solutions, not just higher education but skilled trades. 

And who are the owners there? The bill payers are students. Students are the ones that are going to pick up this tab, and, you 

know, last I checked, students are really dealing with a way to pay 

for that tuition. So your solution is to give these researchers, who 

are benefiting from better tuition and degrees, bigger wages, which 

are really financed by student loans. Students, young people, 18 to 

25 years old, generally are going to pay these wages, okay. And 

they have been decreed with very little input. So there is not a universal class warfare confiscation scheme that is going to work. 

I think that the other thing that, Mr. Robinson, you touched on, 

and from SHRM, we have been members for a long time, so thanks 

for your work in the field of HR. One of the things that really this 

rule also seems very ignorant of is the changing culture. So you alluded to it with manufacturing and kind of the stereotypical things. 

And Mr. Robinson, you also alluded to it with the way people work. 

They are sending emails. FIB, also very active, small businesses in 

the State of Ohio in the west just as in east. 

So if you guys could comment on the impact of culture and just, 

you know—I don’t know how many people came to the room without some version of a smart phone. How does this rule affect the 

ability to do work in today’s economy? 

Ms. WALTERS. Thank you for the question. One thing I would 

share is, back to kind of whether this is the beginning or the end, 

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the next thing that will be, or we understand will be happening, 

the Department of Labor has already published in its regulatory 

agenda, that it will be publishing an RFI, a request for information, seeking feedback from employees and employers about how 

they are tracking the time that nonexempt employees use electronic devices. 

So that is on the radar. We add to that population, our exempt 

employees today who will be converted to nonexempt so in the little, small litany of pay practices where we have to be cognizant of 

how we pay, when we pay, and for what we pay our nonexempt 

employees, we need to be cognizant of that as well. So there is just 

a whole lot in the mix, I think. 

Mr. DAVIDSON. Thank you for that. 

I just have one other thing. You talk about that and just to 

where this will lead us, well, just install an app for that. And that 

will be yet another encroachment into people’s Fourth Amendment 

privacy rights. So we have all here sworn to support and defend 

the Constitution, and we continue to see people who have sworn 

that oath trample it. So thanks for any other feedback you guys 

can give. 

Chairman CHABOT. Thank you very much. The gentleman’s 

time has expired. 

The gentleman from Mississippi, Mr. Kelly, is recognized for 5 

minutes. 

Mr. KELLY. Thank you, Chairman, for holding this hearing 

today. 

And thank you, witnesses, for being here. 

You know, it is so frustrating to me to hear people who have no 

idea what is going on. And Mr. Eisenbrey talks about he is a private employer, and he is a small business owner, but Mr. Robinson, 

Mr. Macre, and Mr. Eisenbrey’s testimony states Economic Policy 

Institute is both a nonprofit and a small business entity. 

For the record, I would like to share just a few facts with you 

about the Economic Policy Institute that I learned from its 

Website. From 2010 to 2014, EPI received 27 percent of its funding 

from unions and 57 percent from foundations. The chairman of 

EPI’s board is none other than Mr. Trumka, the chairman of the 

AFL-CIO. So from my perspective, EPI has absolutely nothing in 

common with the other small businesses that we have here. 

Mr. Robinson or Mr. Macre, does 80 percent of your funding 

come from unions or foundations, or does it come from you? 

Mr. ROBINSON. Our revenue comes from our customers that we 

have to deliver a service to that adds value. So no, no, sir. 

Mr. KELLY. And I wish that everything was cherry blossoms 

and rainbows. I wish everybody could have all the money that they 

want regardless of where they are from or what job they do. I wish 

we all made equal amounts. I wish I had a lot more money than 

I do. However, that is just not going to happen, and you can’t take 

it from owners who don’t have it. 

Having owned a small business, a law firm, a private practice 

law firm, where I did write the checks, and the money came from 

me, not some outside foundation, from the clients that I represented, I think it is important to understand that it is not going 

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to create 100,000 jobs. I don’t care what the statistics say. And if 

it does create jobs, those jobs are going to be part-time. 

I also worked as a city prosecutor in a county government for a 

long time. Most of the salaried employees made less than this 

amount in Mississippi, which is very, very rural. But that is a good 

living there. You understand this, that what happens is people just 

go home or you don’t—you have a hiring freeze, you don’t rehire 

because personnel is the largest cost of a local government. 

And you understand that, Commissioner. Can you comment just 

a little bit about the difference between a part time and the benefits they receive versus a full-time employee that they receive from 

the county or city? 

Ms. TIPTON. Yes, sir. Thank you for the question. In Mineral 

County, a part-time employee is 19 hours a week. They cannot 

work any more than that. State won’t allow that or then you have 

to pay retirement on them. They get workman’s comp, that is what 

they get. A full-time employee, we pay 100 percent of their benefits. 

Last year it was probably $500 a week per an employee. 

And my next worry is, it has gone up, of course, because 

healthcare has. Mineral County, Nevada, some of my employees, 

the day may come, in the not too distant future, where they are 

paying taxes on their healthcare. And that is going to be interesting too. 

Yeah, and that is it. From a part-timer they get workman’s comp, 

that is what they get, and Social Security, period. 

Mr. KELLY. And I also take exception to professionals. And 

again, I think there is just—you know, even within my district, it 

is 22 counties. I have one county that has 167,000 people in it. I 

have one county that has 8,000 people in it. So to compare those 

incomes in those counties is not—so I understand exactly what you 

are saying. 

And when you throw in Atlanta, Georgia, with Calhoun City, 

Mississippi, or Vardaman, Mississippi, those are not equal and you 

can’t compare statistics about what salaries are based on those. 

Would you agree with that? 

Ms. TIPTON. Oh, definitely. The community I live closest to is 

a population of 200. The next community is 32. The largest town— 

no incorporated cities in Mineral County—the largest town is about 

3,000. About 900 of my county residents live on the Walker River 

reservation. We—yeah, that is my residence. 

Mr. KELLY. Thank you. 

And the final point I will say is, I worked for the government as 

a district attorney, and so I hired people. 

Most of my investigators that worked for me—which are longtime law enforcement officers who are stepping up in a job and it 

paid at or less than what the salaried amount is now, which is a 

great limit—I had ADAs, assistant district attorneys who were 

coming out of law school, and I could not pay them $49,000, 

$50,000 a year because it was not within my budget. 

But the experience and the trial experience and the mentorships 

and the things those people got, but what would have happened if 

they would have said you have to pay them this or pay them overtime, I would just not have hired someone. I would have had less 

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assistant district attorneys and less opportunities. Can any of you 

comment on that? 

Chairman CHABOT. And the gentleman’s time has expired, but 

you can comment. 

Mr. ROBINSON. Well, sure, in brief, you take our—and not just 

us. Every startup who—technology startup creating the bulk of the 

high-paying jobs, in this country right now, if you take the wage 

base up 20 percent, you are eliminating one job every five hires. 

That is the math. It is simple. It is I can higher one fewer person 

in five. Now scale that across thousands of businesses like ours and 

you have the suppression on job growth which seems to me antithetical to the whole point of this exercise. 

I mean, just let us—it is a labor market. People can go where 

they want. If we treat them poorly, they will leave. We compete for 

talent. It is not just the salary. It is equity and stock options and 

all the other tools we have to compete as an employer. This is a 

giant, blunt instrument that we now have one tool and it really 

doesn’t help us differentiate and hire the people we need. 

Chairman CHABOT. Anybody else need to comment? 

Mr. EISENBREY. Mr. Chairman, could I just comment? 

Chairman CHABOT. Go ahead. 

Mr. EISENBREY. You know, the beauty of a one-size-fits-all rule 

that has been attacked here today is that every business is subject 

to the same rule, so that all of your competitors, will be subject to 

the same rule. And the notion that raising labor costs is somehow 

a bad thing leads us to having no minimum wage, which, you 

know, that would not be a good thing and the American people 

wouldn’t support that. 

That the notion that every time you raise labor costs you are 

somehow crimping business would—I think it is actually the biggest cause for the wage stagnation that we have had for the last 

30 or 40 years, that that has been raised—it has sort of been deified and it leaves employees behind. 

Mr. ROBINSON. If our ability to pay was the same as local corporations—— 

Mr. EISENBREY. Excuse me, I didn’t interrupt anyone else, and 

I would like you not to interrupt me. Thank you. 

I would just like to say that somehow we managed as a Nation 

from 1938 until the late 1970s with rules that set a higher threshold than we have now. Workers, as the ranking member said, we 

had a much higher—— 

Mr. KELLY. Mr. Chairman, I would like to claim back my time. 

He has gone over what the amount is. 

Chairman CHABOT. It is the gentleman’s time. I did want to 

give somebody else a chance to respond here, if that is okay with 

the gentleman. Mr. Robinson or—— 

Mr. ROBINSON. Well, my comment was just, bigger businesses 

have a much greater—and excuse me for the interruption—much 

greater impact to bear the cost than a small company like ours. 

Oracle, you know, in many ways we compete against, multibillion 

dollar company, multibillion dollars in profit publicly traded. I compete for deals with those guys. I can’t just take my cost up. I don’t 

have it. One size does not fit all. I am this big; they are this big; 

there is a difference. That is the problem. 

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Chairman CHABOT. Okay, the gentleman’s time has expired. 

We want to thank all the witnesses for being here today and participating in this hearing. 

From my perspective, as Chair, I would indicate, I believe that 

the overtime rule is going to do more harm than good and is likely 

to pose a considerable challenge for small businesses, especially 

those with thin margins, which is most small businesses, as well 

as, small nonprofits, and small governmental jurisdictions, as you, 

Commissioner Tipton, have indicated, with very tight budgets. 

However, the most damaging repercussions are likely to be, I believe, the loss of employee morale as workers are shifted from salaried positions to hourly status. Benefits very well may be reduced, 

as the testimony was; flexible work options will be limited; and opportunities for career advancement may well be decreased. 

My colleagues and I will continue, on both sides of the aisle, to 

work on legislative solutions that help America’s small employers 

and their workers succeed and reverse the harmful effects caused 

by this new overtime rule. 

I would ask unanimous consent that members have 5 legislative 

days to submit statements and supporting materials for the record. 

And without objection, so ordered. And if there is no further business to come before the Committee, we are adjourned. Thank you 

very much. 

[Whereupon, at 11:37 a.m., the Committee was adjourned.] 

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A P P E N D I X 

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Thank you Chairman Chabot and Ranking Member Vela ́zquez 

and Members of the Committee for the opportunity to testify about 

the impact of the Department of Labor’s new overtime rule. This 

rule requires employers to provide overtime pay to employees 

whose salary is less than $47,500, which is about double the existing threshold. 

What I want to do in my time today is focus on how this rule 

will adversely affect technology startups and high-growth small 

business owners like me, and what that means for the people we 

employ. 

I am the CEO and co-founder of a human resources technology 

business called Hireology. We have streamlined and improved the 

hiring process to help companies eliminate bad hires and identify 

good ones. We have also fielded hundreds of confused inquiries 

from our customers about how to comply with this rule. As a result 

we have a unique perspective to speak about its impact. 

Like most federal regulations, the overtime rule is a one-size-fitsall policy that doesn’t distinguish among firm size, sector, location, 

or compensation structure. This means that companies that don’t 

fit the Department of Labor’s outdated model will be disproportionately hurt by the rule. 

Take the capital-constrained technology startup sector that I 

work in, for example. Employees at these companies trade long 

hours and lower pay for the opportunity to get amazing professional experience in their careers, and the potential for a significant financial windfall later on. 

Are we exploiting our employees? Of course not. Those working 

at tech startups voluntarily recognize that their positions are highrisk, high-reward ventures, and that they may have to go years 

with below-market pay to get a big payout in the end. Do we want 

to regulate these opportunities out of existence? 

Looking back on when I started my company in 2010, I can tell 

you with 100% certainty that I would have not been able to hire 

my first employee had this rule been in place. My company now 

has 100 employees with a median annual compensation that exceeds $70,000 a year—well above the US average. How many 

‘‘Hireology’s’’ won’t get started as a result of this rule making that 

1st employee unaffordable for an entrepreneur? Are fewer goodpaying jobs created and fewer businesses launched the outcomes 

that are desired here? 

Sales professionals—the lifeblood of almost every company—also 

suffer from this rule because their commission-based compensation 

structure doesn’t align with the Department of Labor’s vision of the 

workplace. Consider what my company is facing: Forty of our 100 

full-time salaried professionals are salespeople, whose success—like 

with most sales positions—depends on persistence. That means 

working until the sale is made, whatever the hours. 

We pay new salespeople a base salary of $40,000, and those who 

hit their quota can earn $70,000 to $120,000 a year. This compensation structure is typical in the technology and sales sectors 

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because it allows employees to directly share in the profits they 

produce for the company. 

However, the overtime rule forces us to choose between raising 

base salaries to the new exempt threshold or converting everyone 

on the sales team to an hourly rate, capping hours at 40 per week. 

Both alternatives are unattractive. A 20 percent pay increase for 

new hires to put them above the threshold would hamstring our expansion plans. But, capping hours at 40 per week would mean a 

loss of earning potential for our salespeople, and add costly time 

tracking overhead to our bottom line. Both paths result in less opportunity and fewer middle-class jobs. 

To the extent that employers like me are forced to reclassify employees as hourly to avoid unexpected overtime costs, these highpaying job opportunities will be reduced. Millions of Americans 

have entered the middle-class by securing a salaried job then working their way up by working until the job gets done. 

That means sometimes—during a busy season, a financial 

month-end, or when a coworker is out sick—working longer than 

eight hours in a day. In return, these employees are rewarded with 

the flexibility, benefits, bonuses, status, and promotions that come 

with a salaried position. It’s not exploitative. It’s a key tenant of 

American work culture. 

Reduced middle-class job opportunities as a result of this rule 

will be compounded in parts of the country with lower standards 

of living. Companies in Chattanooga will have a much more difficult time complying with a $47,500 salary threshold than companies in Chicago. As a result, the rule will be another hurdle for 

smaller communities across the country that are still suffering 

from high unemployment and a lack of middle-class job opportunities. 

I urge you to pursue legislative solutions to undo the harm that 

will be inflicted by this overtime rule. At a time when the middleclass in this country is already being squeezed, the tech sector, 

sales jobs, and middle-management positions are a few areas that 

still provide relief. The over-time rule threatens to close those career pathways that have been paved by hard work. 

Thank you for your time today. I’m happy to take any questions. 

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Chairman Chabot, Ranking Member Vela ́zquez and members of 

the Committee, thank you for the opportunity to testify today on 

the Impact of the U.S. Department of Labor’s (DOL) final overtime 

rule on small entities—including small county governments like 

mine. As an integral part of our federal-state-local intergovernmental system, county governments have a vested interest in labor 

market policies. 

My name is Jerrie Tipton. I am the Chairman of the Mineral 

County, Nevada, Board of Commissioners and also serve in leadership positions with the Nevada Association of Counties and the National Association of Counties (NACo). 

About the National Association of Counties (NACo) 

Founded in 1935, NACo is the only national organization that 

represents county government in the United States and brings together county officials to advocate with a collective voice on national policy, exchange ideas and build new leadership skills, pursue transformational county solutions, enrich the public’s understanding of county government and exercise exemplary leadership 

in public service. 

About Mineral County 

Counties are highly diverse, not only in my home state of Nevada 

but across the nation, and vary immensely in natural resources, social and political systems, cultural, economic, public health and environmental responsibilities. Mineral County is located in western 

Nevada, approximately 300 miles north west of Las Vegas. 

We have a population of 4,478 and a land area of just over 2.4 

million acres—of which the majority is owned by the federal government. Of those 2.4 million acres, 1.6 million are managed by the 

U.S. Department of the Interior’s Bureau of Land Management 

(BLM) and nearly 400,000 more acres are managed by the U.S. 

Forest Service (USFS). 

To put that into perspective, the BLM and Forest Service together manage an area of our county more than two times the size 

of Rhode Island. All told, federal lands in Mineral County, including military reserves and land held in trust for Native American 

tribes, are as large as Rhode Island and Delaware combined. 

Mineral County is the very definition of a small governmental 

entity and we are very concerned about the potential impact of the 

new overtime rule on our ability to fulfill our fundamental responsibilities—many of which are mandated by the state and federal 

government. We employ 102 full time employees to serve our 4,478 

residents across this vast, rugged—and beautiful—landscape. 

In addition to the county, there are 60 more establishments that 

serve as employers in our area—many of which will also be impacted by the final rule. The majority of these are small businesses 

and are essential to the continued vitality of our communities. 

Mr. Chairman and members of the committee, as you continue 

to assess DOL’s new overtime rule and the potential impact on emSBREP-219A with DISTILLER

32 

ployers—and especially small entities including local governments—we respectfully submit three observations for your consideration: 

1. The nation’s 3,069 counties, most with fewer than 

500 employees, provide vital services to more than 300 

million residents. 

2. The new overtime rule does not adequately address 

the wide variations in local labor markets across the 

country. 

3. The new rule will have broad consequences for taxpayers and county services. 

First, the nation’s 3,069 counties, most with fewer than 500 

employees, provide vital services to more than 300 million 

residents. 

County governments are an essential component of the federalstate-local intergovernmental system, and therefore we have a vested interest in wage and hour policies that are both fair and efficient for public employers and employees. 

America’s 3,069 counties administer public programs and deliver 

public services, often on behalf of states and the federal government. Counties employ over 3.6 million people to carry out this important work. Because of our role as employers, we are concerned 

that the new rule could have the unintended effect of placing additional strain on already limited county budgets throughout the 

country, hindering our ability to provide crucial services to our 

local communities. 

The majority of counties, almost 70 percent, can be considered 

rural and have fewer than 50,000 residents and are therefore categorized as small governmental jurisdictions under the Regulatory 

Flexibility Act (RFA). The RFA defines small governmental jurisdictions as governments of cities, towns, townships, villages, school 

districts, or special districts, with a population of less than 50,000 

(RFA, 5 U.S.C. §§ 601-12). 

Small rural counties are also major employers. These counties 

across the country employ over 410,000 full-time employees, who 

collectively serve almost 40 million Americans. Like Mineral County, these small counties often deliver services over expansive 

areas—some even larger than smaller states. Small counties in 

particular have raised concerns that the new overtime rule could 

adversely affect their county finances as well as their county employees’ work hours and benefits. 

As mentioned earlier, 70 percent of our nation’s counties have 

fewer than 50,000 residents. Despite major variations in size and 

population, counties across the country must provide basic public 

services at the local level. These include maintaining the justice 

and public safety system, including police and fire protection, 

criminal justice, courts and jails; transportation and infrastructure, 

including road and bridge building and maintenance, airports and 

transit; health, including local public health departments, hospitals, clinics, nursing homes and mental health programs; and in 

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this election year, counties are responsible for administering federal, state and local elections. We also serve as conveners for our 

communities, bringing local stakeholders together to engage with 

state and federal agencies on matters of local concern. Our ability 

to perform all these critical—and often mandated—local functions 

could be affected as we try to comply with the new rule. 

Of Mineral County’s 102 full-time employees, 13 to 17 of our 

county employees will eligible for overtime pay under the new rule. 

We simply do not have the flexibility within our local budget to pay 

the newly eligible employees overtime pay in compliance with the 

rule—especially as soon as December. Two factors limit our capacity to comply. First, we must maintain spending required under existing federal and state mandates. Second, we are constrained by 

limits on our ability to generate revenue imposed by the state of 

Nevada and by the fact that so much of our land is tax-exempt federal land. Like many other counties, the upcoming December 2016 

implementation date puts our county in an even more difficult bind 

as we work to try to find where this extra revenue will come from. 

We have been ‘‘doing more with less’’ for so long that, absent new 

revenue sources, it is hard to see any alternative to cutting services. 

Second, the new rule does not adequately address the 

wide variations in local labor markets across the country. 

While it is encouraging that the rule attempted to take into account regional variations, using Census regions to determine the 

salary threshold is too broad and does not provide an accurate picture of the major differences in labor markets across local communities. The rule pegs the proposed salary level to the salary level 

of the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region (now the South). The South 

Census Region includes Alabama, Arkansas, Delaware, the District 

of Columbia, Georgia, Florida, Kentucky, Louisiana, Maryland, 

Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, 

Texas, Virginia and West Virginia. 

As is often the case with federal regulations, the new salary 

threshold will likely have an even greater impact on small and 

rural county governments. A nationwide uniform federal regulation 

does not, in this case, adequately take into account key measurable 

differences between small and rural communities and larger population centers. The new salary threshold is significantly above our 

Mineral County median household income of $38,664. 

Consider local government average wages by state. Based on 

data from the Bureau of Labor Statistics, in 2015, the average annual wages paid by local governments nationally ranged from 

$62,482 in Hawaii to $32,911 in South Dakota. In 34 of the 50 

states, local government employees earned less than $46,000— 

which is less than the new DOL salary threshold. 

The situation is even more uneven at the local level. In 85 percent of counties, local governments do not meet the new salary 

threshold of $47,476. For example, in Decatur County, Kansas the 

current average wage in local government in $18,465. In 97 percent 

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1 Istrate, Emilia. County Health Benefits 2014, Washington, D.C.: National Association of 

Counties. Available at http://www.naco.org/sites/default/files/documents/ 

County%20Health%20Benefits%20FINAL—06.30.2014.pdf 2 Istrate, Emilia, Brian Knudsen. County Economies 2015: Opportunities and Challenges, 

Washington, D.C.: National Association of Counties. Available at http://www.naco.org/sites/default/files/documents/2016%20CET-report—01.08.pdf 

of counties in the South Census region, the region used by the new 

rule for pegging of the threshold, average wages in local government are less than the newly proposed threshold. 

Mr. Chairman, in your state of Ohio, local governments pay on average $44,526 and in 94 percent of the counties in your state, 

local governments pay less than the newly proposed threshold. And 

Ranking Member Vela ́zquez, in New York, almost three quarters of 

the counties (42 of 58) pay less than the newly proposed threshold. 

So as you can see, the new overtime rule will have a significant impact on the nation’s counties—especially those with populations of 

50,000 and below. 

Because we are often unable to offer wages as high as in the private sector, local governments will often compete in the labor market by offering our employees great benefits. For example, counties 

provide extensive health coverage to their employees, dependents 

and retirees. An estimated 2.5 million county employees—out of 3.5 

million full-time and part-time county workers—and nearly 2.4 million of their dependents were enrolled in health plans offered by 

county governments in 2014. Full-time employees are eligible for 

county health benefits in almost all counties and 80 percent of 

counties offer health coverage for all employee dependents.1

Finally, the new rule will have broad consequences for 

taxpayers and county services. 

Many counties are still struggling to recover from the recession 

and may not have the resources to absorb sudden spikes in pay increases 

First and most obvious, doubling the current salary threshold 

amount all at once will have harmful consequences on county budgets—and ultimately on county employees—particularly as we struggle to recover from the recession. According to NACo’s County 

Economies 2015 report, only 214 county economies have fully recovered by 2015 (based on four indicators—jobs, unemployment rates, 

economic output (GDP) and median home prices) to their pre-recession levels.2

Some counties have calculated the impact of the overtime pay 

change on their payroll costs and are expecting dramatic increases 

to payroll in the first year of implementation and beyond. For example, according to Berks County, Penn., 97 of the 419 county employees who are currently ineligible for overtime pay because of 

their salary levels would be newly eligible under the final rule. 

Berks County has estimated that the resulting additional financial 

burden could cost the county as much as $1.5 million in the first 

year alone. 

In Mineral County, of our 102 employees, approximately 13-17 

would now be newly eligible for overtime pay under the new law— 

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3DOL Overtime Pay Rule; 81 Fed. Reg. 32540 (May 23, 2016) (to be codified at 29 C.F.R. Part 

541) 

and potentially cost an additional $25,000 to $45,000. This might 

not seem like a lot, but for our county, this poses quite a financial 

challenge. 

Many counties do not have the financial flexibility or resources 

to absorb sudden spikes in pay increases without reducing current 

service levels, decreasing employee benefits and/or reducing our 

county employee work hours or staff. 

In the final rule, DOL does not seem to have adequately analyzed the economic impact on small governmental jurisdictions as 

required by the RFA. In the section of the final rule titled ‘‘Projected Impacts to Affected Small Entities,’’ DOL provides an analysis of the projected economic impact on small entities, including 

small local governments (pgs. 32, 536-32,541). In Table 42 (pg. 

32,540) it estimates the total costs—directs costs and payroll increases—per establishment. For state and local government establishments, DOL estimates the total cost would be $9,264.3 However, as I noted above, my county is projecting a total cost of 

$25,000 to $45,000, which is significantly higher than DOL’s estimate. 

Most counties’ ability to raise new revenue is limited by states 

Increasing taxes to pay for overtime increases is not often an option for counties, beyond the political difficulty of instituting additional taxes. In fact, 43 states impose some type of limitation on 

counties’ ability to increase property taxes, including 38 states with 

statutory limitations on property tax rates, property tax assessments or both. There are not many other revenue solutions at 

counties’ discretion. For example, only 12 states authorize counties 

to collect their own local gas taxes, which are limited to a maximum rate in most cases and often involve additional approvals for 

implementation. 

Given these fiscal limitations, many counties may have to reduce 

the service levels for critical programs (public transportation and 

infrastructure, justice and public safety, public health, search and 

emergency rescue and 911 operations) and cut any non-mandated 

services such as critical support for economic development—to comply with the new rule. 

Counties with federal land in their jurisdictions are even more 

limited in their ability to raise additional revenue to pay for the 

new overtime rule 

Our ability to raise additional revenue to pay for the salary increases is not just impacted by the states—there is another complicating factor for many counties. Sixty-two percent of counties nationwide have federal land within their boundaries and in each 

case, those county governments provide important local services to 

federal public lands visitors and federal employees every day. However, once the federal government acquires land, it is removed from 

county tax rolls and no longer subject to local property taxes. The 

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loss of revenue greatly impacts local schools, roads, hospitals, fire 

and public safety services. In Mineral County, just 3.4 percent of 

our county is privately held and over half of the private land has 

no taxable infrastructure associated with it. 

Although the federal government has traditionally provided some 

relief for this lost revenue through the Payments in Lieu of Taxes 

(PILT) program, PILT often reimburses at a rate well below the 

land’s taxable value per acre. For example, Mineral County receives $0.36 cents per acre from the PILT program, far less than 

the $3.84 per acre we receive in local property taxes for similar 

land. In addition, in recent years the fate of the PILT program has 

been uncertain. The lack of long-term, predictable and full funding 

for the program has a significant impact on the budgets of public 

lands counties acres the nation. 

The budget process and timing for counties further complicates 

our ability to comply with the new rule 

Many counties have a budget deadlines of July 1, if not sooner. 

Because the final rule was announced on May 18, counties—including mine—hae very little time to conduct analysis and calculate the 

additional costs of the increased salary threshold and where these 

resources would come from. Our budget cycle is from July 1 to 

June 30 and for this year, we had to submit our budget, without 

accounting for the overtime rule, to the state by April 15. 

In addition, some counties operate on a bi-annual budget, meaning some counties already have their finances accounted for in the 

coming fiscal year excluding the additional costs for the new rule. 

Furthermore, many counties, like Mineral County, must have their 

budgets approved or certified by the state. Once these budgets are 

approved, it is very difficult to change if the needs of the county 

shift. 

It can be more challenging for small and rural counties to ensure 

that we are in compliance with federal regulations, because we 

have limited human resources personnel, legal counsel and financial advisory staff 

DOL estimated that on average, an affected small ‘‘establishment’’ is expected to incur $100 to $600 in direct management 

costs, a one-hour burden for regulatory familiarization (reading and 

implementing the rule), a one-hour burden per each affected worker in adjustment costs, and a five-minutes burden per week scheduling and monitoring each affected worker. 

However, we are concerned that these estimates may not reflect 

the actual experiences of small entities—as we typically spend a 

disproportionately higher amount of time and money on compliance 

because we have less capacity and staff expertise to work through 

the required changes under the new rule. Unfortunately, we may 

be forced to adjust by hiring outside consultants to help us comply 

with these new regulations, which can cost thousands of dollars. In 

Mineral County, we do not have the extra funding to hire an outside consultant. 

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The comp time option for compliance is not a complete solution 

The final rule offered alternatives to state and local governments 

to help us comply with the new rule. One alternative that DOL offered was to allow public sector employers, including local governments, to satisfy their overtime obligation by providing comp time 

rather than cash overtime premiums. State and local government 

employers may continue to use comp time to satisfy their overtime 

obligations to employees who have not accrued the maximum number of comp time hours. However, in Mineral County, we have so 

few full-time employees, comp time is not a real option. In most of 

our county departments, for example, we have one employee fulfilling certain job duties and responsibilities. If that employee has 

to use comp time, we may not be able to carry out the public services that are need in order to have a functioning county government. 

Additionally, comp time is not budget neutral and offering it to 

newly overtime eligible employees will have costs associated with 

it. In fact, for accounting purposes, overtime paid as comp time 

must be regarded the same as cash. While we appreciate DOL attempting to offer options for state and local governments, ultimately, the comp time option does not seem to provide enough 

flexibility to be very helpful for small counties confronting significant compliance challenges. 

Conclusion 

Chairman Chabot, Ranking Member Vela ́zquez and members of 

the Committee, as we have explained, DOL’s new overtime rule 

will impose considerable burdens on counties, especially small 

counties. We thank you once again for holding this important hearing and respectfully ask that you continue to consider the interests 

of America’s 3,069 counties in this matter—not only as employers, 

but as your intergovernmental partners, providing vital services 

to more than 300 million residents. Unfortunately, the new 

overtime rule does not adequately address the wide variations in local labor markets in counties across the country. 

And ultimately, please remember that the new rule will 

have broad consequences for taxpayers—and county services. 

NACo and our member counties stand ready to work with you to 

craft balanced policies that are fair to workers and workable for 

county governments and their residents. 

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Good morning, Chairman Chabot, Ranking Member Velazquez, 

and members of the Committee. My name is Albert F. Macre. I am 

a Certified Public Accountant and the owner of several small businesses located in eastern Ohio, one of which—Payroll + Services— 

is affected by the new Department of Labor (DOL) overtime rule 

for salary exempt personnel. I am pleased to be here on behalf of 

the National Federation of Independent Business (NFIB) to discuss 

these rules at today’s hearing. 

NFIB is the nation’s leading small business advocacy organization. Founded in 1943 as a nonprofit, nonpartisan organization, our 

mission is to promote and protect the right of its members to own, 

operate, and grow their businesses. NFIB represents about 325,000 

independent business workers located throughout the United 

States, 25,000 of which are located in my home state of Ohio. 

As a small business owner with several salaried employees positioned between the current exempt overtime earnings threshold 

and that created by the Department of Labor’s new rule, I now find 

myself standing with countless other small business owners forced 

to swallow more government ‘‘medication’’ prescribed before an accurate attempt at diagnosis has been completed. 

NFIB believes that the rule will have a substantial negative impact on small businesses and their employees. Frankly, the 100% 

increase in the salary exempt threshold to $47,476 is too much, too 

fast. To put the significance of this increase in perspective, from 

the time that the last salary threshold was increased in 2004, the 

Consumer Price Index has risen by only 28%. To make matters 

worse, the threshold will be automatically updated every three 

years. And while the rule allows use nondiscretionary bonuses and 

incentive payments to satisfy up to 10 percent of the standard salary level, the reality is that few administrative and lower level supervisory personnel are the recipients of such compensation. 

NFIB estimates that the new rule will impact approximately 40% 

of small businesses while the DOL has said the rule could affect 

over 4 million employees. Instead of increasing wages for certain 

employees, as the DOL might project, the rule will force small business owners to take more control of employee hours and benefits 

to keep costs in check. These controls could ultimately result in employees taking home less money annually. And don’t underestimate 

the impact on employee morale as affected employees are told they 

must now punch a time clock for the first time in their careers. 

In addition to these negative impacts, the implementation window is very short. This rule will become effective on December 1, 

2016, just over five months from now. Given that many small businesses are still struggling with the implementation of the Affordable Care Act five years after the enactment, this window of compliance seems barely cracked open. 

From a personal perspective, this rule is likely to have negative 

consequences—not only to my company, but to my employees as 

well. 

Payroll+ opened in 1995 in response to my clients’ desire to farm 

out payroll processing services to a local, low cost provider. We curSBREP-219A with DISTILLER

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rently have three salaried employees earning above the current 

threshold and below the proposed amount. We operate on a 30 to 

35 hour workweek for 8 months of the year, but do incur substantial overtime during the four payroll tax months. Our employees 

appreciate the certainty of their salary-based take-home pay each 

period. They also appreciate the fact that they don’t have to punch 

a time clock every day. I estimate that the roughly 600 hours of 

overtime our employees work each year are offset by the less than 

forty hour weeks they work during the slow months. Unfortunately 

law doesn’t allow me to ‘‘bank’’ the short weeks to offset the long 

weeks. In addition, we have paid 100% of our employees’ health insurance since the day we opened our doors. 

Without getting into the analytical weeds, in order to keep employee take-home pays consistent, we are contemplating a system 

of salary advances to be recovered during those overtime months. 

In order to keep our company cash flow level, we are contemplating—for the first time in over twenty years—requiring employees to bear a share of the cost of their health insurance benefits. 

DOL’s new overtime rule will have a significant, and in my belief, negative impact on employers and employees alike. In order 

for small businesses to avoid costly overtime pay, managers moved 

from their salaried positions to hourly jobs will need to keep time 

cards and be prohibited from working overtime, including answering email from home. This will be a burden not only financially, 

but in terms of productivity, as managers and supervisors will only 

be allowed to work when permitted. From an employee perspective, 

the flexibility that so many had will become a thing of the past. 

NFIB anticipates the changes will hit hardest those low-to-midlevel managers. These managers may currently make less than the 

proposed threshold, but value work week flexibility and benefits 

such health insurance and employer-provided pension benefits. 

Also, fewer salaried, managerial positions would signal to employees that there is little opportunity for growth at the company. 

These consequences will severely hamper opportunities for growth 

and development, not just of small businesses, but their employees 

as well. Unfortunately, neither can afford it. 

Thank you again for allowing me to share my thoughts today. I 

will do my best to answer any questions you might have. 

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