May 24, 2019 Press Release

Press Release

Attorney General Ellison fights federal efforts to make it harder for Minnesotans to afford their lives

Opposes new federal rules that would reverse overtime protections for workers and weaken protections against predatory payday lenders

Ellison: ‘As the People’s Lawyer, I’ll protect Minnesotans when the federal government won’t’

May 24, 2019 (SAINT PAUL) — Minnesota Attorney General Keith Ellison has joined attorneys general from around the country in opposing new Trump Administration rules that would make it harder for Minnesotans to afford their lives. He joined a coalition of 15 attorneys general in urging the U.S Department of Labor not to adopt a proposal that could lead to more than 8 million workers losing overtime protections. He also joined a coalition of 25 states to oppose the Trump Administration’s efforts to roll back rules that protect consumers from abusive payday loans.

“Once again, the federal government is actively stacking the deck to make it harder for people to afford their lives. As the People’s Lawyer, I’ll protect Minnesotans when the federal government won’t,” Attorney General Ellison said.

Reversing overtime protections

As part of a coalition of 15 states, Attorney General Ellison submitted a letter to the U.S. Department of Labor in opposition to a proposed rule to change the white-collar exemptions under the Fair Labor Standards Act, which currently exempts from overtime protections for those in executive, administrative, and professional positions. In order for an employer to classify an employee as exempt from overtime, the employee must: 

1.     Be paid a fixed salary (the “salary basis test”);  
2.     Be paid a minimum specified salary (the “salary level test”); and  
3.     Have a job with duties that are executive, administrative, or professional in nature (the “duties test”).   

In 2016, DOL adopted a rule that raised the minimum-salary level, last set in 2004, from $455 in weekly earnings to $913 in weekly earnings. DOL also included an automatic updating provision that would increase the salary level every three years. The Trump Administration’s proposed rule seeks to rescind the 2016 rule by lowering the salary level from $913 to $679 and eliminate the automatic updating provision. 

More than 8 million workers nationwide would be at risk of losing overtime protections under the proposed rule.

The comment letter details the state’s concerns that DOL’s weakening of the salary level-test will make it harder for the states to enforce labor laws and will lead to more FLSA violations by employers who misclassify workers as white-collar employees. 

Weakening protections against abusive payday lenders

As part of a coalition of 25 states, Attorney General Ellison filed an official comment letter with the Consumer Financial Protection Bureau (CFPB) in opposition to the Bureau’s proposed repeal of rules, adopted in 2017, that protect consumers from excessive interest rates and other predatory practices that are designed to trap consumers in cycles of debt. The letter argues that eliminating the 2017 protections, which were set to go into effect in August 2019, would harm consumers, reduce states’ ability to protect their residents from predatory lending, and is inconsistent with the CFPB’s legal obligations to protect consumers from unfair and abusive practices.

In 2017, the CFPB finalized a rule that requires lenders to determine in advance whether consumers have the ability to repay loans that are due all at once, capped the number of consecutive short-term loans lenders can make to the same consumer at three, and preserved access to less risky short-term loans that allowed consumers to pay off debt over time. While the rule went into effect in early 2018, compliance was delayed until August 19, 2019 to give lenders time to develop systems and policies. Now, less than 18 months after the rule was adopted, the Trump administration is attempting to rescind it.

In March 2019, Attorney General Ellison opposed a separate attempt by the CFPB to further delay implementation of the rule, as part of the same 25-state coalition.

Payday loans are high-interest, short-term loans that must be paid in full when the borrower receives their next paycheck. Payday lending can trap lower-income people who do not otherwise have access to consumer credit in endless cycles of debt. According to the Pew Charitable Trusts, the average payday loan borrower earns about $30,000 per year, and close to 60 percent of them have trouble meeting their monthly expenses. The average payday borrower is in debt for nearly half the year because they borrow again to help repay the original loan. The average payday borrower spends $520 per year in fees to repeatedly borrow $375.