Lawmakers Debate Overtime Rule

June 15, 2016

AA017956On June 9, the House Committee on Education and the Workforce, chaired by Rep. John Kline (R-Minn.), held a hearing to examine the Department of Labor’s (DOL’s)controversial overtime rule, which doubles the salary threshold under which employees qualify for overtime.

Witnesses which included small businesses and non-profit organizations were able to express their concerns and the impact the final rule will have on workers, budgets, costs and their ability to deliver program and services. Upon release of the final rule on May 18, concerns have been raised that the administration failed to streamline existing overtime regulations and finalized a rule that will lead to fewer jobs, less workplace flexibility, and fewer opportunities to climb the economic ladder.

During his opening statement, Chairman Kline stated: “This rule will disrupt the lives of countless individuals and do nothing to remove the regulatory landmines that are harmful to workers and employers. That’s what small business owners, college and university administrators, state and local officials, and heads of nonprofit organizations have warned about. But these warnings were ignored…The department ignored the voices of those who must implement this rule in their workplaces, on their campuses, and as they serve the needs of people in their communities.”

In 2015, the DOL released a proposal to increase the salary threshold under which employees qualify for overtime pay. The department’s final rule released last month, which more than doubles that salary threshold – from $23,660 to $47,476, will result in workers having less flexibility and opportunity for advancement in the workplace.

In March, Rep. Tim Walberg introduced H.R. 4773, the NSBA-supported Protecting Workplace and  Advancement Opportunity Act, which would require the DOL to conduct an economic analysis before making any changes to overtime rules.

On June 7, chairmen of the Senate HELP committee and the Senate Homeland Security and Governmental Affairs committee introduced legislation—S.J.Res. 34—under the Congressional Review Act (CRA) to block implementation of the administration’s overtime rule. The CRA legislation introduced by Senator Lamar Alexander (R-Tenn.) and Senator Ron Johnson (R-Wis.) would nullify the Administration’s final rule if passed, and prohibit the Administration from issuing a substantially similar rule without congressional approval.

NSBA is a member of the Partnership to Protect Workplace Opportunity, a coalition that is working to change the new overtime rule. When first proposed, NSBA submitted comments and among the key issues raised by NSBA’s comments included: the cost of compliance for small businesses will be much greater than the DOL estimate; changes to the duties test are likely to miss the fact that there is no bright line between “exempt” and “non-exempt” in the typical small business workplace; the creation of new hourly reporting and tracking requirements are likely to be a disproportionate burden on smaller firms; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be  “downgraded” from exempt managers to non-exempt workers. Please click here to download NSBA’s comment letter.