Bill to Block Overtime Rule Introduced

By Allen Smith, J.D. Mar 18, 2016
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As the Department of Labor’s (DOL’s) overtime rule hurtles toward finalization, advancing to the Office of Management and Budget (OMB) March 14, House and Senate Republicans stepped in and introduced legislation March 17 calling for the rule to be stopped in its tracks. 

“This mandate on employers will hurt the lowest paid American workers the most, by reducing their opportunities for a promotion or a better job and making it all but impossible for workers to negotiate flexible schedules,” said Senate Health, Education, Labor and Pensions Chairman Lamar Alexander, R-Tenn., when introducing the bill. Alexander said small independent colleges in Tennessee estimate the rule would cost each of their schools a minimum of $1.3 million—“a giant figure that may cost the colleges’ students in tuition hikes and cost employees in job cuts.”

As proposed, the rule recommended setting the salary threshold for exempt employees at $50,440 annually, up 113 percent from the current $23,660 annually. It also called for annual automatic increases to the salary threshold and suggested that the duties tests might be made more stringent, requiring managers to spend at least half of their time on managerial functions.

Bill’s Proposals

The Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773) would:

  • Nullify the proposed rule.
  • Require the DOL to first conduct a comprehensive economic analysis on the impact of mandatory overtime expansion to small businesses, nonprofit organizations and public employers.
  • Prohibit automatic increases in the salary threshold.
  • Require that any future changes to the duties test must be subject to notice and comment.

The legislation “provides a clear vehicle to push back on the overtime rule,” said Lisa Horn, a spokeswoman for Partnership to Protect Workplace Opportunity (PPWO) and director of congressional affairs with the Society for Human Resource Management (SHRM). “Both Republicans and Democrats have expressed concerns about the unintended consequences of this rule, and this bill provides a reasonable approach to updating the overtime rules in a way that that works for both employers and employees.” The PPWO is a group of more than 60 employer organizations and companies representing the broad employer community’s response to the proposed overtime rule changes.

“The rule heading to OMB started the clock, essentially, and this legislation signifies the Hill’s response,” Horn said. “Having just had nearly 200 members on Capitol Hill [March 16] advocating for legislation to address the overtime proposal, SHRM welcomes this development and looks forward to supporting the legislation.” SHRM members made visits to Capitol Hill to talk to congressional leaders as part of the SHRM Employment Law & Legislative Conference.

Take Two

James Swartz, an attorney with Polsinelli in Atlanta, said the bill seeks “to nullify the proposed white-collar exemption regulations, and to require the Department of Labor to start its rulemaking process over, including an economic impact analysis that integrates the criteria identified in the proposed legislation.”

While some Democrats have expressed concern about the proposed overtime rule, Swartz said the bill “is not a bipartisan affair. Senate and House Republicans are attempting to force the DOL and, more pointedly, this administration, to delay the implementation of the new rules.” He said the Congressional Review Act “looms here, as it gives Congress 60 legislative days to effectively veto (via resolution) any regulation following OMB review. If Congressional Republicans can slow down the OMB review, they may be able to extend those 60 days past the inauguration of a new president. While President Obama—or a President Clinton or Sanders—would likely veto such a Congressional disapproval resolution, causing the rule to become effective, a President Trump or Kasich or Cruz or TBD [to be determined] likely would allow the disapproval to stand, thereby scuttling” the DOL rule.

“What’s interesting is that the bill only addresses what employers are fearing will be in the final regulations. No one knows if some of the concerns raised by the bill, concerns that were raised in many of the comments provided to the DOL, exist in the version submitted earlier this week to the OMB,” said Robert Boonin, an attorney with Dykema in Detroit and Ann Arbor, Mich., and immediate past chair of the Wage and Hour Defense Institute. “The bill, though, would be more powerful than resolutions objecting to the regulations brought under the Congressional Review Act since it not only serves to negate the new regulations, it also lays out the ground rules for how future changes may be made.”

The Wage and Hour Defense Institute serves as a nationwide network and meeting ground for top-tier practitioners to engage in professional development in what has become a highly nuanced area of the law.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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