By Ronnie Miles
On November 5, 2023, the National Golf Course Owners Association (NGCOA) submitted comments regarding the United States Department of Labor’s proposed rule – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.
The Department of Labor (Department) announced a Notice of Proposed Rulemaking (NPRM) on August 30, 2023, aiming to revise regulations under the Fair Labor Standards Act, particularly the exemptions for executive, administrative, and professional employees. The proposed changes also raise the standard salary level of highly compensated employees' total annual compensation threshold. Additionally, an automatic updating mechanism is suggested to adjust these thresholds based on current earnings data.
The Fair Labor Standards Act ensures minimum wage and overtime pay for most workers but allows for various exemptions. To qualify for the executive, administrative, and professional (EAP) exemption, employees must be salaried, meet a minimum salary level determined by the DOL, and perform specific duties. The proposed rule intends to elevate the minimum salary threshold for the EAP exemption from $35,568 to $55,068 annually, with a potential final rule increase to $60,209. For highly compensated employees, the minimum will increase to $147,414.
The National Golf Course Owners Association acknowledges the significance of establishing fair and market-driven wages. However, they express concerns that the proposed rule could significantly impact their industry and the employed workforce. Three major concerns were outlined in their comments on the proposed rule:
Methodology for setting the minimum wage for EAP: NGCOA recommends using the 20th percentile, as was done in the 2019 rule, rather than the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). This adjustment would more accurately reflect current market wages while offering exempt employees a reasonable minimum wage increase.
Removal of the 10% limitation on commission income: NGCOA's recently released 2024 Golf Industry Compensation and Benefits Report revealed that commissions constitute up to 50% of affected employee wages. Restricting the inclusion of commissions in total earnings could force many employees into hourly wages, potentially limiting their overall earnings.
Future updates to earnings thresholds: NGCOA believes that the Department’s proposed automatic wage increases do not account for economic conditions, regional variations, or individual business circumstances. The lack of flexibility in these updates might pose challenges for golf operators in regions with lower living costs or during economic downturns when providing wage increases might be challenging.
The NGCOA emphasizes that a thoughtful reconsideration of these aspects in the proposed rule would better serve the golf course industry and its workforce. The comment period closed on November 7, 2023. As we saw following the release of the 2016 minimum wage rule, we expect this one to land in the courts with a subsequent decision from the U.S. Supreme Court. NGCOA will continue to follow the Department’s actions on this rule and provide updates as they become available.