Bill to Delay Overtime Rule Passes House, Awaits Action in Senate

By Allen Smith, J.D. Sep 29, 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.]

The House of Representatives passed a bill Sept. 28 that would delay by six months the effective date of the Department of Labor's (DOL's) new overtime regulations after small businesses argued that the original deadline would force them to lay people off. 

"I can't think of a worse Christmas present," said Rep. Pete Sessions, R-Texas, at a House Committee on Rules hearing on the bill, which, if enacted, would move the effective date from Dec. 1 to June 1, 2017.

Working overtime
FLSA Overtime Rule Compliance

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· FLSA Overtime Rule Resources Guide
· Compliance Checklist· Infographic

The committee, of which Sessions is chairman, passed the bill—H.R. 6094, the Regulatory Relief for Small Businesses, Schools and Nonprofits Act—Sept. 27. The new regulations will double the exempt salary threshold for overtime from $23,660 to $47,476.

However, Rep. Mark Takano, D-Calif., said that the rule will cost businesses less than one-tenth of 1 percent of total payrolls. "Many [workers] were and are denied fair pay for far too long," he said, noting that it's working families that need relief, not small businesses. Takano said that working families would be denied $600 million in overtime pay if the rule's implementation is delayed.

But Rep. Bradley Byrne, R-Ala., said that if a person doesn't have a job, then there's no paycheck at all—with or without overtime pay. He said he has "heard from everybody" about the rule—from small businesses to universities, nonprofits and elementary and secondary schools. And what the institutions are telling him, he said, is "wholly at odds with the made-up facts from the DOL." He said there should be a "six-month pause" while Congress gets better facts from the department.

Rep. Tom Cole, R-Okla., said he thought people would lose jobs because of the rule and called it arbitrary.

However, Rep. Bobby Scott, D-Va., said businesses could end up hiring more people as a result of the rule if businesses that want to avoid paying overtime divide the work among more people. Scott said that he'd consider supporting a delay if that was all that was being sought—but that he thought that a delay would ultimately turn into an effort to kill the rule.

Rep. Alcee Hastings, D-Fla., said that despite arguments in years past that increasing the minimum wage would lead to lost jobs, that hasn't happened. Hastings said he didn't believe that there would be significant job losses as a result of the overtime rule, either.

Time Needed to Adjust

More time is still needed to adjust to the rule, though, according to Rep. John Kline, R-Minn., who said, "More than half of businesses don't even know the rule is out there."

Rep. Tim Walberg, R-Mich., and the sponsor of the bill, said that the University of Michigan is increasing its tuition by 4 percent because of the rule.

"Small business owners are scaling back hiring," he added.

Sessions said that he serves on the board of trustees for Southwestern University in Georgetown, Texas, and noted that the president told the board the rule would increase costs by $500,000. "At a small school, that is significant," Sessions said.

Byrne blamed overregulation for steep increases in tuition and also expressed his concern that people would be "thrown out of work around Christmas" because of the rule.

Bill Won't Be Signed Into Law

Rep. Jim McGovern, D-Mass., said, "We all know the bill is not going anywhere," referring to President Barack Obama's opposition to the bill, despite the bill's widespread support from organizations ranging from business groups such as the Partnership to Protect Workplace Opportunity and the National Federation of Independent Business to educational organizations such as the American Council on Education.

The Office of Management and Budget (OMB) issued a statement Sept. 27, asserting, "The administration strongly opposes H.R. 6094, which would delay implementation of the Department of Labor's overtime rule until the middle of next year, endangering a critical step toward promoting higher pay and undermining efforts to allow workers to better balance their work and family obligations."

The OMB said that the rule "will extend overtime protections to 4.2 million additional Americans who are not currently eligible for overtime under federal law, boosting workers' wages by $12 billion over the next decade. The rule also will automatically update the salary threshold every three years to ensure that it does not erode again and to make it harder for employers to misclassify workers to avoid paying the overtime pay they have earned."

The OMB added, "Many employers, including nonprofits, institutions of higher education and small businesses, are already taking steps to come into compliance. This bill would be disruptive to their efforts and create new uncertainty for employers." And the OMB noted that if presented with H.R. 6094, the president would veto the bill.

On Sept. 28, Sen. James Lankford, R-Okla., introduced a bill in the Senate to delay the overtime rule.

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