Congress Teems with Proposals to Delay or Phase in Overtime Rule

By Allen Smith, J.D. Oct 6, 2016
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[Editor's note: A federal district court has granted a preliminary injunction blocking the overtime rule from taking effect Dec. 1.] 

A flurry of bills to delay or phase in the final overtime rule gained steam before Congress adjourned in late September. But will the bills clear enough hurdles to become law when they return after the Presidential election? Some Hill observers have their doubts, while others think the bills' fate may depend on lawsuits brought against the Department of Labor (DOL).

Rep. Tim Walberg, R-Mich., sponsored H.R. 6094, which proposed delaying the effective date of the overtime rule by six months from Dec. 1 to June 1, 2017, and which passed the House of Representatives Sept. 28. However, President Barack Obama's Office of Management and Budget announced that, if the bill is presented to the president, he will veto it.

Also on Sept. 28, Sen. James Lankford, R-Okla., introduced S. 3462 in the Senate to delay the overtime rule by six months. The bill is companion legislation to H.R. 6094. Lankford said he has been told by "small business owners, colleges and nonprofits that this federal overtime rule will quickly lead to job loss, increased tuition and the reduction of charitable services. I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed."

The bill was referred to the Senate Committee on Health, Education, Labor and Pensions.

Phase-In Proposals

Still in the House and gaining bipartisan support is the July 14 proposal (H.R. 5813) by Rep. Kurt Schrader, D-Ore., to phase in the overtime rule over four years and eliminate the automatic triennial increase of the exempt salary threshold. The bill currently has 10 Democratic co-sponsors and seven Republicans.

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.

The bill then would raise the threshold to:

  • $39,814 on Dec. 1, 2017.
  • $43,645 on Dec. 1, 2018.
  • $47,476 on Dec. 1, 2019.

The Society for Human Resource Management (SHRM) strongly supports this bill, which has been referred to the House Committee on Education and the Workforce but is gaining bipartisan support in the House.

Senators Lamar Alexander, R-Tenn.; Susan Collins, R-Maine; Jeff Flake, R-Ariz.; James Lankford, R-Okla.; and Tim Scott, R-S.C., have introduced companion legislation (S. 3464) in the Senate. Alexander's bill, introduced Sept. 29, would provide the same step increases as Schrader's bill, but at a slower pace and no increase in 2017:

  • $35,984 on Dec. 1, 2016.
  • $39,814 on Dec. 1, 2018.
  • $43,645 on Dec. 1, 2019.
  • $47,476 on Dec. 1, 2020.

Alexander's bill would prohibit an increase to the exempt salary threshold in 2017, giving 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. Alexander's bill, like Schrader's, would not provide an automatic triennial increase.

The automatic increase "seems to violate the Administrative Procedure Act because the automatic increases will involve a substantive change to the exemption standards without going through full notice-and-comment rulemaking," said Paul DeCamp, an attorney with Jackson Lewis in Reston, Va., and former administrator of the DOL's Wage and Hour Division.

"My hope is that when we come back in November, senators on both sides of the aisle will have heard from their Boy Scout troops, from their colleges and universities, from their restaurants, and from their employees, who say: 'Wait a minute, this overtime rule makes no sense the way it is being implemented. Do something in November to change its negative effect on our country,' " Alexander said.

He stated that the new rule will result in about $100,000 in annual costs for the Great Smoky Mountain Council of Boy Scouts, whose employees staff weekend camping trips during certain seasons, which means longer hours.

"We are hopeful that the Senate phased-in bill modeled after Rep. Schrader's legislation will garner some Democratic support," said Kelly Hastings, SHRM senior advisor, government relations. "In order for anything to get across the finish line, it will need to be bipartisan in each chamber."

Disaster Relief

Sen. David Vitter, R-La., introduced a bill (S. 3429) on Sept. 28 that would delay implementation of the overtime rule by two years in states where the president had declared a major disaster on or after Aug. 14, 2016. Louisiana's floods would qualify the state for a delay should this bill be enacted. The bill was referred to the Senate Committee on Health, Education, Labor and Pensions.

Long Shots

Despite efforts to delay or phase in the overtime rule, some Hill observers are skeptical about these bills' chances of enactment.

"Even though a bill to delay implementation has passed the House, Congress is designed for action not to happen," said Mark Landes, an attorney with Isaac Wiles in Columbus, Ohio. "Bet against any employer relief from Congress." But, he added, "a President Trump could rescind the rules without congressional action."

Should a bill to delay or phase in implementation reach President Obama's or a President Clinton's desk, "Congress will not have the votes to override" a presidential veto, predicted Susan Warner, an attorney with Nelson Mullins in Jacksonville, Fla. "I do not believe there is any realistic chance that any of these bills are enacted in the current political climate."

Bryance Metheny, an attorney with Burr & Forman in Birmingham, Ala., said, "The only real hope for the legislation is likely related to and depends on pending litigation in the Texas federal court." Led by Texas, 21 states have filed a lawsuit challenging the overtime rule revisions. Business groups have filed a separate lawsuit.

Metheny said that if the rule is blocked in the courts, "a more willing DOL might emerge and reach a compromise on both timing and incremental increases. On their own though, these bills are not likely to provide employers the relief they need, and we urge our clients to continue to plan for a Dec. 1 effective date."

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