Congress Offers More-Moderate Approaches to Raising FLSA Salary Threshold

A Trump administration overtime rule change may borrow from these efforts

Stephen Miller, CEBS By Stephen Miller, CEBS December 1, 2016
Congress Offers More-Moderate Approaches to Raising FLSA Salary Threshold

The ruling by a federal district court judge in Texas that placed a nationwide injunction on the Department of Labor's (DOL's) overtime rule revision under the Fair Labor Standards Act (FLSA), halting it from taking effect on Dec. 1, has casts doubt on whether the revisions will go forward in their current form. 

The Justice Department appealed the injunction on Dec. 1, but many believe the Trump administration is unlikely to pursue the appeal.

FLSA overtime rule resources
FLSA Overtime Rule Compliance

For more overtime compliance news, tips and tools, check out the SHRM resources provided below:

· FLSA Overtime Rule Resources Guide
· Overtime Rule Blocked: Now What?
· Compliance Checklist · Infographic

It's also uncertain what, if anything, will happen with legislation introduced in Congress to block—or at least slow down—the revised rule's controversial doubling of the salary threshold for exempt employees from $23,660 to $47,476.

Unless exempt, employees covered by the Fair Labor Standards Act must receive at least time and one-half their regular pay rate for all hours work over 40 in a workweek.

As SHRM Online's Allen Smith previously reported, a flurry of bills to delay or phase in the final overtime rule are awaiting congressional action. With implementation of the DOL rule now halted, these congressional alternatives are getting a second look for signs of what the Trump DOL might proposed once it's in place:

  • The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094), sponsored by Rep. Tim Walberg, R-Mich., proposes delaying the effective date of the overtime rule by six months from Dec. 1 to June 1, 2017. It passed the House of Representatives on Sept. 28 by a vote of 246 to 177, with only five Democrats voting in favor of the measure. President Barack Obama's Office of Management and Budget announced that, if the bill were to be presented to the president, he would veto it.

  • The bill's companion measure in the Senate (S. 3462), with the same title, was introduced on Sept. 29 by Sen. James Lankford, R-Okla., and was referred to the Senate Committee on Health, Education, Labor and Pensions. The legislation is sponsored by seven senators, all Republicans. "I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed," Lankford said at the time.

  • The Overtime Reform and Enhancement Act (H.R. 5813), introduced in the House on July 14 by Rep. Kurt Schrader, D-Ore., has more limited aims. It would phase in the overtime rule over four years and eliminate the automatic triennial inflation-based increase of the exempt salary threshold. The bipartisan bill currently has 10 Democratic and 7 Republican co-sponsors.

    Rather than raise the exempt salary threshold from $23,660 to $47,476 as of Dec. 1, as the final overtime rule does, Schrader's bill would raise the new threshold this December to $35,984. It then would raise the threshold to $39,814 on Dec. 1, 2017; $43,645 on Dec. 1, 2018; and $47,476 on Dec. 1, 2019.

    The Society for Human Resource Management (SHRM) supported this bill when it was introduced and referred to the House Committee on Education and the Workforce, viewing it as a bipartisan measure that would modify some of the most onerous parts of the rule, with the best chance to be approved by Congress and signed by President Obama.

    "The court decision last week now affords [President-elect Donald Trump's] administration the opportunity to revisit the overtime regulations," said Kelly Hastings, SHRM's senior government relations advisor. "SHRM believes that the current salary threshold needs to be increased, but consistent with the methodology that's been used to increase the threshold historically, to meet the needs of both employers and employees and the realities of the 21st-century workplace."

  • Companion legislation in the Senate (S. 3464), the Overtime Reform and Review Act, was introduced on Sept. 29 by Senators Lamar Alexander, R-Tenn.; Susan Collins, R-Maine; Jeff Flake, R-Ariz.; James Lankford, R-Okla.; and Tim Scott, R-S.C. That measure would provide the same step increases as Schrader's bill, but at a slower pace and with no increase in 2017: $35,984 on Dec. 1, 2016; $39,814 on Dec. 1, 2018; $43,645 on Dec. 1, 2019, and $47,476 on Dec. 1, 2020.

    S. 3464 would prohibit an increase to the exempt salary threshold in 2017 so as to give employers an opportunity to adjust to the new level while the Government Accountability Office studies the impact of the rule in its first year of implementation. The Senate bill, like its House counterpart, would not provide automatic triennial increases.

[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]

A New Game

In the event that the DOL's overtime rule remains blocked, as many now believe is likely, the incoming Trump administration could introduce its own overtime rule that is less burdensome for employers and with a less-steep increase in the exempt-status salary threshold.

Trump has said that he favored a small business exemption from the proposed higher salary threshold under the new overtime rule, but that was before the injunction was issued. Now, instead of tweaking Obama's overtime rule, the Trump administration's DOL may chart its own course—perhaps to be inspired by some of the alternative approaches outlined in the bills before Congress.

Related SHRM Online Article:

Trump Faces Choice on Overtime Rule Appeal, SHRM Online Employment Law, December 2016

Democrats Pledge a Fight to Restore Overtime Rule, SHRM Online Compensation, December 2016

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