Adviser relief follows judge's injunction of overtime pay rule

Labor Department's regulation will not take effect Dec. 1

Nov 23, 2016 @ 12:22 pm

By Grete Suarez

Tuesday's injunction against the Labor Department's rule to pay overtime to more than four million lower-salaried workers has relieved some in the financial advice industry.

“We have had a number of concerns with the rule and its impact on small-business owners, including independent financial advisers,” David Bellaire, FSI executive vice president and general counsel, wrote in an email.

U.S. District Judge Amos L. Mazzant issued a nationwide injunction against a rule to pay overtime to workers who receive wages of less than $913 weekly or $47,476 annually. The lawsuit to block the rule was brought by 21 states and more than 50 business groups on the grounds that employers would suffer serious financial harm if the rule came into effect on Dec. 1.

“One concern we had was that the salary threshold should be determined by region as the cost of living varies greatly among the various cities and communities across the country,” Mr. Bellaire said.

The judge's decision essentially freezes the measure until a full ruling is made.

"At the very least, the court's decision gives employers, including independent financial advisers and financial services firms, time to budget and plan for the rule's impact should the legal challenge fail," Mr. Bellaire said.

Michael Carminucci, an LPL Financial adviser who runs Carminucci Wealth Management, is not fazed by the injunction on the DOL overtime rule. He said the industry was already hesitant to act on any rules until results of the U.S. elections were known. The future of the regulatory landscape hinged on the winning candidate.

“In the industry, we know there is going to be a dramatic difference in the DOL rule depending on who was going to win the election,” he said. “So any upfront changes is not worth it. Until we see what exactly is going to come, what changes are to be made, then we will act on it.”

Mr. Carminucci said while he believes in paying his employees what they deserve, he does not think the government needs to meddle.

“I don't like government intervention, but I like the fact that employees should be paid what they deserve,” he said. “I find that hourly employees who have certain time over the week, they do tend to go over their set hours.”

In response, Mr. Carminucci said his practice gives out bonuses to staff, and prefers to have the flexibility to reward employees the way he feels is right.

“I do think the government should instead give guidelines and tax incentives associated to enhancing your business and how to pay the employees,” he said.

The DOL overtime rule was introduced in 2015 and finalized in May 2016, after the Obama administration requested the agency update regulations to ensure "every worker is compensated fairly for their hard work” and to “look for ways to modernize and simplify the regulations.” The resulting draft drew more than 270,000 comments from impacted parties, according to the DOL.

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